Month: June 2017
Germany and Nato, revisited
I’ve argued before that much of the collapse of Nato is in fact due to Germany, and not Trump. There is now an update:
Germany and Austria have castigated new American sanctions on Russia that target Moscow’s controversial Nord Stream 2 gas pipeline to Europe, describing them as an illegal threat to EU energy security.
Sending a strong message to Moscow, the US Senate on Wednesday voted 97-2 to approve measures that toughen existing sanctions on Moscow and create new restrictions that target companies which support Russian “energy export pipelines”.
In a joint statement on Thursday, Berlin and Vienna said the amendment heralded a “new and very negative quality in European-American relations”.
The Senate move threatens to break a delicate transatlantic consensus on Russia sanctions orchestrated by Chancellor Angela Merkel, which has until now excluded Russia’s export pipelines precisely because they involved key German interests.
Here is the FT article. How would America have reacted to Russia’s election tampering back say in 1966? How might Germany have gone along with that response? How willing was Germany back then to accept such a high percentage of its energy supplies from Russia/USSR?
Historical Returns of the Market Portfolio
A new paper by Ronald Q. Doeswijk, Trevin Lam, and Laurentius (Laurens) Adrianus Petrus Swinkels addresses exactly this question:
Using a newly constructed unique dataset, this study is the first to document returns of the market portfolio for a long period and with a high level of detail. Our market portfolio basically contains all assets in which financial investors have invested. We analyze nominal, real, and excess return and risk characteristics of this global multi-asset market portfolio and the asset categories over the period 1960 to 2015. The global market portfolio realizes a compounded real return of 4.38% with a standard deviation of 11.6% from 1960 until 2015. In the inflationary period from 1960 to 1979, the compounded real return of the GMP is 2.27%, while this is 5.57% in the disinflationary period from 1980 to 2015. The reward for the average investor is a compounded return of 3.24%-points above the saver’s. We also compare the performance of an investor who holds the market portfolio with an investor who uses simple heuristics for the portfolio allocation. Our results suggest that the market portfolio is close to the mean-variance frontier, but our heuristic allocations achieve a significantly higher reward for risk.
Do note that is for many countries, not just the United States. For the pointer I thank Samir Varma.
Thursday assorted links
1. An interview about Confucian philosophy, and other things.
2. Redux of my earlier post “Singapore as financial corporation.”
3. Should a test for new surgeons measure their sweat?
4. Douthat on Caesar and Cassius (NYT).
5. Canada to teach computer coding, starting in kindergarten.
“Now you need to post your ranking of all Shakespeare’s plays.”
That was a tweet from Matt Yglesias, so here goes:
The best, in order
The Henriad (as a unit!)
King Lear
Hamlet (even if it is a bunch of cliches, strung together)
Measure for Measure
A Midsummer Night’s Dream
Merchant of Venice
Romeo and Juliet
As You Like It
Twelfth Night
Winter’s Tale (underrated)
Love’s Labour’s Lost
Anthony and Cleopatra
The Tempest
Othello (slightly overrated, Verdi’s opera actually is better)
Richard II + III
Pretty flawed, but I still want to call underrated
Cymbeline
Coriolanus
Troilus and Cressida
OK, and would be pretty awesome from anyone else
Comedy of Errors
Much Ado About Nothing
All’s Well That Ends Well
Overrated, though you still can think they are pretty good
Julius Caesar
Macbeth
Taming of the Shrew
Just not that good
Henry VIII
Two Gentleman of Verona
Merry Wives of Windsor
Timon of Athens
Titus Andronicus
King John
Let’s not even get into the possible co-authorships.
The bottom line
Shakespeare is very likely the deepest thinker the human race has produced, so these are worth careful study! I am a fan of the Folger Library editions.
Wednesday assorted links
Indifference Curves!
The latest video in our Principles of Microeconomics course at MRUniversity is on indifference curves (earlier videos covered marginal utility and budget constraints). In at least one way this video is better than any we have previously done.
As always, these videos go great with our beautiful textbook Modern Principles of Economics.
