Month: October 2018

Why is the news cycle getting shorter and shorter?

Remember the anonymous Op-Ed from within the Trump administration?  We’re hardly talking about it any more, and indeed so many “major” stories from just a few weeks ago seem to be slipping from our grasp.  Why?

The naïve hypothesis is that we keep turning our attention to the very latest events because so much is happening so quickly. But there have been periods in the past when a lot was happening, such as the financial crisis of a decade ago, and the news cycle seemed “stickier” then. So this can’t be the entire story.

An alternate theory is that there are actually very few “true events” happening, but there is lots of froth on the surface. Maybe there is only one “big event” happening, one major transformation underway: a change in the willingness of American political leaders to break with previous norms. If the change is mostly in one direction, then maybe it’s enough to debate only the most recent news.

That may sound abstract, so here is a concrete analogy. Let’s say you are on a sinking ship. You might focus more on the current water level than on where it was in the recent past, except maybe to help you estimate the rate of flooding. In more technical terms, talking about the event of the day is a “sufficient statistic” for talking about the last two years.

The shorter news cycle also may result from greater political polarization. If people don’t frame events in a common way, then a discussion of those events might not last very long. Conversation will return very quickly to the underlying differences in worldviews, and discussion of any particular event will get trampled by a much larger philosophical debate. It does seem like we have been repeating the same general arguments about Trump, populism, gender and governing philosophy for some time now, and we are not about to stop.

Possibly the shorter news cycles are also a result of greater general disillusionment with politics and especially with elites, a theme outlined in Martin Gurri’s forthcoming book “The Revolt of the Public.” The really fun stuff might instead be watching mixed martial arts, debating social norms about gender and browsing the Instagram feeds of your friends.

Finally, maybe we’re all just better at digesting news events more quickly. Perhaps every possible observation, insight and argument gets put on Facebook and Twitter within a day or two, and much of this material is archived. What’s the point of repeating these debates every few months?

That is from my latest Bloomberg piece.  I am thankful to Anecdotal for a related point and insight.

Brazil fact of the day

Just 8 percent of Brazilians told the Pew Research Center in 2017 that representative democracy is a “very good” form of government – the lowest of all 38 countries surveyed.

Most of the article is about what we can expect from Jair Bolsonaro, sometimes called “the Brazilian Trump,” who is very likely to be Brazil’s next president, recommended and interesting throughout.

The funnel of human experience

So humanity in aggregate has spent about ten times as long worshiping the Greek gods as we’ve spent watching Netflix.

We’ve spent another ten times as long having sex as we’ve spent worshiping the Greek gods.

And we’ve spent ten times as long drinking coffee as we’ve spent having sex.

Furthermore:

It turns out that if you add up all these years, 50% of human experience has happened after 1309 AD. 15% of all experience has been experienced by people who are alive right now.

This should cheer you all up, yes indeed there is no great stagnation no wonder the rate of productivity growth has been so high:

FHI reports that 90% of PhDs that have ever lived are alive right now.

That is from eukaryote at LessWrong.  Hat tip goes to the always-excellent The Browser.

My Conversation with Paul Krugman

Here is the audio and transcript, here is part of the summary:

Tyler sat down with Krugman at his office in New York to discuss what’s grabbing him at the moment, including antitrust, Supreme Court term limits, the best ways to fight inequality, why he’s a YIMBY, inflation targets, congestion taxes, trade (both global and interstellar), his favorite living science fiction writer, immigration policy, how to write well for a smart audience, new directions for economic research, and more.

Here is one excerpt:

COWEN: In your view, how well run is New York City as an entity?

KRUGMAN: Not very. Compared to what? Actually, I like de Blasio. I actually think he’s done some really good things. What he’s done on education, and even on affordable housing, is actually quite substantial. But the city is so big and the problems are so large that people may not get it.

I will say, it is crazy that you have a city that is so dependent on public transportation, and yet the public transportation is not actually under the city’s control and has clearly been massively neglected. I don’t suffer the full woes of the subway, but I suffer some of them, even myself.

The city could be run better than it is, but it’s certainly not among the worst-managed political entities in the United States, let alone in the world.

