Month: November 2017
Where is the typical eating the best?
Andrea Matranga emails me:
“You have to drop a pin somewhere. Thereafter, at each meal time, a random person living within 30km of that pin will be selected, and you will eat an exact copy of what he is eating. Breakfast, lunch, and dinner, for the rest of your life, a different random person, but always within 30km of that pin. Where do you drop it?”
I go for the three s’s: Singapore, Seoul, and Sicily. You wish to avoid junk food, while also making sure that cheap food can hit some of the peaks. Seoul is especially good for vegetables, Singapore for variety, Sicily for yummy!
What is your pick?
*The Wizard and the Prophet*
That is the new Charles C. Mann book, I pre-ordered long ago, here is the new Kirkus review:
A dual biography of two significant figures who “had little regard” for each other’s work but “were largely responsible for the creation of the basic intellectual blueprints that institutions around the world use today for understanding our environmental dilemmas.”
A thick book featuring two scientists unknown to most readers is a tough sell, but bestselling journalist and historian Mann (1493: Uncovering the New World Columbus Created, 2011, etc.), a correspondent for the Atlantic, Science, and Wired, turns in his usual masterful performance. Nobel Prize–winning agronomist Norman Borlaug (1914-2009) developed high-yield wheat varieties and championed agricultural techniques that led to the “Green Revolution,” vastly increasing world food production. Ornithologist William Vogt (1902-1968) studied the relationship between resources and population and wrote the 1948 bestseller Road to Survival, a founding document of modern environmentalism in which the author maintains that current trends will lead to overpopulation and mass hunger. Borlaug and Vogt represent two sides of a centurylong dispute between what Mann calls “wizards,” who believe that science will allow humans to continue prospering, and “prophets,” who predict disaster unless we accept that our planet’s resources are limited. Beginning with admiring biographies, the author moves on to the environmental challenges the two men symbolize. Agriculture will require a second green revolution by 2050 to feed an estimated 10 billion inhabitants. Only 1 percent of Earth’s water is fresh and accessible; three-quarters goes to agriculture, and shortages are already alarming. More than 1.2 billion people still lack electricity; whether to produce more or use less energy bitterly divides both sides. Neither denies that human activities are wreaking havoc with Earth’s climate. Mann’s most spectacular accomplishment is to take no sides. Readers will thrill to the wizards’ astounding advances and believe the prophets’ gloomy forecasts, and they will also discover that technological miracles produce nasty side effects and that self-sacrifice, as prophets urge, has proven contrary to human nature.
An insightful, highly significant account that makes no predictions but lays out the critical environmental problems already upon us.
You can pre-order here.
Thursday assorted links
2. Does going to Mars squash your brain?
3. High-tech mirror for cancer patients only works if you smile (a cruel tease or oppression of sorts?).
4. A useful uranium/HRC explainer.
5. Will China buy America’s top choir college?
6. Can you make a 10-year malt whiskey in two weeks?
7. Universities use shell corporations and tax blockers (NYT).
War dissolves customs
…the role of wars in dealing the coup de grace to lingering customs is quite remarkable. Contemporary observers noted this development without comment or simply attributed it directly to the catastrophe. But war was less a cause of change than a precipitant of changes already under way. Edgar Morin makes precisely this point when he writes that in the parish of Plodémet “the war of 1914 accelerated and amplified most of the processes set off in 1880-1900.” Like the Great Revolution in peasant parlance, the Great War became a symbolic dividing line between what once was and what is, so that informants in a survey used terms like jadis and avant de guerre interchangeably. Yet wars are not watersheds for customs, but difficult times in which people are forced to focus on essential matters and come to see things differently. Many festive customs were not necessarily suspended by the Great War. In the countryside, mourning was almost as universal as hardship; two years for parents, one for siblings. There were few pigs to slaughter, no festive family meals, no public festivities. And after the war there was the great influenza epidemic. By 1919 the old customs were no longer part of people’s lives. Some were restored to their prewar prominence, but many were quietly forgotten.
That is from Eugen Weber’s classic Peasants into Frenchmen: The Modernization of Rural France, 1870-1914.
Why isn’t the Indian caste system more protested in the United States?
