Month: July 2018
Here is one bit from what is an excellent story with good material in every paragraph:
Mr. Teles makes sure to emphasize that his sympathy with the conservative legal movement here grows out of not his policy preferences, which lean left, but his belief in the importance of a “powerfully structured” constitutional system. “I don’t think the purpose of the Constitution is to get a government so small you can drown in a bathtub,” he says. Rather, it is to ensure the government “is democratically responsible.”
Mr. Teles believes that one of the most salient projects for the newly conservative Roberts Court will be to roll back administrative-state prerogatives. That could revitalize Congress and restore the constitutional structure, vindicating two longtime goals of the conservative legal movement. But he thinks this could also end up serving certain policy ends of progressives.
For the past several decades, Mr. Teles says, many progressive victories in the economic realm have been achieved through “administrative jujitsu”—difficult-to-understand maneuvers involving taxes, fees, mandates, regulations, and administrative directives. If courts start to block technocratic liberal plans for social reform because they violate the separation of powers, the left may find it easier to mobilize for pure redistribution as an alternative. Think of postal banking instead of CFPB regulation, or a carbon tax instead of the Obama administration’s Clean Power Plan, or a reduction in the Medicare eligibility age instead of ObamaCare subsidies and exchanges.
That might be good for democratic discourse, Mr. Teles suggests. “In some ways liberalism has been deformed” by relying on administrative agencies, “as opposed to making big arguments for big, encompassing social programs.” In the short term, though, conservative courts will probably prove “radicalizing for the left.” Democrats may fully jettison Clintonism and say: “We’re going straight for socialism.” Steeply redistributive programs enacted by legislatures would be “easier to defend in court,” even a conservative court, than unaccountable bureaucratic diktats.
Lesson one in our textbook chapter on managing incentives is “You get what you pay for (even when what you pay for is not exactly what you want)”. Case in point is the California cleanup of the 2017 wildfires, at $280,000 per site it’s four times more expensive than similar past cleanups and by far the costliest cleanup in CA history. The state emphasized speed and farmed the job out to the Army Corp of Engineers who hired contractors who were paid by the ton excavated! Paying by the ton created highly u̶n̶p̶r̶e̶d̶i̶c̶t̶a̶b̶l̶e̶ predictable consequences as KQED reports:
…Dan said he saw workers inflate their load weights with wet mud. Sonoma County Supervisor James Gore said he heard similar stories of subcontractors actually being directed to mix metal that should have been recycled into their loads to make them heavier.
“They [contractors] saw it as gold falling from the sky,” Dan said. “That is the biggest issue. They can’t pay tonnage on jobs like this and expect it to be done safely.”
…Krickl pointed to where his home used to stand. It’s a 6-foot deep depression that he affectionately called his “pond”.
That “pond” was created when contractors removed the foundation, soil and an entire concrete pad for Krickl’s garage, leaving behind a large hole.
Here’s my favorite part:
So many sites were over-excavated that the Governor’s Office of Emergency Services recently launched a new program to refill the holes left behind by Army Corps contractors. That’s estimated to cost another $3.5 million.
Hat tip: Carl D.
On average, patients get about 11 seconds to explain the reasons for their visit before they are interrupted by their doctors. Also, only one in three doctors provides their patients with adequate opportunity to describe their situation…
In just over one third of the time (36 per cent), patients were able to put their agendas first. But patients who did get the chance to list their ailments were still interrupted seven out of every ten times, on average within 11 seconds of them starting to speak. In this study, patients who were not interrupted completed their opening statements within about six seconds.
Now solve for the telemedicine equilibrium.
My wife and I are the proud (and exhausted) parents of two young sons, and we live in Falls Church, Virginia. Our oldest is “two half” and will be starting a “cooperative” preschool down the street this September. That means we volunteer in his classroom and help run the school—charity auction, field trip transportation, etc.—and in return we save on tuition. It’s a win-win.
Currently, co-oping parents in Virginia must undergo four hours of annual training before they can volunteer in the classroom—basic things like first aid and certain laws relevant to child care. As reported by the Washington Post, however, the Virginia Department of Social Services is considering regulations that would require co-oping parents instead to undergo approximately 30 hours of training—just to help in the classroom a few hours each month, completing daunting tasks like passing out snacks and sweeping the floors.
Here is more from Ilya Shapiro.
3. Photographer of death: “It is not known whether Hooper ever aided his subjects.” Warning: those images are tough viewing.
5. Markets in everything? (speculative)
There are those who still believe that the Thatcher government (1979-1990) rolled back the state and cut taxes. In fact Thatcherism involved an increase in the proportion of national income passing through the state and an increase in the tax burden. Only income taxes went down, with great publicity — the more hidden taxes increased. Value Added Tax, a form of purchase tax, was increased and was by comparison with income taxes regressive, though not quite as regressive as the additional taxes which were levied on alcohol and tobacco…the Thatcher government, and indeed subsequent ones, ended up spending more in absolute and even in relative terms on welfare taken overall.