And:

COWEN: Will there ever be interstellar trade in intellectual property? You send your technology to a planet far away. It arrives much later, of course. Or you trade Beethoven to the aliens in return for a transporter beam? Can this work? You’ve written a paper that seems to indicate it can work.

KRUGMAN: I wrote a paper on the theory of interstellar trade when I was an unhappy assistant professor. Are there any happy assistant professors? [laughs] I was just blowing off steam. But it’s an interesting question.

COWEN: It could become your most important paper, right? [laughs]

KRUGMAN: We could imagine that there would be some way. We’d have to find somebody to trade with, although it’s the kind of thing — if you try to imagine interstellar trade for real in intellectual property — it’s probably the kind of thing that would be more like government-to-government exchanges.

It sounds like it would be really, really hard, although some science fiction writers are imagining that something like Bitcoin would make it possible to do these long-range . . . I don’t think something like Bitcoin is even going to work here.

Krugman also gives his opinions on Star Wars and Star Trek and Big Tech and many other matters.  Interesting throughout…

What Do We Learn from Amazon and the Minimum Wage?

Amazon’s widely touted increase in its minimum wage was accompanied by an ending of their monthly bonus plan, which often added 8% to a worker’s salary (16% during holiday season), and its stock share program which recently gave workers shares worth $3,725 at two years of employment. I’m reasonably confident that most workers will still benefit on net, simply because the labor market is tight, but it’s clear that the increase in the minimum wage was not as generous as it first appeared.

What lessons does this episode hold for minimum wage research? Amazon increased its wages voluntarily but suppose that the minimum wage had been increased by law. What would have happened? Clearly, Amazon would have, at the very least, eliminated their bonus plan and their stock share plan! In this situation, researchers examining employment data would discover that the increase in the minimum wage did not much lower employment. Such researchers might conclude that minimum wages don’t reduce employment much because the demand for labor is inelastic. The conclusion is correct but the reasoning is false. The correct conclusion and reasoning would be that the minimum wage didn’t reduce employment much because the minimum wage didn’t increase net wages much.

Amazon is a big and newsworthy employer so its actions have been closely monitored but in most cases we never know the myriad ways in which firms respond to a law. Even using administrative data it would be difficult to pick up changes in a stock share plan or a pension plan, as this compensation doesn’t show up in earnings until years after the work is completed. Even a simple employment contract is a complicated bargain with many margins. During the holiday season, for example, Amazon hires a CamperForce of workers who live in RVs and it pays their campsite fees–no big deal, but that is a form of compensation that is hard to find on a W-2. More generally, firms can respond to a minimum wage by changing compensation on non-wage margins, adjusting working conditions, reducing benefits, changing wage growth patterns, and adjusting the type of workers they hire, to give just a few examples–and notice that all of these changes are difficult to measure and none of them have a first-order effect on employment.

Indian airport police are going to smile less

Airport police in India are being instructed to smile less.

This is over concerns cheerfulness could lead to a perception of lax security and a threat of terror attacks.

The country’s Central Industrial Security Force, which is in charge of aviation safety, wants its staff to be “more vigilant than friendly”.

They will move from a “broad smile system” to a “sufficient smile system”, the Indian Express says.

Officials are said to believe that excessive friendliness puts airports at risk of terrorist attacks.

The organisation’s director general, Rajesh Ranjan even said the 9/11 attacks had taken place because of “an excessive reliance on passenger-friendly features”.

Here is the full story, via Anecdotal.

Do higher minimum wages induce more search?

Monopsony models generally imply they should, and that is part of the argument why minimum wage hikes might be good for workers, wages, and yes even employment.  But the data don’t seem to support the claim of more search behavior:

Labor market search-and-matching models posit supply-side responses to minimum wage increases that may lead to improved matches and lessen or even reverse negative employment effects. Yet there is no empirical evidence on this crucial assumption. Using event study analysis of recent minimum wage increases, we find that increases to minimum wage do not increase the likelihood of searching, but do lead to large yet very transitory spikes in search effort by individuals already looking for work. The results are not driven by changes in the composition of searchers.

