Month: November 2017
Dina Wadia and the Partition
Muhammad Ali Jinnah was nothing if not complicated. Jinnah, an alcohol-drinking, pork-eating, English-loving barrister, was the founder of the Islamic Republic of Pakistan. Yesterday, his only child Dina Wadia died and that too is complicated.
Dina Wadia was the daughter of Jinnah and his Parsi wife Rattanbai Petit whom he proposed to at 16 and married at 18 when he was 42. Rattanbai was the daughter of one of Jinnah’s friends, who never forgave him. Jinnah and Petit’s daughter, Dina, was born in 1919 shortly after their marriage. Rattanbai died only ten years later.
Dina herself married young, to the Parsi Neville Wadia whose successful family-business went back to the days of the East India Company. But Jinnah was furious that she had married outside the faith telling her “There are millions of Muslim boys in India,” and she could marry any one of them she chose. Dina promptly replied, “Father, there were millions of Muslim girls in India. Why did you not marry one of them?” Jinnah did not attend the wedding.
When India’s partition came, Jinnah’s family was partitioned as well. Jinnah went to Pakistan and his daughter stayed in India, never to see him again. Her son, Nusli Wadia, became one of India’s richest men. Thus the descendants of the founder of the Islamic Republic of Pakistan are successful Indian Parsis. The last twist perhaps in Jinnah’s complicated tale.
In her later years, Dina Wadia moved to New York where she died yesterday.
What I’ve been reading
1. Andrea Dworkin, Heartbreak: The Political Memoir of a Feminist Militant. Published in 2002, this sure sounds like 2017. Your mileage may vary, but it has a strong, unique voice and it looks more relevant than ever. It reminds me of the in-your-face directness of Amiri Baraka, another underrated figure who ought to be rediscovered just about now. If you are going to read only one Dworkin book, this is the one.
2. Gordon S. Wood, Friends Divided: John Adams and Thomas Jefferson. This is a high quality work, as you might expect. Still, I am numb from the oversupply of material on the Founding Fathers, and so I could read no more than a third of this one. If only it had come out twenty years ago.
3. George William Van Cleve, We Have Not a Government: The Articles of Confederation and the Road to the Constitution. The best book I’ve read on the Articles period, most of all a revision of Merrill Jensen. Van Cleve details clearly and analytically why the Articles did a poor job on fiscal, trade, foreign policy, and Western settlement issues.
4. Augustine, Confessions, new translation by Sarah Ruden. This is the most readable translation I have encountered. While I cannot vouch for the accuracy, Ruden has very strong qualifications as a classical translator.
5. c n lester, Trans Like Me: a journey for all us. A memoir of sorts, might this be the best introductory book on its topic? It is already out in the UK, not until June in the US.
Jason Brennan, Bas van der Vossen, and David Schmidtz, editors, The Routledge Handbook of Libertarianism, my blurb reads: “This is the best contemporary anthology introducing the reader to the basics of libertarianism.”
Joshua Clark Davis, From Head Shops to Whole Foods: The Rise and Fall of Activist Entrepreneurs. Covers African American bookstores, head shops, businesses in the women’s movement, and natural foods stores, a good revision of Milton Friedman on the social responsibility of business.
The new GOP tax bill
As I’m on the road, I’ve only read summaries. Kevin Drum has an excellent post on how the distributional implications harm the blue states, follow-up here. Scott Sumner says better than expected. Kevin writes:
The Republican tax bill eliminates deductions for a bunch of odd things: tuition debt, mortgage interest, alimony, medical expenses, state and local taxes, gambling losses, tax prep expenses, moving expenses, and a few others.
Bravo! I’m actually impressed, noting that many of these deductions are limited rather than eliminated as I understand matters. Furthermore, in various embedded ways the plan discourages the itemizing of deductions, which in turn limits the value of remaining deductions for many taxpayers, but in a politically subtle way. The bill even nips at the endowment income for well-off universities, though I don’t favor that change, as it may harm innovation.
The plan as a whole is a reckless expansion of the deficit, but if that is going to happen anyway this is one of the better ways to do it. In fact, we should tax companies less and homes/land more. Why? First, for behavioral reasons homeowners are insufficiently diversified; the tax code should not encourage that. Second, this bill will (modestly) lower land, home, and rental values in the fancy cities on the coasts, a net gain at least for non-itemizers perhaps (caveat: I don’t know everything that is in the bill). Third, big, fancy homes on big plots of land are not that “green,” and furthermore residence size seems to bring a lot of hedonic adaptation. Fourth, there are more likely increasing returns across companies than across expensive homes. Fifth, American equities seem to bring a long-run return of 5-7% and real estate zero percent. More of the former please! Companies > homes.
