Month: September 2017

Wednesday assorted links

1. Why David Roberts doesn’t write about overpopulation.

2. Larry Summers on antitrust against the tech companies.

3. What Tinder knows about you.

4. Rexford Tugwell’s New Deal collectivist dream for Puerto Rico.

5. “As cities are basically two-dimensional in space and one-dimensional in time, this implies that most visits to a place are by people who live nearby (not so surprising), and also by people who visit very infrequently (quite surprising).”  Link here.

6. Photos of Belfast 1955.  And Pigou club for ghosts.

Kill the Jones Act Now!

The purpose of the 1920 Jones Act was to protect American shipping interests by giving them a monopoly on US port-to-port traffic. The Act requires that all ships transporting goods between U.S. ports have to be constructed in the United States and owned and crewed by U.S. citizens (or permanent residents).

The Act, however, wasn’t enough to save the US industry. As a result, we have the worst possible situation. Extremely expensive US port-to-port shipping and only a tiny US shipping industry to show for it. By one account, there are less than one hundred Jones-Act-eligible ships.

The expense of US water transport pushes shippers to move goods by air and coastal highway which is wasteful but usually not deadly. But as Salim Furth points out the Jones Act could be deadly for Puerto Rico:

Even though Trump granted a brief waiver from the Jones Act following Hurricanes Harvey and Irma, the Department of Homeland Security announced last week that it would not grant a Jones Act waiver to Puerto Rico. It justified its decision on the basis that the Jones Act fleet is sufficient to the task.

But the Jones Act fleet already imposes much higher shipping costs on Puerto Rico than on nearby islands, and it operates near capacity in normal times. To involve mainland American workers and businesses in Puerto Rico’s recovery requires a rapid increase in capacity and speed—something far beyond the ability of America’s moribund crony capitalist shippers.

If the cost to Puerto Rico doesn’t get President Trump’s attention then perhaps this will–The Jones Act benefits socialist Venezuela!

Puerto Rico’s badly damaged energy sector relies on oil imports from Venezuela, a socialist dictatorship that uses its revenue to prop up anti-Americanism in Latin America. If issued a waiver, Puerto Rico could switch to cheaper, cleaner natural gas from sources such as Pennsylvania and Texas.

The Jones Act shouldn’t be temporarily lifted, the Jones Act should be killed.

What if Puerto Rico becomes part of an already existing state?

That is a Twitter suggestion, and I believe this option warrants serious consideration.

The obvious candidate would be New York State, and of course New York could be given more federal funds to ease the fiscal burden.  The state would have more representatives in the House, but there would be no gain of two Democratic Senators for Puerto Rico, which might limit opposition from the Republican Party.  Puerto Rico also might be given some special dispensations regarding the Spanish language and some other cultural markers.

I am not sure how Puerto Rico would feel about such an arrangement at this point, but under many alternative arrangements a big chunk of the island’s population simply empties out, and much of it to New York at that.

On the other hand, Puerto Rico + Alberta could make 52…sorry Monique!

Addendum: As for the shorter run, here is one report of relevance:

While the federal government continues to calculate a damage estimate, responders deployed to the region are focused on logistics like getting food and water to millions of people who remain without power as temperatures hit 90 degrees and humidity hovers above 70 percent.

The administration contends that much of Puerto Rico and the Virgin Islands is so damaged that officials can’t even begin damage assessment, meaning the federal government may not know for weeks how many roads, buildings or power lines will need to be rebuilt.

“The issue is not paying for any of this,” the administration source said. “It’s like: Paying for what?”

Here is the power supply, before and after the storm.  I’ve seen informal reports that over 40 percent of the island does not currently have usable drinking water.  Or what about people who need medications or dialysis?  Here are some photos.

The basic model for Puerto Rico isn’t working any more

That is the topic of my latest Bloomberg column, here is one bit:

Worse yet, the island has about $123 billion in debt and pension obligations, compared with a gross domestic product of slightly more than $100 billion, a number that is sure to fall. In the last decade, the island has lost about 9 percent of its population, including many ambitious and talented individuals. In the past 20 years, Puerto Rico’s labor force shrank by about 20 percent, with the health-care sector being especially hard hit. The population of children under 5 has fallen 37 percent since 2000, and Puerto Rico has more of its population over 60 than any U.S. state.

And then came Hurricane Maria.  According to a recent NYT piece, almost half of American’s don’t know that Puerto Ricans are American citizens.

In my considered opinion, using government money to help Puerto Rico has a much higher humanitarian return than devoting it to the further subsidization of health care.

Tuesday assorted links

The Roodman Replication

David Roodman, working for the Open Philanthropy Project, has completed an absolutely tremendous replication and extension of many papers in the literature on deterrence and crime. He reaches two conclusions. First:

I estimate, that at typical policy margins in the United States today, decarceration has zero net impact on crime. That estimate is uncertain, but at least as much evidence suggests that decarceration reduces crime as increases it. The crux of the matter is that tougher sentences hardly deter crime, and that while imprisoning people temporarily stops them from committing crime outside prison walls, it also tends to increase their criminality after release. As a result, “tough-on-crime” initiatives can reduce crime in the short run but cause offsetting harm in the long run.

Second:

Empirical social science research—or at least non-experimental social science research—should not be taken at face value. Among three dozen studies I reviewed, I obtained or reconstructed the data and code for eight. Replication and reanalysis revealed significant methodological concerns in seven and led to major reinterpretations of four. These studies endured much tougher scrutiny from me than they did from peer reviewers in order to make it into academic journals. Yet given the stakes in lives and dollars, the added scrutiny was worth it. So from the point of view of decision makers who rely on academic research, today’s peer review processes fall well short of the optimal.