That is from a new NBER Working Paper by Camilla Adams, Jonathan Meer, and Carly Will Sloan.

Nigeria fact of the day

Rising crude oil prices are set to send Nigeria’s bill for fuel subsidies rocketing, threatening to exacerbate the already precarious economic situation of Africa’s largest oil producer as it heads into election season.

Although Nigeria produces 1.7m barrels of crude per day, it has very little refining capacity and imports roughly 90 per cent of its fuel, negating much of the benefits oil-producing nations accrue from high crude prices.

When crude prices plunged to about $30 a barrel in 2016, it sent Nigeria’s oil-dependent economy reeling into a recession from which it has barely recovered. While a rally has since pushed the oil price past $85, Africa’s most populous country is not set to reap the benefits. This is because its subsidy bill is likely to surge beyond the $3.85bn annual tally the oil minister estimated earlier this year when prices were 20 per cent lower, said Tunde Ajileye, a partner at SBM Intel, a political and economic risk consultancy.

That is from Neil Munshi at the FT.

Assorted Tuesday links

1. Old Paul Romer talk, which even presents the Nordhaus graph on the price of light, see for instance 5:45.  Via Kari Kohn.

2. New criticism of charter cities, and Mark Lutter’s response.

3. Lambda School.

4. Larry Summers road trip.  Or try this link.

5. How Ray Fair is modeling running, and aging (NYT).

6. Why is the William Nordhaus optimal carbon tax so modest?  And A Fine Theorem on Romer and Nordhaus.

Preference for realistic art predicts support for Brexit

Here is part of the abstract from Noah Carl, Lindsay Richards, and Anthony Heath:

Controlling for a range of personal characteristics, we found that respondents who preferred all four realistic paintings were 15–20 percentage points more likely to support Leave than those who preferred zero or one realistic paintings. This effect was comparable to the difference in support between those with a degree and those with no education, and was robust to controlling for the respondent’s party identity.

Via the excellent Kevin Lewis.

On first world problems, from the comments

Airspace homogenuity is a 1st World gripe. Here’s some of my 3rd World concerns: do we have any more Philippine spitting cobras in our backyard? (We’ve killed two in the last year, one of them at 10:00 am in the outdoor kitchen, slithering up to somebody; it can shoot their venom up to 10 feet, kills many within 30 minutes, too short to make it to the hospital); are we going to run out of water in this rain forest climate that has no dams, though we just dug a second pressurized well?; does burning plastic (there’s no trash pickup here) cause cancer though we’ve taken precautions to build a big pit and stay upwind? (diesel fuel helps but it’s so rainy here it’s hard to burn anything); did the diseased bat that almost landed on my head carry Ebola or rabies (I have anti-rabies shots, but not Ebola)?; will the volcano erupt again and bury us with pyroclastic flow, like it almost did earlier this year (the magma the size of a football stadium that rolled down the mountainside was spectacular, I saw it when it happened); will our new concrete house get damaged by an earthquake (I think not, we used good concrete not the crumbly stuff they use here to save money), or a typhoon (we have a steel roof; the Philippines gets something like a dozen typhoons a year, and we’re in ‘typhoon alley’); will we have another power cut just when I’m typing this? (the PH regional power plant is geothermal, which sounds good but in fact is prone to breakdowns, a brownout for a few hours every week is common, and more common during rain, a coal-fired plant is actually more reliable and btw electricity costs are about 2-3x more than in the USA, and people here are poor). Why are fruits and vegetables so expensive here ($1 for an ordinary apple; 80 cents for a small fist sized greenish tomato or huge, dirt filled–it’s comical–carrot) and why won’t my next-of-kin eat them? (sad people here eat nothing but sugar, white rice, pork, chicken, and the bony talapia fish, all fried of course since nobody even sells ovens and the one oven I bought, imported, had a gas leak and is inoperative, serves me right for trying to buck custom and buying things knowing everything here is sold from First World county rejected equipment, I kid you not).

Those are Third World concerns, and it’s even worse in Africa. And this guy is complaining about what again? When people wish ill on the USA, it’s because of stuff like what this guy is concerned over.

That is from Ray Lopez, the first link being added by me.