Month: January 2019

Noah Smith debates the 70 percent marginal tax rate with a bunch of us

Here is the Bloomberg link, here is a sentence from Noah on AOC:

Her proposal, which would make the tax structure similar to the one the U.S. had in 1921, is pretty much symbolic — a way of expressing disapproval of inequality, while kicking off a lively discussion of income taxes and redistribution.

We do not all agree.

What I’ve been reading

1. Jackie Chan, with Zhu Mo, Never Grow Up. “My ankle joint pops out of its socket all the time, even when I’m just walking around, and I’ll have to pop it back in.  My leg sometimes gets dislocated when I’m showering.  For that one, I need my assistant to help me click it back in…I can’t lift heavy objects.”  He needed brain surgery after filming Armour of God, and he sustained permanent hearing loss in his left ear.  Recommended, if you like the movies.  And: “That was how I pursued girls, I overwhelmed them.”

2. John L. Brooke, The Refiner’s Fire: the Making of Mormon Cosmology, 1644-1844.  “…the rise of the Church of Jesus Christ of Latter-day Saints can only be understood if it is placed in the context of the hermetic tradition.  The distinctive doctrines of the church — preexistent spirits, material spirit, human divinization, celestial marriage — are opaque unless we explore their relationship to the evolving fusion of hermetic perfectionism and radical sectarianism occupying the extreme edge of the Christian tradition from the late Middle Ages into the early modern age.”

3. Guy Arnold, Africa A Modern History: 1945-2015, second edition.  It is hard to image that a 1077 pp. doorstop kind of a book on “Africa” might be very good, but in fact this one is.  It is the best book on contemporary Africa and its (recent) historical roots that I know.  I am reading this book all the way through.

4. Cass Sunstein, How Change Happens.  How does social change happen, organized around Cass’s favorite topics, such as nudge and polarization and cascades.  This book doesn’t cover everything, but it is one of the essential introductions to a topic that is very difficult to handle.  And I am happy there is no subtitle.

Joshua S. Goldstein and Staffan A. Qvist, A Bright Future: How Some Countries Have Solved Climate Change and the Rest Can Follow, is a good and correct “green” take on the case for nuclear energy.

The Cato Institute has put out Michael D. Tanner, The Inclusive Economy: How to Bring Wealth to America’s Poor, and Randal O’Toole Romance of the Rails: Why the Passenger Trains We Love are Not the Transportation We Need.

China fact (?) of the day

China Daily reported Friday that unnatural deaths have taken the lives of 72 mainland billionaires over the past eight years. (Do the math.)

Which means that if you’re one of China’s 115 current billionaires, as listed on the 2011 Forbes Billionaires List, you should be more than a little nervous.

I don’t know about you but I find it somewhat improbable that among such a small population there could be so many “suicides,” “accidents” and “death by disease” (the average age of those who died from illness was only 48).

Here is the Forbes story by Ray Kwong, I am not sure how confirmed to treat this as being.

From the comments:

According to the original Chinese version of the news report, the base (number of billionaires) should be 60k, not just 115. I think ‘billionaires’ refers to 100M CNY in the original news report. It’s still shocking though…
“2010年,这一数字同比增长了9.1%,达到6万人左右。” http://www.chinadaily.com.cn/dfpd/shehui/2011-07/22/content_12957783.htm

Right. The Chinese number units are ones, tens, hundreds, thousands, ten thousands, and ten thousand ten thousands. The “billionaires” in the article are ten thousand ten thousandaires.

+1 (Google Translate confirms that the base is 55k people 🙂 )
The mortality rates now seem far more reasonable…

Dreyer’s *Day of Wrath* (this post is full of spoilers)

Yes this movie dates from 1943 but I don’t think it is (mainly) about the Nazi persecutions, and every review I have seen on-line seems to misunderstand the film rather badly.  First, it is a #MeToo film.  Anne is abused and in essence raped (repeatedly) by her much older husband Absalon, who is a powerful figure in the local community.  He saved her mother from being burnt as a witch, and in return took her body and matrimonial hand, never asking if she wanted this.  She ends up wishing for his death “hundreds of times,” and the movie focuses on how this marital experience hollows out her inner shell.  Her illicit romance with Martin, Absalon’s son, was never emotionally real and was mainly intended as an escape from her servitude and perhaps also as a bit of revenge.

The second theme of the movie, related to the first, concerns the equilibria of belief in witchcraft.  If some of the citizens believe in witches, some of the otherwise powerless women will pretend to be witches, to win some power.  Anne does this, as she knows that powerlessness is the worst thing in this society.  (The older Herlofs Marthe also left some uncertainty about her powers to reach demons and the like.)  Of course this strategy has potential downsides, especially when some women are burnt as witches, but ex ante it can make sense to parade as a witch with some probability.  For Anne, powerlessness is perceived as so bad she is even willing to be a witch ex post.  Of course she killed Absalon by poisoning his beer, not by placing a hex on him.  Even when facing death, she can’t give up the one source of perceived power she might aspire to have.