My Conversation with Jill Lepore
Here is the transcript and podcast (no video). Jill and I discuss Mary Pickford, Dickens in America, why the early United States did not blossom culturally, Steve Bannon as a character from a 19th century painting, what the Tea Party got wrong and right, H.G. Wells, her working class background, Doctor Who and Gilligan’s Island, Elizabeth Bishop, what Americans don’t like about New England, Stuart Little, how she got her start as a secretary at HBS, and many other topics. Highly intelligent throughout, though note it is not easy to excerpt. Here is one good bit:
COWEN: You’ve argued at times that people overestimate the connectedness of the present with the American past. It’s not just that the past is a foreign country as Peter Laslett suggested, but it’s indeed stranger in some sense. If we could undo those mistaken intuitions about, “Oh this is like the 1960s” or “This is like Andrew Jackson,” whatever the analogy may be, what’s a concrete example of how that could improve our understanding of the current world?
LEPORE: I like to think about it in a different structural way. That completely understandable desire to find a historical analogy is just like to take an accordion and compress it.
COWEN: Yes.
LEPORE: They make then just like now. So, “Oh I know, Trump is just like Andrew Jackson. It’s the same move. He’s appealing to the people. He’s unwilling to enforce the rulings of the Supreme Court. He’s overriding Congress in order to get the mandate.” Whatever it is that you want to say about those two people. And that seems to me really quite kooky.
A different move that I find much more edifying and historically defensible is to pull open the accordion and stretch it open as far as you can, so you can see the distance between now and Andrew Jackson, the distance between Trump and Jackson, and try to understand what happened between those two characters and those two presidencies that helps us to see transformation. It’s a little bit like some of the controversy over how to interpret the Constitution. Because originalism, to me, is like squishing that accordion all the way together. “What would James Madison think?” is the question that originalists want to ask. Whereas I want to know what happened between when Madison thought that and here where we are now. And that’s a very different kind of constitutional interpretation.
In 1987, when it was the 200th anniversary of the Constitutional Convention, there was a lot of hoopla. It was right after the Robert Bork nomination, and then originalism was very much the priority of the Reagan justice department under Edwin Meese, and there’s a lot of conversation about the filial piety of a bicentennial. And this is an exciting thing to think about, that 200th anniversary of the Constitution.
Thurgood Marshall, as you know, the first African American Supreme Court justice who’d argued Brown v. Board of Education in 1954 — he was asked, “Are you going to participate in the hoopla, the bicentennial hoopla of the Constitution?” He gives this incredibly powerful speech in which he says, “No. You know what I’m willing to celebrate, not that document, which was flawed. Let’s just understand the ways in which it was flawed. I will celebrate the 200 years since, the 200 years of struggle to make good on the promises of that document.” And it’s that kind of thinking, that kind of historical thinking that contributes to our popular culture and to our discussions of the relationship between the past and the present, more than that desire to really collapse things and say, “Oh it’s 2008; this is just like 1932.” It’s not. It’s really not like 1932.
And:
LEPORE: I remained somewhat befuddled by how a lot of things happen in the world.
Recommended…
Hong Kong fact of the day
Hong Kong just set another property-price record. This time, it was for a parking space.
A 188-square-foot space on Hong Kong island sold for HK$5.18 million ($664,300), or HK$27,500 a square foot, last month, newspaper Ming Pao reported Wednesday, citing land registration records.
The car park cost more than some Hong Kong homes: Centaline Property data shows a HK$4.2 million sale of a 284-square-foot, two-bedroom home in Sha Tin, in the New Territories, in April.
That is from Fion Li at Bloomberg.
There is no Thucydides trap
That is the title of a new and interesting short essay by Arthur Waldron, here is one interesting bit of many:
Since the attack on Scarborough Shoal, now six years ago, my own opinion is that China expected to have occupied a lot more. Her slightly delusional view of her claims, first made explicit in ASEAN’s winter meeting of 2010 in Hanoi, was that “small” countries would all bow respectfully to China’s new pre-eminence. This has failed to occur. All of China’s neighbors are now building up strong military capabilities. Japanese and South Korean nuclear weapons are even a possibility. Over-relying on their traditional concept of awesomeness (威 wēi), the Chinese expected a cake walk. They have got instead an arms race with neighbors including Japan and other American allies and India too. With so much firepower now in place the danger of accident, pilot error, faulty command and control, etc. must be considered. But I’d wager that the Chinese would smother an unintended conflict. They are, after all, not idiots.
