Month: March 2019
Sunday assorted links
1. Some graphs on the evolution of market concentration in the United States.
2. There is only one reliable rule of thumb in macro.
3. Rob Atkinson on big business (WSJ). And on the import of middle managers (WSJ, speculative).
4. A claim that 95 percent of Bitcoin trading is fake — can any of you speak to this?
5. Video of my economics vs. philosophy debate/dialogue with Agnes Callard at University of Chicago. Long (three hours), lots of content not available elsewhere in any other form.
The economic ecology of Jews as a rural service minority
The five million Jews who lived in the Pale of Settlement at the turn of the century were overwhelmingly over-represented in towns and in cities. They specialized in seemingly urban occupations, were relatively literate, and were almost absent in agriculture. This pattern persisted overseas where one third of them would eventually immigrate. Hence, Jews were typically characterized as an urban minority. I argue that the opposite was true. The economic ecology of the Jews, the patterns of choices of occupation and location, are described in a model in which Jews were countryside workers with a comparative advantage in rural commerce, complementing agricultural workers, and without comparative advantage in denser urban settings. Using data from the 1897 census, I show that the cross-sectional patterns across districts and localities were consistent with all the predictions of this model. When the share of Jews in the population grew, Jews spilled across two margins—occupational, as manufacturing workers, and geographic, as rural frontier men. Non-Jews were imperfect substitute for Jews, rendering the latter indispensable to the countryside economy. No evidence of urban advantage is evident in the data. Turn of the century Pale of Settlement Jews ought to be understood as rural workers, in and of the countryside. In this light, the patterns exhibited in the US after immigration appear as a sharp break from, rather than a continuation of, old country economic tradition.
That is the abstract of a new paper by Yannay Spitzer. For the pointer I thank Ilya Novak.
What do concert audiences really want?
Audiences only really like two parts of a show — the beginning and the end. You should prolong the former by rolling directly through your first three numbers without pausing. Then make sure you end suddenly and unexpectedly. Audiences rewards who stop early and punish those who stay late…
Finally, there’s nothing an audience enjoys more than hearing something familiar. If you think your songwriting and all-round musical excellence are enough to entertain a bunch of strangers for an hour with songs they have never heard before, bully for you. The Beatles didn’t, but what the hell do they know?
That is from the entertaining and insightful David Hepworth book Nothing is Real: The Beatles Were Underrated and Other Sweeping Statements About Pop. He lists the following as the ten best blues songs ever:
Memphis Jug Band: K.C. Moan
B.B. King: You Upset me Baby
Blind Willie Johnson: Dark Was the Night
Mississippi Fred McDowell: Shake ‘Em On Down
Lightnin’ Slim: Rooster Blues
Muddy Waters: Too Young to Know
Elmore James: I Can’t Hold Out
Otis Rush: All Your Love
Richard ‘Rabbit’ Brown: James Alley Blues
Blind Blake: Too Tight
By the way, Paul and the Beatles really did record both “I’m Down” and “Yesterday” in the same day.
Ross Douthat on some reasons for the electoral college
Is there a case for a system that sometimes produces undemocratic outcomes? I think so, on two grounds. First, it creates incentives for political parties and candidates to seek supermajorities rather than just playing for 50.1 percent, because the latter play is a losing one more often than in a popular-vote presidential system.
Second, it creates incentives for political parties to try to break regional blocs controlled by the opposition, rather than just maximizing turnout in their own areas, because you win the presidency consistently only as a party of multiple regions and you can crack a rival party’s narrow majority by flipping a few states.
According to this — admittedly contrarian — theory, the fact that the Electoral College produces chaotic or undemocratic outcomes in moments of ideological or regional polarization is actually a helpful thing, insofar as it drives politicians and political hacks (by nature not the most creative types) to think bigger than regional blocs and 51 percent majorities.
That is from the NYT, he also considers some arguments against.
Saturday assorted links
1. Those new service sector jobs: helping Chinese families name their babies with English-language names in a culturally appropriate way.
3. Dominic Cummings on…stuff, Brexit but mainly broader.
4. NYT runs long column producing evidence against the secular stagnation thesis.
5. Amsterdam to ban tourist tours of its red light district.
6. Psychopathy by individual state, D.C. a champ. How is New Jersey only number nine?
Missing markets in everything?
Or do the offer curves simply not intersect?:
Just over half of Americans between the ages of 18 and 34 — 51 percent of them — said they do not have a steady romantic partner, according to data from the General Social Survey released this week. That 2018 figure is up significantly from 33 percent in 2004 — the lowest figure since the question was first asked in 1986 — and up slightly from 45 percent in 2016.
Here is the story, via the excellent Kevin Lewis.
How bad would a hard Brexit really be?
This account has some gloomy rhetoric, but doesn’t drum up such an awful scenario, for instance:
Among the little-noticed impacts: U.K. citizens and businesses will no longer be able to register internet sites using the .eu domain, and any U.K. entities that currently have such sites will not be able to renew them.