I believe that with further examination I could find many ugly and stupid aspects of this bill, and many politically craven decisions. And again, I don’t favor increasing the debt. But holding the size of the debt constant, let’s face it — this is a step in the right direction.
Regulatory progress in Arlington, Virginia?
Arlington County is considering whether to relax regulations that allow homeowners to legally rent to long-term tenants on a portion of their property, after only 20 homeowners out of 28,000 eligible successfully obtained licenses over the past eight years.
At a time when people increasingly are sharing cars, bicycles and workspaces, and are renting out rooms by the night on Airbnb, the idea of providing a legal way for residents to safely lease their garage or basement room to a young adult — or anyone else — seemed like a no-brainer.
But the detailed regulations, written in part to mollify wary neighbors, apparently stopped the practice from taking off, county officials said.
That is from Patricia Sullivan at the Washington Post. As a frontier for further deregulation, this does not seem to be a hopeless cause:
California’s legislature passed bills in 2016 that made it easier for local communities to create ADUs, prompting cities throughout the state to adopt ordinances that are designed to be more user-friendly.
Even California.
Thursday assorted links
1. “Audible’s new feature lets you skip right to the most erotic part of romance novels…“Take me to the good part” lets listeners jump to the juicy sections of 110 romance titles in the company’s collection. These include beloved tropes like a couple’s first meeting, their innuendo-heavy banter, a marriage proposal, and, of course, sex scenes.” Link here.
2. What Southeast Asia would look like if every proposed railway were built. And more information here.
3. Profile of Jay Powell: “He doesn’t drink much, plays golf and the guitar, and has an odd ability to repeat people’s sentences backward to them, a quirk former colleagues say is a reminder of his smarts — and how closely he listens.”
4. One of my favorite Ben Thompson pieces, this one on Tech goes to Washington.
5. Eugenics 2.0? How far are we?
Corporate Taxation and Capital Taxation
In the debate over corporate taxation it’s often assumed that corporate taxes are equivalent to taxes on capital. But corporations are only a minority of firms. Most of the firms in the pass-through sector are small partnerships but by no means are all pass-through firms small. Indeed, corporate profits are less than half of all business profits as shown by the following graph from the Tax Foundation.
What this means is that a cut in the income tax is also a cut in the capital tax. Indeed, a cut in the top marginal income tax rate is a bigger cut in capital taxation than a cut in the top corporate tax rate. (Unfortunately, it now looks like the top marginal rate on income won’t be cut.)
Since pass through businesses can be large, some people have suggested that these businesses should be taxed like corporations. That would be a mistake. An ideal tax system should be neutral as to organizational form. So, if anything, corporate taxation should be moved more in the direction of pass-through taxation.
Hat tip: Lunch with Steve Pearlstein, Bryan Caplan and Tyler.
*Red Mars* by Kim Stanley Robinson, a review (modest general spoilers)
What if you had a closed, isolated society of 100 people, half male, half female? Russian and American. Politics depends on the family and on sexual relations, and since you can’t predict how the sex will evolve, you can’t predict the politics either. That lowers stability, but terraforming will bring you some dynamic TFP, introducing additional chaos. Put it all on Mars. Then let the plot meander but remain interesting, and introduce a transformational religious cult figure.
I look forward to reading the sequel.
Don’t blame Facebook for our own failings
That is the theme of my latest column for Bloomberg, here is one excerpt:
Critics may argue that Facebook isn’t so much like a phone company because it uses complex algorithms to decide what to place before our eyes. That’s true, but would the critics be much happier if ads and posts on Facebook simply appeared in linear, chronological order? And on the question of algorithms, consider an analogy with a traditional publisher: Plenty of mainstream companies have published and promoted the works of Marx, Stalin, Hitler and Mao. The “algorithm” behind these decisions was whether these works would find an audience and bring in profit. The ideologies behind those works, of course, led to revolutions and the massacres of many millions, plus the infiltration of Western governments by communist sympathizers and delusional beliefs for several generations of Western intellectuals. Few of us are happy about those outcomes, yet for the most part we don’t blame printing presses, publishers’ quest for profit or their “algorithms.” We instead focus on the bad ideas themselves, and how we might persuade individuals otherwise.