About one-sixth of India is Dalits, or “Untouchables.” And while Western criticisms of caste segregation are a long-standing observation about India, I hardly hear serious complaints over the last two decades or so. In contrast, the apartheid system of South Africa met with demonstrations, boycotts, campus activism, frequent dialogue, and so on. Why don’t we see some modified version of the same for the Indian caste system? No matter how you compare its relative oppression to that of South Africa, it still seems like a massive system of unjust and opportunity-destroying segregation, and an efficiency-loser as well. Here are a few hypotheses, not intended as endorsements but rather speculations:
1. The caste system is simply too difficult for most Americans to understand, whereas apartheid could be represented more readily in what I dare not call simple black and white terms.
2. Most of the Indians who migrate to the United States are higher caste or at least middling caste, and they sway American opinions of India in a way that South African migrants to the USA never did.
3. Libertarians don’t want to focus on the caste system because it persists without active government support being the main driver. Democrats don’t want to focus on the caste system because Indian-Americans are often leading supporters and donors. It doesn’t feel like a Republican issue either. So who is there to push this one for domestic ideological reasons?
4. Talking about the caste system makes harder the (justified, I should add) program of raising the status of non-minority whites in America.
5. Talking about the caste system would focus light on caste-based discrimination in the United States, and distract attention from other domestic issues.
What else? Overall I find this a disappointing topic to ponder. Perhaps all politics, like envy, really is local after all.
I am indebted to Sujatha Gidla for a useful conversation on this topic. My formal Conversation with her will be up in a bit, I still recommend her book on caste, Ants Among Elephants: An Untouchable Family and the Making of Modern India.
Wednesday assorted links
1. Mark Koyama on whether Rome could have had an industrial revolution.
2. The peculiar political economy of reverse grandfathering.
3. Georgian baby boom no this is not Conor Sen bait.
4. Dan Klein talk on the genealogy of Adam Smith’s liberalism.
5. An older Bryan Caplan post: Blame the Republicans.
6. “For every hour you spend writing a screenplay, you spend 10 hours defending it.“
Room charges at the Ritz?
The Saudi government is aiming to confiscate cash and other assets worth as much as $800 billion in its broadening crackdown on alleged corruption among the kingdom’s elite, according to people familiar with the matter.
Several prominent businessmen are among those who have been arrested in the days since Saudi authorities launched the crackdown on Saturday, by detaining more than 60 princes, officials and other prominent Saudis, according to those people and others.
The country’s central bank, the Saudi Arabian Monetary Authority, said late Tuesday that it has frozen the bank accounts of “persons of interest” and said the move is “in response to the Attorney General’s request pending the legal cases against them.”
Here is the WSJ piece, note that many of these people are being held at the Ritz-Carlton hotel in Riyadh, now being used as a kind of high-class detention center.
Game of Theories: The Keynesians
Over the next few weeks our Principles of Macroeconomics class at MRUniversity will offer four “mini-classes” on theories of the business cycle. Today, we begin with the Keynesian theory.
What is the incidence of a tax on tuition waivers?
Here is some basic info, in 2011-2012 145,000 graduate students received tuition waivers. Monday I suggested such a tax is a bad idea, but who would bear the burden? Let’s say there are three parties, the universities, the graduate students, and third-party funders who support research and graduate students. Those third parties may be for instance Harvard donors or the National Science Foundation.
The short-run, first-order effect is that the grad students pay tax on their waivers and fewer of them pursue postgraduate studies. And if grad students are dead set on attending no matter what, they bear a relatively high burden of the tax.
That said, there is more to the story. Universities seek to attract graduate students for multiple reasons, with two possible options being “to enhance their prestige” or “to boost revenue,” or some mix of the two. It will matter.
To make up for (some of) the tax, and maintain the flow of students, universities will opt for some mix of lowering their tuition and increasing stipends and increasing non-taxed forms of aid, such as quality of office space or teaching opportunities for grad students. If universities seek to boost their prestige, they will be quite keen to keep up their “Q,” and not eager to lower Q, even with higher P as recompense on the revenue side. In that case a relatively high share of the burden will fall on universities.
In contrast, if universities pursue revenue, they are more willing to live with a lower Q if accompanied by a higher P. More of the burden will fall on students, because the accompanying enrollment-maintaining compensations from the universities will be accordingly lower.