My paper on Three Strikes with Eric Helland was one of the papers that Roodman replicated. (Fortunately, it did replicate with the exception of one error in a table.) I can vouch that Roodman gave us tougher scrutiny than did the peer reviewers.

Not surprisingly, I don’t agree with all of Roodman’s conclusions but rather than pushing back I think it more important to underline how impressive the replication project is. There are many review papers in economics but a replication project of this magnitude is nearly unprecedented. In our paper on the National Science Foundation, Tyler and I advised the NSF to put more efforts into replication. We wrote:

The NSF could support replication studies on a significant scale. A significant fraction of economic research does not easily replicate…Replication and reproducibility studies are true public goods that are not rewarded highly by most top journals or by the tenure process at research universities.

Roodman and OPP have demonstrated the value of replication on a large scale.

Do we really need to play the Star-Spangled Banner so much?

I say no, in my latest Bloomberg column.  Here is one bit:

We live in a country where very often the concession stands don’t stop operating during the anthem, nor do fans stop walking through the concourse. We’re fooling ourselves to think that current practices are really showing respect for the nation or its military.

And:

Anthem practices shouldn’t be viewed as sacrosanct, and no one would think the absence of an anthem unpatriotic if expectations were set differently. Professional sports don’t start their competitions with the Pledge of Allegiance, and that is hardly considered an act of treason. Nor do we play the anthem before movies, as is mandatory in India. Furthermore, “The Star-Spangled Banner” wasn’t sanctioned by Congress as our national anthem until 1931. Earlier in the history of baseball, the anthem was played during the seventh-inning stretch. It was only during World War II that the anthem was played regularly at the beginning of each game, rather than for special games alone, such as the World Series.

Might we consider moving back to some of these earlier practices? To play the anthem before the players are present or during a mid-game break, or perhaps to cease the practice altogether?

Finally:

The awkward, hard-to-admit truth is that the American national anthem is a form of right-wing political correctness, designed to embarrass or intimidate those who do not see fit to sing along and pay the demanded respect.

Here is a piece by Cass Sunstein also on the theme of right-wing political correctness.

Monday assorted links

Water Runs Downhill: Toronto Edition

Globe and Mail: More than 1,000 planned purpose-built rental units have instead been converted to condominiums in the Greater Toronto Area since Premier Kathleen Wynne’s government expanded rent control in the spring, according to a new report that warns the region’s rental supply crisis is poised to worsen.

And given how rent control can destroy cities this is a foreboding sign:

The report also warns that 85 per cent of the province’s existing stock of purpose-built rental buildings are more than 35 years old and will require higher levels of investment to maintain.

Was banning Indian child labor counterproductive?

The authors are Prashant Bharadwaj, Leah K. Lakdawala, and Nicholas Li, and here is the abstract:

While bans against child labor are a common policy tool, there is very little empirical evidence validating their effectiveness. In this paper, we examine the consequences of India’s landmark legislation against child labor, the Child Labor (Prohibition and Regulation) Act of 1986. Using data from employment surveys conducted before and after the ban, and using age restrictions that determined who the ban applied to, we show that child wages decrease and child labor increases after the ban. These results are consistent with a theoretical model building on the seminal work of Basu and Van (1998) and Basu (2005), where families use child labor to reach subsistence constraints and where child wages decrease in response to bans, leading poor families to utilize more child labor. The increase in child labor comes at the expense of reduced school enrollment. We also examine the effects of the ban at the household level. Using linked consumption and expenditure data, we find that along various margins of household expenditure, consumption, calorie intake and asset holdings, households are worse off after the ban.

I’m not trying to talk you into child labor with this post.  Rather, you should be less confident in a lot of your moralizing about what is a good policy or an evil policy.

Hat tip goes to Dev Patel.

What I’ve been reading

1. The New Testament, translated by David Bentley Hart, Yale University Press.  I’ve spent a good bit of time with this book, and if you own and read a few New Testaments, this should be one of them.  It is the most accurate translation conceptually and philosophically, taking care to render the Greek of that period as faithfully as possible.  It doesn’t try to make the text “read nice,” nor does it make all of the books sound the same.  Of course, with any Bible translation you care both about a) what the authors really meant, and b) what other readers of the Bible thought they were imbibing.  By the very nature of its virtues, this volume is weak on b) precisely because it is strong on a), and thus it probably should not be your first translation.  Still, if you are tempted, this is more and better than “just another New Testament.”

2. Richard McGregor, Asia’s Reckoning: China, Japan, and the Fate of U.S. Power in the Pacific Century.  I am sick of books on these topics, because they tend to repeat the same old same old.  This one has fresh content on almost every page, and it is especially strong on explaining how the revisionist history debates in China and Japan fit into domestic politics and also foreign policy.

3. Barry Hatton, The Portuguese: A Modern History.  “Portugal largely missed the Enlightenment.”  This is the best introduction I know to that charming country.  In 1986, Portugal had only 123 miles of highway.  It had not occurred to me, by the way, that the 1974 coup was the first Western European revolution since 1848, unless you count the Nazis.  Here is a picture showing Portugal as an Atlantic rather than Mediterranean economy.  Explanation here.

4. Nils Karlson, Statecraft and Liberal Reform in Advanced Democracies.  How did liberal reforms happen in Australia and Sweden?  This book tells you about the world, rather than the theory or the taxonomy.  There should be many more books of this sort, a study in actual public choice.

Arrived in my pile is:

Barry Eichengreen, Arnaud Mehl, and Livia Chitu, How Global Currencies Work: Past, Present, and Future.

For economic historians I can recommend Bruce M.S. Campbell, The Great Transition: Climate, Disease and Society in the Late-Medieval World.