You could think of Facebook as akin to a delivery truck, noting that such trucks often carry guns, abused medications, junk food and bad books, among other evils. If Russian conspirators order you flowers for Valentine’s Day, perhaps in appreciation of your pro-Putin tweets, the delivery truck will bring those too.
Here is good analysis by Jacob Sullum. Here you can view some of the offending ads, weak tea says I. Vyacheslav Mikhailovich Molotov would have been ashamed.
Overall, one reason Facebook is such a scapegoat is because so many individuals don’t want to admit that Trump simply won the election. To the extent you can pin his victory on some kind of conspiracy or wrongdoing, that gives you something to rail against, something to blame, and also a way to feel better about parts of your country.
All the world in New York City
Two exhibits in Manhattan, taken collectively, offer what might be this year’s most rewarding aesthetic and learning experience. I stated a while ago that for the first time in a long time (possibly ever), America has a peer country in China. The contemporary Chinese art overview in the Guggenheim is the single best demonstration of this point I have seen, and the show is further evidence that China already may have surpassed the United States in the visual arts. Read this NYT review: “…a powerful, unmissable event, and an invaluable window onto a world of contemporary art, politics and history that we still, decades on, barely know.” This is not complacent art, and some of it was so disturbing it had to be removed before the show opened (NB: the Chinese were not the ones censoring).
At the still underrated Morgan Library, you will find Master Drawings from the Thaw Collection, in two large rooms. Are drawings and watercolors better than paintings? Per dollar spent, for sure. I cannot think of a better, more easily digestible survey of the brilliant visual intelligences behind the last few centuries of Western art. This NYT review also has quality visuals.
Dept. of Just Wait, central banker edition
Bank of Japan Governor Haruhiko Kuroda on Tuesday brushed off the notion that researchers can use artificial intelligence to analyze his facial expressions and predict changes in monetary policy.
Kuroda spoke in response to questions about two artificial intelligence researchers, one from Nomura Securities (8604.T) and the other from Microsoft (MSFT.O), who are using software to analyze split-second changes in Kuroda’s facial expressions at his post-meeting press conferences.
The study claims that at news conferences that preceded two recent major policy changes, Kuroda flashed brief signs of “anger” and “disgust”.
Here is the full story, via David Wessel.
My Conversation with Brink Lindsey and Steve Teles
This is an out-of-synch bonus episode, rushed out because I think their new, just-out book — The Captured Economy: How the Powerful Slow Down Growth, Enrich Themselves, and Increase Inequality — is so important. You will find the podcast here, lots of rapid fire back and forth.
Everyone wanted me to interview them together, but I said no, I would instead interview them separately and ask about 2/3 the same questions to see how their answers might hang together, or not. That is how co-authors should be treated! I also asked each what the other has for breakfast, and by the end each had confessed to several crimes, to avoid a longer sentence of course.
Here is the smallest of bits:
COWEN: Are higher levels of executive compensation part of the problem?
TELES: There you probably would get a different answer between me and Lindsey.
COWEN: That’s why I asked
Recommended, again here is the podcast (no transcript, we wanted to get this out right away).
Wednesday assorted links
1. Peter Leeson WTF video for his new book. And The Economist covers Peter on witch trials.
2. Who will be the next president of Harvard?
3. “Scientists have called for Kyrgyzstan’s only mummy to be immediately dug back up after the 1,500-year-old relic was taken from a museum and hastily reburied on the eve of a presidential election in a decision celebrated by self-professed psychics.” Link here. And: “In 2011, lawmakers ritually slaughtered seven sheep in parliament to exorcise “evil spirits”.” Recommended.
What were the problems in Yugoslavian socialism?
Here is a recent paper (PDF) by Leonard Kukić of LSE:
Beyond the recent past, and beyond the Soviet Union, we know little about the performance of Eastern European economies. This paper fills the knowledge void by analysing socialist Yugoslavia using a diagnostic tool that identifies the mechanisms that drive economic growth – business cycle accounting. The analysis provides novel findings. During the “Golden Age” of economic growth, total factor productivity became gradually more important in sustaining economic growth. Distorted labour incentives were a major constraint on growth since the mid-1960s, and explain the slowdown of the economy during the 1980s. Socialist growth was primarily handicapped by poor incentives to work, rather than by poor incentives to innovate or to imitate. In an attempt to liberalise the economy, economic power was delegated to the labour-managed firms. These firms were maximising income per worker, which hindered the ability of Yugoslavs to supply labour.
That is via the essential follow Pseudoerasmus.