I don’t know of a paper estimating the effects of taxing student fellowships, an innovation from the Reagan tax reforms of 1986. Can any of you lend a hand here? It didn’t seem to much slow the growth of graduate education as far as I can tell, so perhaps the burden there was born by universities.
Now enter the third parties. Donors might give more funds to universities to help make up for taxed tuition waivers. If you are a Harvard alum, for instance, you might wish to see Harvard carry on its great traditions with yet another generation of Ph.d economists who initially received tuition waivers. In other words, you want prestige as an alum and that requires keeping up the flow of Q, number of quality students, through the program. Donors will give more resources to the universities, or to the students (through other vehicles), to help make up for the new tax. In words, to the extent the donors covet prestige, more of the tax will fall on them. This is a tax on prestige-seeking!
My intuition is that the schools with a strong donor base will put in much more effort to raise money for graduate students, and they will meet with a fair degree of success. (Note that Harvard’s now-bigger fundraising campaign will to some extent distract the attention of the president and other senior leaders from other programmatic activities at Harvard; in the longer run that could harm Harvard stakeholders.) But schools below the top tier don’t so much have this option, so they will decline in resources and status relative to the very top schools. This is p classic case of how imposing new burdens leads to higher market concentration and cementing in the status of the elites, in this case the educational elites.
Throughout, I am assuming the universities cannot evade the tax outright, for instance by relabeling the categories of tuition and tuition waiver to avoid the bite altogether. But that is another possible equilibrium, if the details of the law so allow.
Who are the real fly-over people?
The state flown over the most actually is…Virginia.
Next in line are Maryland, North Carolina, and Pennsylvania.
In part this is because so many flights from the very busy Atlanta airport cross Virginia. Yet the airport with the most flights above Virginia is Toronto, including most of its flights to the Caribbean and Latin America.
Other than Hawaii, the least flown over state is — surprise — California. Hawaii is also the “most flown under” state, if you look at the opposite point on the globe. Most of the continental U.S. “opposites” into obscure parts of the Indian Ocean, but Hawaii opposites into Botswana.
That is all from Randall Munroe’s What If?: Serious Scientific Answers to Absurd and Hypothetical Questions.
Tuesday assorted links
Indiana Jones, Economist?!
In a stunningly original paper Gojko Barjamovic, Thomas Chaney, Kerem A. Coşar, and Ali Hortaçsu use the gravity model of trade to infer the location of lost cities from Bronze age Assyria! The simplest gravity model makes predictions about trade flows based on the sizes of cities and the distances between them. More complicated models add costs based on geographic barriers. The authors have data from ancient texts on trade flows between all the cities, they know the locations of some of the cities, and they know the geography of the region. Using this data they can invert the gravity model and, triangulating from the known cities, find the lost cities that would best “fit” the model. In other words, by assuming the model is true the authors can predict where the lost cities should be located. To test the idea the authors pretend that some known cities are lost and amazingly the model is able to accurately rediscover those cities.
Here from the paper is more detail. Each step is an accomplishment and the final product is something completely unexpected. Bravo!
Our first contribution is to extract systematic information on commercial linkages between cities from ancient texts. To do so, we leverage the fact that the ancient records we study can be transcribed into the Latin alphabet, allowing all texts to be digitized and parsed. We automatically isolate, across all records, the tablets which jointly mention at least two cities. We then systematically read those texts, which requires an intimate knowledge of the cuneiform script and Old Assyrian dialect of the ancient Akkadian language that the records are written in. Taking individual source context into account, this analysis relies exclusively upon a subset of records that explicitly refer to journeys between cities and distinguishes whether the specific journey was undertaken for the purpose of moving cargo, return journeys, or journeys undertaken for other reasons (legal, private, etc.).
Our second contribution is to estimate a structural gravity model of ancient trade. We build a simple Ricardian model of trade. Further imposing that bilateral trade frictions can be summarized by a power function of geographic distance, our model makes predictions on the number of transactions between city pairs, which is observed in our data. The model can be estimated solely on bilateral trade flows and on the geographic location of at least some cities.
