Month: July 2017

Is there a restaurant bubble?

Mostly not, here is a good article by Maura Judkis.  Here is part of the chat with me:

What’s happening is something that some restaurateurs may not want to hear: Competition in an already-tough business is getting even tougher. Cowen has an analogy: “Say you went to Hollywood and you asked, ‘Is there an actors-and-actresses bubble?’ ” he said. True, there is an overabundance of aspiring stars who move to Los Angeles with dreams of making it big. They spend money, time and effort investing in their future. But for most of them, it will never pay off. Drama-school graduates know the risks, and still, they keep heading west, because they believe that they are different. With some hard work, they’ll be the ones to make it big. The overabundance of young ingenues will continue in perpetuity.

“You have too many people trying, but that’s going to persist more or less forever precisely because the reward is high,” said Cowen. “The world of fancier restaurants” — and casual restaurants, too — “has become more of a winner-take-all world.”

And how is this for a blasé response?:

There may be plenty of openings, but “the lower echelons of the business, they’re tapped out. You can’t find people [staff],” said Paul Guzzardo, a restaurant consultant and partner in several restaurants, including Leopold’s Kafe . He thinks that indicates a bubble, but Cowen disagrees.

“It has not been a speculative fervor,” Cowen said. “The laws changed, prices went up, some places had to adjust.”

The article is substantive throughout.

Why do the NYT wedding pages seem so upper crust?

Here is their own explanation:

One challenge, though, is that our published announcements are culled from the couples who submit their wedding to us through the online form. We would love to see more economic diversity and a broader range of careers represented. The biggest step in that direction would be for more readers to submit announcements, giving us a wider and deeper pool of candidates. Recently, we had a push for a more racially diverse submissions, and it has helped create a more inclusive section.

Every submission is read and seriously considered. Some weeks, we’ll have 125 to 200 submissions; other weeks we’ll have 20. It can be agonizing to pare down to only 35 couples during the heavy wedding season. (If you want to really increase your odds of getting in, try a Christmas week wedding.)

And, yes, choosing our couples is subjective. Factors, in no particular order, include life achievements, job information, how-we-met stories, ages of couple, college backgrounds or not, parents’ information and other interesting anecdotes. We also strive to have as diverse a selection as we can, based on the submissions for any particular week.

While I consider that a perfectly fair response, I wonder how an NYT labor market story would evaluate a comparable response from say a top tech company in Silicon Valley.

Wednesday assorted links

1. A new theory of language evolution: “A critical feature of our model is the core principle of reversal, whereby deceptive signals aimed originally by a coalition against an external target are subsequently redeployed for honest communicative purposes within the group.”

2, How similar is sex over the centuries? (not at all obscene, but very frank language at the link.  Btw, I am not convinced by the argument but interesting nonetheless).

3. A short history of for-profit scientific publishing.

4. Is Just-in-Time inventory one reason for growing corporate cash hoards?

5. “Our results demonstrate that substituting one food for another, beans for beef, could achieve approximately 46 to 74% of the reductions needed to meet the 2020 GHG target for the US. In turn, this shift would free up 42% of US cropland (692,918 km2).” Link here, via Kevin Lewis.

6. The syllabus of Junot Diaz at MIT.  Weirder than you might think, in a good way.

7. “Further, we find no relation between menstrual cycle phase and economic preferences in the placebo group.

What is the optimal speed of email response?

A while ago I tweeted something like “If you use 2x on your podcasts, should you also aspire to speak twice as fast to others?”, or something like that.  In turn I started thinking about the optimal speed of written responses.

Sometimes you won’t email back until you have something quite good to say, and discourse may be inefficiently slow.  You are waiting, not only because you might be busy, but also to protect your reputation. It would be socially preferable to just “get the response over with,” even if you seem a little duncey every now and then.  In fact you are a little duncey.

Alternatively, you may drum up an obviously perfunctory response, so that no one judges your intelligence by it.  In equilibrium, some people will overinvest in being brusque over email for this reason.

If one has been smart or clever, it raises the bar for future interactions, raises expectations, and so slows down discourse.  So often (too often?) we judge others by the trend.  In that case, cleverness should ascend with time, at least in the initial stages of relationships.  If that is the case, do not raise initial expectations so high, though neither can you sound too stupid at first.  Perhaps the same is true for blogs and blog posts.

Or say you wish to flatter the sender of the email.  What is the appropriate response pace toward that end?  Not one second later, but not three years later either.

The now-defunct gmail chat eased some of these problems by lowering expectations for quality of response, by making “right away” the default pace.  I suspect one does gmail chat, or whatever is replacing it now, mainly with people where “expectations of quality” already are fairly well set.