As mentioned, no doubt British truckers would be badly hurt, but what else? This sounds correct to me:
Custom delays could create food shortages. The U.K. is vulnerable because an extreme heat wave and summer drought caused by global warming have already reduced food output.
Tariffs would be reimposed. They are as high as 74 percent for tobacco, 22 percent for orange juice, and 10 percent for automobiles. That would hurt exporters. Some of that pain would be offset by a weaker pound.
Tariffs would increase prices of imports into the U.K. One-third of its food comes from the EU. Higher import prices would create inflation and lower the standard of living for U.K. residents.
Is this the biggest danger?:
Health Secretary Matt Hancock has warned medical drug companies to expect six months of “significantly reduced access” to the main trade routes between Britain and Continental Europe if there is a no-deal Brexit.
This one seems exaggerated:
“Bodies may remain uncollected and children might miss exams due to gridlocked roads in the event of a no-deal Brexit”, the report said.
So people, what’s the deal? Put aside the longer and medium-term effects on gdp and the like, what are the greatest short-run dangers of a hard Brexit in the weeks to come? Or is it a big, overstated worry, the new Y2K?
The Hayek auction results are very impressive
You will find them here, for instance Hayek’s copy of Wealth of Nations went for almost 200k, it was estimated in the 4k to 6k range.
“Desktop ephemera and personal effects” were estimated at 200-300 British pounds, went for 87,500 British pounds. Crazy! Many of the items went for 10x or 20x their original estimates.
Perhaps Hayek is back in fashion again, if only with the wealthy.
For the pointer I thank Lotta Moberg.
Addendum: Here is BC from the comments section:
So, the central planners couldn’t accurately estimate the values of Hayek’s personal effects because the necessary information was distributed among all the auction participants?
The culture that is Alexandria, VA
A proposal to open a halal butchery facility in Alexandria hit a snag Saturday after some local business owners and dog owners objected. DC Poultry Market wants to open a facility that would sell fresh, humanely killed chickens on Colvin Street in a mostly industrial area of Alexandria between Duke Street and railroad tracks. There are no residential properties in the immediate area, but pet businesses abound: Pinnacle Pet Spa & More, Frolick Dogs, Dogtopia, and the Wholistic Hound Academy.
Therein lay a problem. Though city staff and Alexandria’s planning commission recommended approving DC Poultry Market’s application, dog lovers showed up to the Alexandria City Council’s March 16 meeting to object on olfactory grounds (“My dog can smell when there’s a cookie down the block,” one resident said) and on proximity to poultricide (“Knowing that my dogs may be walked by a business that holds chickens in a windowless room before their throats are slit while fully conscious does not make me feel that my dogs are in a safe environment,” another said).
Here is the full story, via Bruce A. Few seem to be complaining about the chickens.
Friday assorted links
1. Miles Kimball on Alan Krueger.
2. College major switching, interesting.
3. I’ve never written “wtf” before, but…”wtf”? Call it solar system fact of the day. Is Mercury really the planet most frequently closest to earth?
4. Adam Ozimek on opioids and the labor market. And a profile of Adam, economist and entrepreneur.
5. Waze uses many map-loving volunteers to update its maps.
6. Norway’s new underwater restaurant.
7. Julie Phillips on suicide, excellent piece.
Sentences to ponder
Oregon lawmakers are considering raising their annual pay by nearly $20,000, a move the sponsors say will attract more diverse candidates to the statehouse.
“We’re a diverse state, we need a diverse legislature,” Senate Majority Leader Ginny Burdick, one of the legislators leading the effort, told Oregon Public Broadcasting. “Because of the low pay, we are automatically screening out people who really should be represented here.”
That may sound cynical, but in fact the case for doing this is not crazy, and in general the U.S. underpays many (not all!) of its public sector employees:
The move comes only a few weeks after a 28 percent legislative pay raise went into effect. Lawmakers were not behind that raise, and the increase was tied to collective bargaining agreements that affected nearly 40,000 state employees.
Legislators now make $31,200, plus an extra $149 a day when the Legislature is in session.
Here is the full story, with further detail of interest, and for the pointer I thank Mark West.
What is wrong with social justice warriors?
Curious if you’ve read this (has a PDF link):
http://libjournal.uncg.edu/ijcp/article/view/249Is this paper bad? If it is bad, what is bad about it? How would you describe “what is bad about it” in a way that would connect to a college freshman who finds his/her economics and critical race theory classes to be equally interesting and deserving of further study? This extends to broader questions about “what precisely is undesirable about the state of social-justice-oriented academic study?” I have seen a lot of backhanded stuff from you on this topic, but not a centrally articulated, earnest answer.
That is from my email, and I would broaden the question to be about social justice warriors more generally. Most of all, I would say I am all for social justice warriors! Properly construed, that is. But two points must be made:
1. Many of the people who are called social justice warriors I would not put in charge of a candy shop, much less trust them to lead the next jihad.