Monday assorted links

Ratio of <= 40 to >= 50 scientists funded by the NIH

The dotted line at the top is the Jones-implied ratio of productivity of <= 40 year olds to >= 50 year-olds, as drawn from Figure 1 in this source.

For the construction of this data source I am indebted to PseudoMontaigne.  Does it not imply that NIH funding is vastly over-allocated according to the criterion of seniority?  Or might this be the rise of the lab system, where the older people are the PIs, and they in turn dole this money out to younger researchers?  More middlemen, so to speak.  Opinions?

*The European Guilds: An Economic Analysis*

That is the new and highly comprehensive book by Sheilagh Ogilvie, and it is likely to stand as one of the more important works of economic history from the last decade.  Here is one opening summary bit:

…my own reading of the evidence is that a common theme underlies guilds’ activities: guilds tended to do what is best for guild members.  In some cases, what guilds did brought certain benefits for the broader public.  But overall, the actions guilds took mainly had the effect of protecting and enriching their members at the expense of consumers and non-members; reducing threats from innovators, competitors, and audacious upstarts; and generating sufficient rents to pay off the political elites that enforced guilds’ privileges and might otherwise have interfered with them.

And yes she really does show this, with a remarkable assemblage of data.  For instance:

…the 14 guilds in Table 2.4 devoted an average of 28 per cent of their expenditures to lobbying.  However, the average was 45 per cent across the five poor guilds and just 14 per cent across the eight rich ones.

Or:

Guild mastership fees could not be paid off in a couple of weeks of work.  Across these 1,102 observations, the average mastership fee consumed 276 days’ wages for a labourer, 215 days for a journeyman, and 1543 days for a guild master.

Operating licenses were expensive too (pp.125-126).  There are more “Ands”:

Guild entry barriers pushed people into illicit production, as emerges from 14 per cent of observations in Table 3.15.

And:

Guild members whose trades stagnated could not legally diversify to other guilded work…

On top of that, guilds typically restricted the training of women and would not let them enter the relevant sectors.  And:

The amount of attention guilds devoted to product quality in their ordinances does not suggest they regarded it as a major concern.

Ouch!  Ogilivie also concludes, and demonstrates using data, that guilds did not promote human capital accumulation or innovation.  The various revisionist defenses of guilds, as produced over the years, basically seem to be wrong.

You can pre-order the book here.

The Name Game: Urbanization in India

What is rural? What is urban? Different countries use different definitions and sometimes there are multiple definitions within a country. In India, as Reuben Abraham and Pritika Hingorani write, the same state can be 16% or 99% urban depending on the definition..

In India, only “statutory towns” are considered urban and have a municipal administration — a definition that officially leaves the country 26 percent urban. State governments make the decision using widely differing criteria; demographic considerations are peripheral at times. The Census of India provides the only other official, and uniform, estimate. Its formula uses a mix of population, density and occupation criteria, and pegs India at 31 percent urban.

Such estimates can be misleadingly low. For instance, Kerala is statutorily only 16 percent urban. Yet the census sees the well-developed southern state as approximately 48 percent urban. If we use a population cutoff of 5,000 residents as Ghana and Lebanon do, or even Mexico’s threshold of 2,500 people, Kerala’s urban share leaps to 99 percent, which is more consistent with ground reality.

So what? A rose by any other name smells as sweet but definitions matter for policy and resource flows:

The consequences of underestimating the urban share of the population are dire. Resources are badly misallocated: By one estimate, over 80 percent of federal government financing still goes to rural development. This reduces incentives for politicians, especially rural ones, to change the status quo. Tens of millions of Indians who live in dense, urban-like settlements are governed by rural governments that lack the mandate and the money to deliver basic services. In India, urban governments are constitutionally required to provide things such as fire departments, sewer lines, arterial roads and building codes. Local bodies in rural areas aren’t.

In addition, urban planning becomes particularly haphazard when cities grow but aren’t defined as such. How can roads, water lines, sewage lines and metros be arranged when a city is governed by multiple rural units?

As satellite data clearly show, most cities extend well beyond their administrative limits, and dense, linear settlements spread out of those cities along transit corridors. This growth is unregulated and unplanned, marred by narrow roads, growing distance from major thoroughfares, limited open space and haphazardly divided plots.

…what appears to be a single economic unit is now governed by a multitude of rural and urban jurisdictions, with no mechanism to coordinate on mobility, public goods or municipal services. It’s difficult and expensive to retrofit such cities with proper infrastructure and services.