That is from David Edgerton, The Rise and Fall of the British Nation: A Twentieth Century. Here are my previous posts on the book and on other work by Edgerton.
One of the surveillance industry’s recent — and much publicised — success stories took place at a pop concert in eastern China. While Jacky Cheung, a Hong Kong pop star (rebranded a “fugitive trapper” by the Chinese media) crooned, cameras were automatically sweeping the audience. Facial-recognition technology picked out four men accused of crimes — including a ticket scalper and a greengrocer accused of a Rmb110,000 potato scam in 2015. “Smiling as he approached his idol, he did not realise he had already been spotted,” Jiaxing police gloated in a social-media post.
Some of China’s leading facial-recognition players, for example, are now moving into gait recognition. Hanwang Technology was an early entrant in the field: it was forced to rethink its fingerprint-recognition technology when the Sars epidemic of 2005 left people in China terrified of physical contact. “We can see the human figure and his gait, so if his cap is pulled down [we] can still recognise him,” explains Liu Changping, president of the Beijing-based company. The Chinese authorities already have a decent video database to build on, he adds: “If [someone] was put in prison before, there’s video of him walking around.”
That is from Louis Lucas and Emily Feng from the FT, interesting throughout.
The president tempered his criticism by saying that Chairman Jerome Powell — his own appointee — is a “very good man.” He also stopped short of directly calling on the Fed to stop raising interest rates.
“I’m not thrilled,” he said. “Because we go up and every time you go up they want to raise rates again. I don’t really — I am not happy about it. But at the same time, I’m letting them do what they feel is best.”
Here is the story.
It is probably best for the Fed to simply pretend he did not say this. Trying to respond simply escalates the dispute and risks a repeat comment. That said, the Fed may make its future plans concerning interest rates hazier, thereby offering less forward guidance. That will give Trump less of a target in the short run, and furthermore “the market,” with fuzzier expectations to begin with, won’t be able to estimate whether the Fed was swayed by Trump or not.
In any case, the end result will be a modest increase in economic uncertainty.
I would stress, however, that we do not have a politically independent Fed to begin with. Such an arrangement is impossible in a democracy, given that current institutional protections for the Fed always can be taken away by Congress and the president. What we do have is bounds for independence, and those bounds just narrowed, and not for the better. If I were going to narrow the political independence of the Fed (and I am not advocating this), interest rates are not even the correct variable to choose. Why not some measure of how much the Fed is aiding the economy in a downturn? Interest rates may or may not be the most powerful tool there.
The White House itself is trying to pretend the event didn’t happen:
Shortly afterward, the White House issued a statement saying Trump’s comments were merely a “reiteration” of his “long-held positions,” and that his “views on interest rates are well known.”
“Of course the President respects the independence of the Fed,” it said. “He is not interfering with Fed policy decisions.“
And here is another recent remark by Trump, or was it?
Damian Ruck, the study’s lead researcher in the University of Bristol Medical School: Population Health Sciences, said: “Our findings show that secularisation precedes economic development and not the other way around. However, we suspect the relationship is not directly causal. We noticed that secularisation only leads to economic development when it is accompanied by a greater respect for individual rights.
“Very often secularisation is indeed accompanied by a greater tolerance of homosexuality, abortion, divorce etc. But that isn’t to say that religious countries can’t become prosperous. Religious institutions need to find their own way of modernising and respecting the rights of individuals.”
Alex Bentley from the University of Tennessee, added: “Over the course of the 20th century, changes in importance of religious practices appear to have predicted changes in GDP across the world. This doesn’t necessarily mean that secularisation caused economic development, since both changes could have been caused by some third factor with different time lags, but at least we can rule out economic growth as the cause of secularisation in the past.”
Here is my Bloomberg column on that topic. Excerpt:
“But if Trump were in Putin’s pocket, why would he be so nice to him in public? Wouldn’t a real KGB pawn keep a proper distance and play a subtler game?”
…Then there is the “hiding in plain sight” theory. If you know you did something wrong, and people are searching everywhere for evidence of it, then you also know they will eventually find it. So you might as well put it somewhere obvious. For one thing, it might take them longer to look in the middle of the room, so to speak. And when they do find the incriminating evidence, you can argue that it can’t be that bad because you never tried to hide it.
But that hypothesis doesn’t work either. Trump’s embrace of Putin hasn’t exactly put people off the scent, for one. And if Robert Mueller’s team does present serious evidence of Trump-Russia collusion, an “I was open about our friendship at that press conference” probably won’t serve as a workable defense.
p.s. probably not.