If you have a really clever email response, you might wish to send it right away, even if you could come up with a slightly better version after a day of thought.  The immediate send will produce a more favorable impression.

People who are quick thinkers should answer their email right away.  Some of this may be a general attachment to a propensity for “quick response.”  But they will seem smarter this way too, albeit less smart once their recipients figure out this logic.

Cheer you up true story from Maine

As the Maine House voted on a bill to reduce the minimum wage for tipped restaurant workers, Jason Buckwalter and a dozen fellow servers huddled in a back room listening to the vote call at the Bangor steakhouse where they work.

They all hoped to hear one thing: that state legislators had voted to lower their wages. Some cried with relief, Buckwalter said, when the final vote ended at 110 to 37 — overwhelmingly in their favor.

The vote, which took place on June 13, marked the conclusion of a months-long political saga that has upended conventional wisdom about the minimum wage. Workers have traditionally supported such increases, which advocates say are critical to lifting millions out of poverty.

But in Maine, servers actively campaigned to overturn the results of a November referendum raising servers’ hourly wages from $3.75 in 2016 to $12 by 2024,  saying it would cause customers to tip less and actually reduce their take-home income.

The servers’ campaign against increasing the minimum wage was a blow to labor activists, who believed the Maine referendum could kick off similar votes in New York, Massachusetts and D.C.

Instead, some servers in those places are already mobilizing against a higher wage.

Here is the article, by Caitlin Dewey, the pointer is from Steve Rossi.  File under “Not from the Onion.”  At the link, there is a more detailed discussion of how tipping and legal minimum wages interact.  It is not easy to excerpt, but read through it for an explanation of the mechanisms here.

Elsewhere, Venezuela is raising the minimum wage for the third time this year.

Independence Day

All the advances in human rights that we’ve seen in American history—abolitionism, feminism, civil rights, gay rights—stem from our founding ideas of life, liberty, and the pursuit of happiness. The emphasis on the individual mind in the Enlightenment, the individualist nature of market capitalism, and the demand for individual rights that inspired the American Revolution naturally led people to think more carefully about the nature of the individual and gradually to recognize that the dignity of individual rights should be extended to all people.

David Boaz.

I interview Ro Khanna on regional development

This is a Bloomberg podcast, here is their summary of the highly intelligent and personable Khanna:

I recently sat down with Representative Ro Khanna of California to talk about technology, jobs and economic lessons from his perspective as Silicon Valley’s congressman. Khanna, who is serving his first term, is vice chair of the Congressional Progressive Caucus and previously taught economics at Stanford University, law at Santa Clara University, and American jurisprudence at San Francisco State University.

We discuss regional visas, EITC, Facebook, manufacturing employment, and much more.

The political economy of American independence

Here is a new revision of a paper by Sebastian Galiani and Gustavo Torrens:

Why did the most prosperous colonies in the British Empire mount a rebellion? Even more puzzling, why didn’t the British agree to have American representation in Parliament and quickly settle the dispute peacefully? At first glance, it would appear that a deal could have been reached to share the costs of the global public goods provided by the Empire in exchange for political power and representation for the colonies. (At least, this was the view of men of the time such as Lord Chapman, Thomas Pownall and Adam Smith). We argue, however, that the incumbent government in Great Britain, controlled by the landed gentry, feared that allowing Americans to be represented in Parliament would undermine the position of the dominant coalition, strengthen the incipient democratic movement, and intensify social pressures for the reform of a political system based on land ownership. Since American elites could not credibly commit to refuse to form a coalition with the British opposition, the only realistic options were to maintain the original colonial status or fight a full-scale war of independence.

Happy Fourth of July!

p.s. they are not going to make Puerto Rico a state either.

Jonathan Shainin calls this the best piece of 2017

Here is Jonathan on Twitter, and here is the LRB piece by James Meek, “Somerdale to Skarbimierz, James Meek follows Cadbury to Poland.”

The article covers the economic and sociological effects of outsourcing and wage arbitrage, and how it affects communities and politics on both sides of the investment shift.  It is hard to excerpt, but here is one good bit:

Anna Pasternak, who worked at the new chocolate factory in Skarbimierz, noticed the age of the equipment on the production lines. The wear on the metal caused by decades of Somerdale workers’ hands was the only message the British employees sent to their Polish successors. I met Pasternak in her flat in Brzeg, the nearest sizeable town to Skarbimierz. I asked her how she felt about what had happened to the British factory. ‘I never really thought about it,’ she said. ‘We lost so many jobs here in Brzeg … We didn’t feel sorry that others lost theirs … It’s somewhere else in the world. We don’t physically know these people.’


