Month: January 2018
Washington also seems to be full of economists. We have 10 economists for every one member of the clergy, whereas in New York City there are 15 members of the clergy for every economist.
That is the topic of my latest Bloomberg column, here is an excerpt:
Like it or not, this law is not going away — and there are some good reasons to have it. The U.S. has been the world leader in taking on corruption, and we shouldn’t give up that position without a fight. There has been a payoff, as other countries move in the American direction with tougher anti-bribery measures. Getting rid of the FCPA now would send the very worst possible message to the world. Furthermore, some aspects of the FCPA are useful in helping U.S. multinationals limit the demand for bribes, by claiming they are unable to comply for legal reasons.
Rather than junking the FCPA, we should consider reforming it, lowering its costs while simultaneously making it harder to use as an instrument of political retribution…
To improve the law, commentators have recommended adding a “willfulness” requirement for corporate criminal liability, limiting liabilities from the activities of subsidiaries or from previous acquisitions, clarifying exactly who counts as a “foreign official,” and more generally swinging the presumption back closer to innocence, especially for companies with active and responsible compliance programs. All of those changes could build in more safeguards for ambiguous cases and for companies that are basically engaged in honest business. Recently announced Department of Justice guidelines do take some steps in these directions, for instance by encouraging voluntary disclosure and remediation of infractions.
The column has plenty of information about how many companies violate FCPA — lots — and what is their chance of prosecution. We would have to make the penalties at least eight times stiffer to make compliance profit-maximizing, at least on average.
A few of you have been demanding this, here are those who come to mind, note that “influence” does not have to mean I agree with them. And I am sticking with the West, otherwise Uncle Xi wins hands down. In no particular order:
1. Jordan Peterson
2. Catherine Mackinnon
3. Ta-Nehisi Coates
4. Charles Murray
5. A composite alt-right thinker, mixing features of Curtis Yarvin, Steve Sailer, Steve Bannon, and a bunch of others.
In the fairly recent past, both Andrew Sullivan and Peter Singer would have been on this list, but not in 2018. I would cite Michel Houllebecq as a figure who is important, and relatively influential, but more important than influential and thus not in the top five. I am not sure if religious figures should qualify for this designation, for the time being I have not considered them. Obama has a good claim, but adding elected leaders only confuses the matter, relative to what people are asking me for.
One list I saw, which I can no longer find through Google, had on it Peterson, Cass Sunstein, and Samantha Powers, plus two other names I forget.
Arguably a tech person should be on the list, but neither Elon Musk nor Peter Thiel have much written output, nor is either representative of the tech world as a whole. Maybe a kind of composite tech CEO? Bill Gates is also a plausible pick, even though to many intellectuals his ideas seem to be quite mainstream. The mainstream, by definition, is highly influential!
An alternative list could be, again in no particular order:
1. Bill Gates
2. Mark Zuckerberg
3. Jeff Bezos
4. Peter Thiel
5. Brin and Page
6. Elon Musk
7. Jack Dorsey
How’s that? Better?
5. I love you Amazon but please don’t choose Fairfax County…Maryland is so nice! You don’t need to be that close to me to send all those books.
Here is the video of my 30-minute debate — and yes it was a debate not really a dialogue — with Luigi Zingales on this question (click through for the video). At the link is an associated transcript too, though the vigor of the back and forth was lots of fun.
In the movies I’ve seen people who try to get out of a traffic ticket by telling the police officer they made a donation to the policeman’s ball, but those were comedies. I had no idea that not only does this exist there are official cards. In fact, the police in New York are livid that the number of cards is being limited:
The city’s police-officers union is cracking down on the number of “get out of jail free” courtesy cards distributed to cops to give to family and friends.
Patrolmen’s Benevolent Association boss Pat Lynch slashed the maximum number of cards that could be issued to current cops from 30 to 20, and to retirees from 20 to 10, sources told The Post.
The cards are often used to wiggle out of minor trouble such as speeding tickets, the theory being that presenting one suggests you know someone in the NYPD.
The rank and file is livid.
“They are treating active members like s–t, and retired members even worse than s–t,” griped an NYPD cop who retired on disability. “All the cops I spoke to were . . . very disappointed they couldn’t hand them out as Christmas gifts.”
A Christmas gift of institutionalized corruption.
Here’s another article on these cards which just gets all the more stunning.
First, there are tiers of cards. Silver cards are the highest honor given to citizens. It’s almost universally honored by officers, and can also help save money on insurance. Gold PBA cards are only given to police officers and their families. You’d be hard-pressed finding a cop who won’t honor a gold card.
Gold and silver cards! It gets better. You can buy these cards on eBay. Here’s a gold New Jersey card on sale for $114. A silver “family member” shield goes for $299. Some of these are probably fake. The gold and silver are rare but remember, cops get 20 to 30 regular cards so you can see why they might be upset at losing them.