5. “They also revealed that the eventual decision about who should leave the cave first was not based on strength, but decided by the boys themselves. It was based on who lived furthest away from the cave and therefore would have the longest cycle back home.” Link here.
6. Lawn average is over (WSJ).
In a study published on Thursday in the journal Science, investigators at the University of Minnesota reported that mice and rats were just as likely as humans to be influenced by sunk costs.
The more time they invested in waiting for a reward — in the case of the rodents, flavored pellets; in the case of the humans, entertaining videos — the less likely they were to quit the pursuit before the delay ended.
“Whatever is going on in the humans is also going on in the nonhuman animals,” said A. David Redish, a professor of neuroscience at the University of Minnesota and an author of the study.
We found that the sunk cost effect was lower in the ASD [autism spectrum disorder] group than in the control group.
Here are previous MR posts on sunk costs.
Obviously his talents in crypto and programming are well-known, but he is also a first-rate thinker on both economics and what you broadly might call sociology. You could take away the crypto contributions altogether, and he still would be one of the very smartest people I have met. Here is the audio and transcript. The CWT team summarized it as follows:
Tyler sat down with Vitalik to discuss the many things he’s thinking about and working on, including the nascent field of cryptoeconomics, the best analogy for understanding the blockchain, his desire for more social science fiction, why belief in progress is our most useful delusion, best places to visit in time and space, how he picks up languages, why centralization’s not all bad, the best ways to value crypto assets, whether P = NP, and much more.
Here is one excerpt:
COWEN: If you could go back into the distant past for a year, a time and place of your choosing, you have the linguistic skills and immunity against disease to the extent you need it, maybe some money in your pocket, where would you pick to satisfy your own curiosity?
BUTERIN: Where would I pick? To do what? To spend a year there, or . . . ?
COWEN: Spend a year as a “tourist.” You could pick ancient Athens or preconquest Mexico or medieval Russia. It’s a kind of social science fiction, right?
BUTERIN: Yeah, totally. Let’s see. Possibly first year of World War II — obviously, one of those areas that’s close to it but still reasonably safe from it…
Basically, experience more of what human behavior and what collective human behavior would look like once you pushed humans further into extremes, and people aren’t as comfortable as they are today.
I started the whole dialogue with this:
I went back and I reread all of the papers on your home page. I found it quite striking that there were two very important economics results, one based on menu costs associated with the name of Greg Mankiw. Another is a paper on the indeterminacy of monetary equilibrium associated with Fischer Black.
These are famous papers. On your own, you appear to rediscover these results without knowing about the papers at all. So how would you describe how you teach yourself economics?
Highly recommended, whether or not you understand blockchain. Oh, and there is this:
COWEN: If you had to explain blockchain to a very smart person from 40 years ago, who knew computers but had no idea of crypto, what would be the best short explanation you could give them, basically, for what you do?
BUTERIN: Sure. One of the analogies I keep going back to is this idea of a “world computer.” The idea, basically, is that a blockchain, as a whole, functions like a computer. It has a hard drive, and on that hard drive, it stores what all the accounts are.
It stores what the code of all the smart contracts is, what the memory of all these smart contracts is. It accepts incoming instructions — and these incoming instructions are signed transactions sent by a bunch of different users — and processes them according to a set of rules.
Wealthier countries allocate a greater proportion of their workers to science and engineering, fields which produce ideas that often benefit everyone. This is one reason why we all gain when other countries become rich. It’s not just the number of scientists and engineers that matters, however. In a clever paper, Agarwal and Gaule demonstrate that equally talented people are more productive in wealthier countries.
Agarwal and Gaule collect the scores of thousands of teenagers who entered the International Math Olympiad between 1981 and 2000 and they follow their careers. Every additional point earned at the Olympiad increases the likelihood that a participant will later earn a math PhD, be heavily cited, even earn a Fields medal. But Olympians from poorer countries are less likely to contribute to the mathematical frontier than equally talented teens from richer countries. It could be that smart teens from poorer countries are less likely to pursue a math career–and that could well be optimal–but Agarwal and Gaule find that many of the talented kids from poorer countries simply disappear off the world’s radar. Their talent is wasted.
The post-Olympiad loss is not the largest loss. Most of the potentially great mathematicians from poorer countries are lost to the world long before the opportunity to participate in an Olympiad. But it is frustrating that even after talent has been identified, it does not always bloom. We are, however, starting to do better.
You can see from the graph that upper-middle income countries are as good as turning their talent into results as high-income countries. Agarwal and Gaule also find some evidence that the low-income penalty is diminishing over time.
As incomes increase around the world it’s as if the entire world’s processing power is coming online for the first time in human history. That, at least, is one reason for optimism.
Hat tip: Floridan Ederer.