Our third contribution is to use our structural gravity model to estimate the geographic location of lost cities. While some cities in which the Assyrian merchants traded have been located and excavated by historians and archaeologists, other cities mentioned in the records can not be definitively associated with a place on the map and are now lost to us. Analyzing the records for descriptions of trade and routes connecting the cities and the landscapes surrounding them, historians have developed qualitative conjectures about potential locations of several of these lost cities. We propose an alternative, quantitative method based on maximizing the fit of the gravity equation. As long as we have data on trade between known and lost cities, with sufficiently many known compared to lost cities, a structural gravity model is able to estimate the likely geographic coordinates of lost cities. Our framework not only provides point estimates for the location of lost cities, but also confidence regions around those point estimates. For a majority of the lost cities, our quantitative estimates come remarkably close to the qualitative conjectures produced by historians, corroborating both such historical models and our purely quantitative method. Moreover, in some cases where historians disagree on the likely location of a lost city, our quantitative method supports the conjecture of some historians and rejects that of others.
*The Square*
I didn’t like The Square at first, because I initially believed the filmmakers were taking the Swedes entirely seriously, and that it was pretentious windbaggery. Instead, the main theme is that the Swedes are incapable of dealing with others who do not share their premises. The film touches upon issues of immigration, gypsies, Muslims, terrorists, Putin, sexual liberation, contemporary art, YouTube, crucifixions over social media, how trust decays, and more. It’s not “alt right” or objectionably racist (the Swedes and indeed the Westerners more generally are the real target), but most of all it is critical of mainstream liberalism and its inability to see outwards. It won the Grand Prix at Cannes, but American critics have been quite indifferent, I would say oblivious. It is hard to think of a current movie with more brilliant scenes, or that is more appropriate for 2017. The deployment of Elisabeth Moss from The Handmaid’s Tale is mind-blowing.
Could the Republican tax plan lead to bipartisan results?
That is the topic of my latest Bloomberg column, here is one bit:
If the bill succeeds in limiting these deductions, a logic is set in motion for future tax reforms. Let’s say the Republicans eliminate tax deductions for new mortgages above $500,000. That would become a sign that the homeowner and real-estate lobbies are not as strong as we might have thought. The next time tax reform comes around, legislators will consider lowering the value of the deduction further yet. After all, the anti-deduction forces won before and, in the new battle, those who expect to have future mortgages above $500,000 don’t have a stake anymore.
In other words, any squeezed deduction will remain a vulnerable target for more squeezing, or even elimination, over successive reforms.
And then:
The exact treatment in the House plan seems to be in flux, but the top rates from President Barack Obama’s tax reform are likely to stick in some manner. There even seems to be a rateof 45.6 percent on some earners, in the range of $1.2 million to $1.6 million a year. That is a far cry from Jeb Bush’s call in the Republican presidential primaries for a 28 percent top marginal rate, in the tradition of President Ronald Reagan. Some well-off Californians could possibly face a total marginal rate, all taxes considered, of over 62 percent.
You will recall that the Republican Party had in the past pressed strongly for reductions in the capital-gains rates, but that isn’t on the agenda now. Take that as a sign that Obama’s boost to those rates will stick.
If you solve for the equilibrium over time, maybe maybe you will get:
If we look at the Republican plan as a whole, it appears to be a recipe for a future tax code with many fewer deductions, lower corporate rates, higher income tax rates for the wealthy and a continuing inheritance tax. I’m not saying that the exact mix will or should make everyone perfectly happy, but is this not what a bipartisan tax reform compromise might look like?
My fear, of course, is that those deductions will not survive the next stage of the process. Stay tuned…
Monday assorted links
1. Redux of my post “Was it wrong to hack and leak the Panama Papers,” just sub in “Paradise Papers.” p.s. yes, it was wrong, a violation of both law and privacy. Recommended.
2. Speculations on Iran, Saudi, Lebanon, Israel, uh-oh.
3. Where cooking brings economics alive (videos, East Anglia). In this video, the benefits of trade are explained through Hungarian goulash.
4. Brandeis calls off play about Lenny Bruce.
5. The Republican tax plan has “…a 20 percent excise tax on employee compensation above $1 million at all nonprofit entities.” Nor would the college bonds remain tax exempt.