2. Many social justice warriors seem more concerned with tearing down, blacklisting, and deplatforming others, or even just whining about them, rather than working hard to actually boost social justice, whatever you might take that to mean. Most of that struggle requires building things in a positive way, I am sorry to say.
That all said, do not waste too much of your own energies countering the not-so-helpful class of social justice warriors. It is not worth it. Perhaps someone needs to play such a role, but surely those neuterers are not, or at least should not be, the most talented amongst us.
No matter what your exact view of the world, or what kind of ornery pessimist or determinist or conservative or even reactionary you may be, you should want to be working toward some kind of emancipation in the world. No, I am not saying there always is a clear “emancipatory” side of a debate, or that most issues are “us vs. them.” Rather, if you are not sure you are doing the right thing, ask a simple question: am I building something? Whether it be a structure, an institution, or simply a positive idea, proposal, or method.
The answer to that building question may not always be obvious, but it stands a pretty good chance of getting you to an even better question for your next round of inquiry.
The case for real estate as investment
That is the topic of my latest Bloomberg column, here is one bit:
The authors of the aforementioned study — Òscar Jordà, Moritz Schularick and Alan M. Taylor — have constructed a new database for the U.S. and 15 other advanced economies, ranging from 1870 through the present. Their striking finding is that housing returns are about equal to equity returns, and furthermore housing as an investment is significantly less risky than equities.
In their full sample, equities average a 6.7 percent return per annum, and housing 6.9 percent. For the U.S. alone, equities return 8.5 percent and housing 6.1 percent, the latter figure being lower but still quite respectable. The standard deviation of housing returns, one measure of risk, is less than half of that for equities, whether for the cross-country data or for the U.S. alone. Another measure of risk, the covariance of housing returns with private consumption levels, also shows real estate to be a safer investment than equities, again on average.
One obvious implication is that many people should consider investing more in housing. The authors show that the transaction costs of dealing in real estate probably do not erase the gains to be made from investing in real estate, at least for the typical homebuyer.
Furthermore, due to globalization, returns on equities are increasingly correlated across countries, which makes diversification harder to achieve. That is less true with real estate markets, which depend more on local conditions.
Do read the whole piece.
Work as a safe haven (*Big Business*)
Another surprising feature of these results is that the “work as a safe haven” effect was stronger for poorer people. We don’t know if that is true more generally across larger samples of people, but it points to a potentially neglected and egalitarian feature of life in the workplace. In contemporary American society, poorer individuals are more likely to have problems with divorce, spousal abuse, drug addiction in the family, children dropping out of school, and a variety of other fairly common social problems. These problems plague rich and poor alike, but they are more frequent in poorer families and, furthermore, very often wreak greater devastation on poorer families, which have fewer resources to cope with them. The workplace, however, is a partial equalizer here. At least in this sample, the poorer individuals found relatively greater solace in the workplace than did the richer individuals. The poorer individuals, of course, were paid less at work. But in terms of psychological stresses, a lot of corporations are creating “safe spaces” for individuals who otherwise are facing some pretty seriously bad situations.
That is from my forthcoming book Big Business: A Love Letter to an American Anti-Hero, due out April 9.
The 2019 Public Choice Outreach Conference
It’s time to get your applications in for the 2019 Public Choice Outreach conference, a crash course in public choice for students from all fields and walks of life! Professors, please encourage your students to apply!
When is the Public Choice Outreach Conference?
The 2019 Outreach Conference will be held June 14-16th at the Hyatt Centric Arlington in Rosslyn, VA.
What is the Public Choice Outreach Conference?
The Public Choice Outreach Conference is a compact lecture series designed as a “crash course” in Public Choice for students planning careers in academia, journalism, law, or public policy. Graduate students and advanced undergraduates are eligible to apply. Many past participants of the Outreach seminar have gone on to notable careers in academia, law and business.
What will I learn?
Students are introduced to the history and basic tools of public choice analysis, such as models of voting and elections, and models of government and legislative organization. Students also learn to apply public choice theory to a wide range of relevant issues. Finally, students will be introduced to “constitutional economics” and the economics of rule making.
This is a chance to hear talks from Robin Hanson, Alex Tabarrok, Shruti Rajagopolan, Tyler Cowen and more.
Who can apply?
Graduate students and advanced undergraduates are eligible to apply. Students majoring in economics, history, international studies, law, philosophy political science, psychology, public administration, religious studies, and sociology have attended past conferences. Advanced degree students with a demonstrated interest in political economy or demonstrated interest in political economy are invited to apply. Applicants unfamiliar with Public Choice and students from outside of George Mason University are especially encouraged.
What are the fees involved?
Outreach has no conference fee – it is free to attend. Room and meals are included for all participants. However, ALL travel costs are the responsibility of the participants.
Click here for the 2019 Outreach Application