The regular cards have become more common as NYC hires more police. The union may in fact be trying to bump up its monopoly profit by restricting supply.
The cards don’t just go to family members. The rot is deep:
Union officials say the cards are also public relations tools and tokens of appreciation handed out to politicians, judges, lawyers, businessmen, civil service workers and members of the news media.
A retired police officer on Quora explains how the privilege is enforced:
The officer who is presented with one of these cards will normally tell the violator to be more careful, give the card back, and send them on their way.
…The other option is potentially more perilous. The enforcement officer can issue the ticket or make the arrest in spite of the courtesy card. This is called “writing over the card.” There is a chance that the officer who issued the card will understand why the enforcement officer did what he did, and nothing will come of it. However, it is equally possible that the enforcement officer’s zeal will not be appreciated, and the enforcement officer will come to work one day to find his locker has been moved to the parking lot and filled with dog excrement.
He’s not kidding. Here is what seems like a real police officer on a cop chat room (from Mimesis law)
It’s important for me to get in touch with shield [omitted] and ask him why he felt it necessary to say “I’m not even going to look at that” to my PBA card and proceed [sic] to write a speeding ticket on the Bronx River Parkway yesterday afternoon to my fukking WIFE!!!!!!!!!!!!
I’ll show him the courtesy he so sorely lacks by not posting his name on a public forum.
Any help would be appreciated. Please inbox me.
I will find you.
I find these cards especially odious as more and more police are funding themselves through fines and forfeitures. Discriminatory taxation increases the tax rate. It’s one rule for the ruler and another for the ruled.
The cards are not a secret but I agree with my colleague Mark Koyama who remarked:
Sometimes you find out something about the country you live in that makes it appear little better than a corrupt, tinpot, banana republic.
We have always known that trade and technology shocks destroy some jobs and create others with the change in equilibrium typically being zero net job losses and a net positive effect on wages. Increases in imports, for example, should be matched sooner or later by increases in exports as foreigners aren’t sending us goods for nothing. The China Shock paper of Autor, Dorn and Hanson seemed to suggest that the job losses were not matched by job gains. The paper’s clever identification strategy, however, was much stronger on identifying the losses than the offsetting gains (see e.g. Scott Sumner.)
New research by Feenstra, Ma and Xu and Feenstra and Sasahara (summarized here) shows, that as theory predicts, there were offsetting gains. Feenstra, Ma and Xu use similar techniques to ADH and find big offsetting increases in exports:
Our empirical results show important job gains due to US export expansion. We find that although imports from China reduce jobs, the global export expansion of US products creates a considerable number of jobs. Based on the industry-level estimation, our results show that on balance over the entire 1991-2007 or 1991-2011 periods, job gains due to changes in US global exports largely offset job losses due to China’s imports, resulting in about 300,000 to 400,000 job losses in net. Estimation at the commuting zone level generate even bigger job creation effects: in net, global export expansion substantially offsets the job losses due to imports from China, resulting in about 200,000 net job losses over the period 1991-2007, and a roughly balanced net effect if we extend the analysis to 1991-2011.
(Note that the net job loss figures are rounding error in an economy where there are millions of hires and separations every month).
Using a second, quite different, approach based on input-output calculations they find similar results in manufacturing but an even bigger effect on services:
We find that the growth in US exports created demand for 2 million manufacturing jobs, 500,000 resource-sector jobs, and a remarkable 4.1 million jobs in services, totalling 6.6 million. The positive job creation effect of exports in the manufacturing sector, 2 million, is quantitatively similar to the result in Feenstra et al. (2017), in which 1.9 million jobs were created by US exports from the instrumental-variable regression approach. On the import side, our analysis shows that manufacturing imports from China reduced demand for US jobs by 1.8-2.0 million, which is similar to the result in Autor et al. (2016), who finds a decline of 2.0 million jobs due to imports from China.
The authors conclude:
Our results fit the textbook story that job opportunities in exports make up for jobs lost in import-competing industries, or nearly so. Once we consider the export side, the negative employment effect of trade is much smaller than is implied in the previous literature. Although our analysis finds net job losses in the manufacturing sector for the US, there are remarkable job gains in services, suggesting that international trade has an impact on the labour market according to comparative advantage. The US has comparative advantages in services, so that overall trade led to higher employment through the increased demand for service jobs.
Galesic, M., Barkoczi, D., & Katsikopoulos, K. (2018). Smaller crowds outperform larger crowds and individuals in realistic task conditions. Decision, 5(1), 1-15.