Barbara Kaśnikowska, the shrewd former head of Wałbrzych zone, suggests, persuasively, that Law and Justice benefited from resentment not of the have-nots towards the haves, but between haves; that as Poland boomed, ordinary people didn’t resent those who’d become super-rich so much as people just like them who, for no good reason, earned twice or three times as much as they did. In her view, Poland’s non-voters didn’t despise Civic Platform: they took its achievements for granted. A Pole, on this analysis, is much more likely to vote to say ‘screw you’ when they are angry than ‘thanks!’ when all’s going well. You can see her point. Andrzej Buła, the marshal of Opole and Civic Platform leader in the province, told me that the EU was funding 40 per cent of the provincial budget, while unemployment had dropped from 14 to 8 per cent. In some counties it’s as low as 5 per cent – essentially full employment. Without the Ukrainians, he said, they’d be short-handed. Yet in the 2015 parliamentary elections Civic Platform lost Opole on a swing of 40 per cent to Law and Justice.

Every paraagraph is excellent, strongly recommended.

My pick for a summer beach read

The Three-Body Problem and The Dark Forest
By Cixin Liu

Chinese science fiction, or Chinese ghost story, or maybe even Chinese reinvention of the novel? These are the works of fiction I am most enthusiastic about since Elena Ferrante and Karl Ove Knausgaard. I say read a plot summary of the first volume before starting the book, unless you are inclined to read it twice, as I did. — TYLER COWEN

That is from Bloomberg, the link has picks from other regular contributorrs.

Has the Fermi paradox been resolved?

Overall the argument is that point estimates should not be shoved into a Drake equation and then multiplied by each, as that requires excess certainty and masks much of the ambiguity of our knowledge about the distributions.  Instead, a Bayesian approach should be used, after which the fate of humanity looks much better.  Here is one part of the presentation:

Conclusion 2: the great filter is likely in the past

Given the priors and the Fermi observation, the default guess should be that the low -probability term(s) are in the past.

The conclusion can be changed if:

We reduce the uncertainty of past terms to less than 7 orders of magnitude

The distributions have weird shapes

Note that a past great filter does not imply our safety

(The stars just don’t foretell our doom)


Life only actually occurs 8% of the time

It is also noteworthy that most life on earth shares the same genetic system, implying it takes a long time for a particular kind of life, and also intelligence, to evolve.

Those slides are by Anders Sandberg, Eric Drexler & Toby Ord, “Dissolving the Fermi Paradox,” and the pointer is from Patrick Collison.

Whew!  That said, your rate of savings now ought to go up just a wee amount.

Zach Lowe invents a new wage hypothesis

The league and union introduced the super-max to give incumbent teams more of an edge in retaining superstars. If the Bulls indeed felt queasy about the possibility of spending it on Butler, he becomes the second player — alongside DeMarcus Cousins — dealt at least in part because the incumbent team didn’t really want that advantage. Paul George may mark case No. 3, though Kevin Pritchard, Indiana’s GM, sounded heartbroken Thursday about the inevitability of George playing elsewhere. The super-max may be having almost the opposite of its intended effect.

The Bulls were rather publicly uncomfortable with the idea of Butler as foundational player.

Here is the full article, by Zack Lowe, one of the best writers around.  Quick, what is the dual wage hypothesis for CEO pay?  For academic hiring?

Growth projections for China?

…based on comparisons with its more developed neighbours, Mr Lueth argues it is “a myth that the growth of China’s Asian peers slowed when they were at China’s level of development, as measured by GDP [gross domestic product] per capita”.

Taiwan managed to sustain growth rates of around 7 per cent a year for a decade after reaching China’s current level of GDP per head at purchasing power parity, around $11,000, in 1992. South Korea even managed 8 per growth for a period, having reached China’s current level in 1989.

“Taiwan and Korea still had a lot of growth left [at China’s current] level of development,” Mr Lueth says.

Singapore, however, soon trended down to growth of around 5 per cent (from 1979 onwards), while Japan plunged precipitously to 3 per cent (from 1969).

This analysis, then, would seem to suggest that, while a continuation of robust Chinese growth is far from guaranteed, it is not inevitable that it has to slow from here.

An alternative way of looking at the same data would be to analyse Asian growth with respect to what Mr Lueth calls the “technological frontier”. For instance, while China has reached the level of GDP per capita enjoyed by South Korea in 1989 (in PPP terms), it is further behind the US (the embodiment of the technological frontier) than Korea was in 1989 because the US economy has continued to expand in the past 28 years.

On a PPP basis, China’s GDP per capita was only 21.2 per cent of that of the US in 2014, according to LGIM.

Using this as the reference point, China could expect to see robust growth for the next 15-20 years if it followed the trail blazed by its neighbours…

That is from Steve Johnson at the FT.  Please note I am presenting this material, not endorsing it.