And:
China’s tremendous economic vulnerabilities have no mention in Allison’s book. But they are critical to any reading of China’s future. China imports huge amount of its energy and is madly planning a vast expansion in nuclear power, including dozens of reactors at sea. She has water endowments similar to Sudan, which means nowhere near enough. The capital intensity of production is very high: in China one standard energy unit used fully produces 33 cents of product. In India the figure is 77 cents. Gradually climb and you get to $3 in Europe and then — in Japan — $5.55. China is poor not only because she wastes energy but water too, while destroying her ecology in a way perhaps lacking any precedent. Figures such as these are very difficult to find: mine come from researchers in the energy sector. Solving all of this, while making the skies blue, is a task of both extraordinary technical complexity and expense that will put China’s competing special interests at one another’s throats. Not solving, however, will doom China’s future. Allison may know this on some level but you have to spend a lot of time in China and talk to a lot of specialists (often in Chinese) before the enormity becomes crushingly real.
Recommended.
Tuesday assorted links
Game theory + Qatar cut-off = uh-oh…
That is the topic of my latest Bloomberg column, here is one excerpt:
Typically, if you put a major military base in a country, there is a general expectation you will not actively work to subvert the sovereignty of the host government. But right now the U.S. is violating that understanding.
Now imagine you are the leadership of Singapore, which faces political pressure from a much larger China and Indonesia. Singapore also hosts a significant American military base. You will think twice about the benefits you once expected from this arrangement. Kuwait and Bahrain, too, will be reconsidering their options. Other vulnerable countries with American military bases include South Korea, Kosovo, Greece and Djibouti. Yet other nations, such as Taiwan, do not host American military forces, but rely in part on the potential for American military assistance.
In sum, many more countries will feel less secure, and many of these countries will most likely court additional favor with their local or regional hegemons, which are typically less liberal influences than the U.S. In the Middle East and Gulf, for instance, Turkey and Iran stand to gain in influence.
Do read the whole thing.
Your Next Government
Private governments can learn from the commercial corporate world, where intense competition has driven the evolution of institutions capable of supporting large, complex, and consent-rich communities. Your next government might thus resemble a city-sized corporation, with you and other residents buying shares, electing the board of directors, and so forth. Think of it as residential co-op, upgraded for the big leagues.
Read Tom W. Bell for more, including his intriguing idea for “double democracy” and a generous appreciation of dominant assurance contracts.
Land of the free home of the brave fact of the day
…we estimate that refugees pay $21,000 more in taxes than they receive in benefits over their first 20 years in the U.S.
That is from a new NBER paper by Evans and Fitzgerald.
How I think about vocabulary
Relative to my education, including self-education, I think of myself as commanding only a limited English-language vocabulary. Some of this comes from having studied two foreign languages as an adult, which means picking up vocabulary in other languages instead, as the marginal value of a word in the foreign language usually will be higher. Another factor is the complementarity of “direct speech” modes and a fairly modest vocabulary; it doesn’t make sense to talk common sense and suddenly interject “albescent.”
There is also a third reason. I think of “flowery” vocabulary as operating against what Richard Hamming calls “compound learning.” Compound learning occurs when your new learning, and your new analysis, builds steadily upon the old. Over time, learning is a bit like compound interest and it cumulates.
When compound learning is possible, you wish to keep a relatively well-defined set of analytic pieces on the table. It is fine and indeed essential to add to those pieces, but then the new piece should be one that will stick around for a while, again so that you may learn with it. Furthermore it should be readily shared with other people, used with ease on the blog or Twitter, and stick in your mind without much if any effort. It’s a bit like having a consistent programming language or micro model to share across a lunch table, or indeed with yourself over time.
Should I write of a “velleity,” or of a slight, non-fervent wish?
The former seems to me rather periphrastic.
Why do American movie theaters now have assigned seats?
Jeff Ely has a hypothesis:
Everyone who has armchair-theorized why movie theaters don’t sell assigned seats in advance is now obligated to explain why this has changed and how that’s consistent with their model.
I will start. My theory was based on the value of advertising to movie-goers who must arrive early to get preferred seats and then are a captive audience. This has become significantly less valuable now that said movie-goers can bring their own screens and be captive to some other advertiser.