Decisions about political, economic, legal, and health issues are often made by simple majority voting in groups that rarely exceed 30–40 members and are typically much smaller. Given that wisdom is usually attributed to large crowds, shouldn’t committees be larger? In many real-life situations, expert groups encounter a number of different tasks. Most are easy, with average individual accuracy being above chance, but some are surprisingly difficult, with most group members being wrong. Examples are elections with surprising outcomes, sudden turns in financial trends, or tricky knowledge questions. Most of the time, groups cannot predict in advance whether the next task will be easy or difficult. We show that under these circumstances moderately sized groups, whose members are selected randomly from a larger crowd, can achieve higher average accuracy across all tasks than either larger groups or individuals. This happens because an increase in group size can lead to a decrease in group accuracy for difficult tasks that is larger than the corresponding increase in accuracy for easy tasks. We derive this non-monotonic relationship between group size and accuracy from the Condorcet jury theorem and use simulations and further analyses to show that it holds under a variety of assumptions. We further show that situations favoring moderately sized groups occur in a variety of real-life situations including political, medical, and financial decisions and general knowledge tests. These results have implications for the design of decision-making bodies at all levels of policy.
I have heard a number of CEOs and directors claim that organizations change fundamentally once they start exceeding fifty employees, a number only slightly above the cited optimum here. But if only for reasons of sales and marketing and branding, it does in fact make sense, on net, for many institutions to exceed that number of employees.
Peterson’s 12 rules
Rule 1 Stand up straight with your shoulders back
Rule 2 Treat yourself like you would someone you are responsible for helping
Rule 3 Make friends with people who want the best for you
Rule 4 Compare yourself with who you were yesterday, not with who someone else is today
Rule 5 Do not let your children do anything that makes you dislike them
Rule 6 Set your house in perfect order before you criticise the world
Rule 7 Pursue what is meaningful (not what is expedient)
Rule 8 Tell the truth – or, at least, don’t lie
Rule 9 Assume that the person you are listening to might know something you don’t
Rule 10 Be precise in your speech
Rule 11 Do not bother children when they are skate-boarding
Rule 12 Pet a cat when you encounter one on the street
The government estimates that 10 percent of New Hampshire residents — about 130,000 people — are addicted to drugs or alcohol.
Here is much more from the NYT.
6. Ross Douthat on The Show So Far (NYT).
As I’ve already mentioned, the author is Ann Hulbert and the subtitle is The Hidden Lives and Lessons of America’s Child Prodigies. This is an excellent book, and so far I am overwhelmed by the high quality and quantity of books coming out this January (in comparison to last year’s near drought). You don”t have to care about prodigies per se, I would recommend this to anyone in Silicon Valley or finance who thinks about how to find and recruit talent, or anyone interested in the history of art, science, or technology.
I had not known that musician Henry Cowell was the protege of Thorstein Vebeln’s ex-wife, Ellen Veblen. Here is just one bit about Henry:
He was in his element. As Clarissa noted, Henry was highly receptive without being unduly impressionable. “Always he has worked mostly alone,” she observed, “browsing for information, when he felt in need of it, whenever a door opened.”
As a child, he quickly outgrew his town’s public library, and was suspected of skimming the books he claimed to have read. He could give a clear and detailed summary of each. He was born in rural Menlo Park, formal schooling never really worked for him, and Irish music remained a touchstone of his composing, albeit supplemented with tone clusters, extreme dissonance, and a variety of rhythmic innovations. To many people at the time, his music sounded like noise.
Here is a short YouTube clip of Cowell playing the piano.
It’s not a “this puts all the pieces together for you book,” but still I am finding it engrossing. I take the overall message to be a) mentorship is very important for prodigies, and b) most mentors have no idea what they are doing.
Once they moved to Indiana University and started the workshop, they were able to return to the initial idea. Initially, Elinor Ostrom was hired for teaching “Introduction to American Government” on Tuesdays, Thursdays, and Saturdays at 7:30 a.m. “How could I say no?” she joked later.
That is from Vlad Tarko’s new and very useful biography of Ostrom. Of course in 2009 she was both the first political scientist and the first woman to win the Nobel Prize in economics.
2. “Interestingly, some prodigies may actually do better when their eccentricities are seen by loving adults as disabilities first — and talents second.” Here is a good NYT review of Ann Hulbert’s Off the Charts: The Hidden Lives and Lessons of America’s Child Prodigies.
3. Do lower class people have more wisdom for resolving conflicts? (speculative)
4. “More than 20 per cent of Japan, an area the size of Denmark, has no readily contactable owner. By 2040 the projected area is bigger than the Republic of Ireland — a spreading nightmare for government, construction and the property industry, because if nobody knows who owns the land then nobody, except for flytippers, can use it. Forestry roads go unmaintained, solar farms are left unbuilt and taxes uncollected. According to a private sector working group on unowned land, by 2040 the annual economic cost will rise from ¥180bn ($1.6bn) to ¥310bn.” That is Robin Harding from the FT.