What I’ve been browsing

A lot of my reading time has been absorbed by job market papers (some of them covered here on MR) and CWT prep, in the meantime I have been browsing these with profit:

Alexandra Popoff, Vasily Grossman and the Soviet Century covers what the title promises.

David Wallace-Wells, The Uninhabitable Earth: Life After Warming.  The title aside, a very good and very well-written book on the basics of climate change.

Sophus A. Reinert, The Academy of Fisticuffs: Political Economy and Commercial Society in Enlightenment Italy, is the best English-language book I know of on the Italian Enlightenment.  Everything you wanted to know about Pietro Verri but were afraid to ask.

Margaret C. Jacob, The Secular Enlightenment, again delivers good coverage of what the title promises.

Matthias Doepke and Fabrizio Zilibotti, Love, Money & Parenting: How Economics Explains the Way We Raise Our Kids.  Note this book is sober rather than actually telling you how to raise your kids.  And it has sentences like: “In earlier times, men and women had sharply distinct roles.”

Michael Tomasello, Becoming Human: A Theory of Ontogeny does not quite intersect with cultural economics and Joe Henrich, but someday somebody will write a book like this and start making the connections.

Some thoughts on second chances in the #MeToo era

That is the topic of my latest Bloomberg column, here is one excerpt:

Whether we like it or not, as the list of wrongdoers grows, questions of forgiveness will begin to outnumber questions of punishment. The thing is, questions of forgiveness are never entirely easy.

Much Christian doctrine, and especially Catholicism, emphasizes the value of confession, forgiveness and redemption. Thus it is not hard to convince many Americans that sinners should be given a second chance. This impulse occasionally finds its way into policy; just last month, a prison-reform bill became law, reflecting notions that criminals can indeed be rehabilitated. In her book “The Up Side of Down,” Washington Post columnist Megan McArdle stresses how many features of American life, including bankruptcy law and startup culture, depend on second, third or even more chances…

The more delicate truth is that, in the context of the #MeToo movement, forgiveness carries great dangers. I am not referring to those asking for it; rather, I am talking about those in a position to offer it. The survivors of such abuse often feel shame, guilt and a loss of confidence and self-esteem. It is very costly, both psychologically and practically, for such individuals to step forward and levy charges. An emphasis on forgiveness could reinforce victims’ tendencies to bury the crimes and wrongdoings.

And:

The result is a set of conflicting and probably irreconcilable values. America believes in equal treatment before the law. But America’s increasingly powerful system of social pressures and sanctions does not provide for equal treatment.

Do read the whole thing, which also considers both John Lennon and Picasso.

Saturday assorted links

1. Do celebrity governors even matter?

2. Joshua M. Kim comments on Stubborn Attachments.

3. Venture capital, education, and creative artists.

4. Are community schools working? (NYT, link fixed)

5. “Our ability to discuss policy is so broken that saying you’re going to raise the top tax rate is the only way progressives will believe you’re going to tax the rich more. In reality, eliminating stepped up basis & reducing exemptions/deductions would increase progressivity more.”  From Betsey Stevenson.

6. Is this simply the “golden age” of higher ed?

7. Matt Stoller unloads on the Dems.

True but rarely mentioned: wealth taxes and discount rates

…the value of wealth taxes depends sensitively on the interest rate…If the interest rate is 2%, then the tax rate is “only” 1/0.02 = 50%. If the interest rate is 5%, then the tax rate is 1/0.05 = 20%. I suspect these taxes were put in place in a time of higher interest ares and nobody is really thinking about the effect of lower rates.

That is from John Cochrane, with other points of interest about tax incidence at the link.

By the way, non-inflation-indexed capital gains are in part a wealth tax, so current higher interest rates are lowering the burden of that tax to some degree.

Trying to sell your data

I have news for you people: your data ain’t worth nuthin’:

I was ready to call it quits—unless, that is, my proceeds reeled me back in. I tallied up my fiat (that’s money, to the rest of us): 162 WIB, 1 DAT, 0 NRN. My earnings, while eclectic, were worth approximately 0.3 cents.

That is from a recent Wired article by Gregory Barber, who tried to sell his data in the open market.  Yet data can be worth a good deal in the aggregate — just ask some of the major tech companies.  The economics here are a bit like the economics of voting.  If it were legal, and you tried to sell your vote and your vote alone, you might not get much more than 0.3 cents.  That vote is unlikely to prove decisive.  Yet average and marginal value do not coincide.  If someone could buy a whole block of votes, which in turn could swing an election, the price could be much higher.

The upshot is that giving individuals ownership of their data, so they can sell it, is unlikely to yield much, unless of course you think widespread consumer collusion will prove feasible.

For the pointer I thank the excellent Samir Varma.

Friday assorted links