Month: March 2019

*Publisher’s Weekly* on my next book *Big Business*

My subtitle is A Love Letter to an American Anti-Hero, and here is the review:

Cowen (The Great Stagnation), an economics professor at George Mason University, counters complaints of fraudulent corporate behavior, excessive CEO pay, invasions of privacy, oppressive work culture, and corporate influence on government in this spirited defense of big business. He creatively mines polls, economic data, and even social psychology to argue that big business has, on balance, been unfairly judged. Disarmingly, he acknowledges that it’s not perfect—he criticizes the health care industry, notes that corporate cultures have not responded well to sexual harassment, and recognizes threats to privacy from the technology sector—but then he hedges: health care consolidation, he says, is at least partly the result of government regulation; corporations are now responding to sexual harassment; and traditionally generated gossip may well be a bigger threat than breaches of data privacy. Cowen is a smart, original thinker with a knack for reframing criticisms in the context of a larger, utilitarian perspective (drugs produced by pharmaceutical companies save lives, Google Maps gets us where we want to go) that implicitly endorses the current economic system; he comes off more like a lawyer than an ideologue. This analysis is unlikely to convince readers skeptical of big business of its virtue, but it provides food for thought.

Here is information to purchase the book.

Google decides it is underpaying its men

When Google conducted a study recently to determine whether the company was underpaying women and members of minority groups, it found that more men than women were receiving less money for doing similar work.

The surprising conclusion to the latest version of the annual study contrasted sharply with the experience of women working in Silicon Valley and in many other industries.

In response to the finding, Google gave $9.7 million in additional compensation to 10,677 employees for this year. Men account for about 69 percent of the company’s work force, but they received a disproportionately higher percentage of the money. The exact number of men who got raises is unclear.  [TC: I don’t fully understand the metric here.]

But the study did not tell the whole story of women at Google or in the technology industry more broadly, something that company officials acknowledged.

That is from Daisuke Wakabayashi at The New York Times.

Monday assorted links

1. Could giant airships be a major industry?

2. The rising returns to genius.

3. “…we find asymmetries in individuals’ willingness to venture into cross-cutting spaces, with conservatives more likely to follow media and political accounts classified as left-leaning than the reverse.

4. The spread of the norm of universal suffrage.

5. Is there a great cultural stagnation?

6. The evolution of floor space in history.

No Urban Wage Premium for Non-College Educated Workers

The Economist has a nice graph and article on the urban wage premium based on David Autor’s work. The graphs shown that in the past both college and non-college educated workers earned higher wages in more densely populated areas but today only college-educated workers experience an urban wage-premium.

Housing costs eat a large share of the college wage-premium so even college educated workers are not as better off in cities as the graphs make it appear. Autor’s point, however, is that wages for the non-college educated aren’t higher in cities so they might not move to cities even with lower housing costs. That could be true but I also suspect that the urban wage premium for the non-college educated is endogenous–firms employing these workers have moved out of the city but could move back in with lower housing and land costs.

CEOs play games cooperatively, and well

We study whether CEOs of private firms differ from other people with regard to their strategic decisions and beliefs about others’ strategy choices. Such differences are interesting since CEOs make decisions that are economically more relevant, because they affect not only their own utility or the well-being of household members, but the utility of many stakeholders inside and outside of the organization. They also play a central role in shaping values and norms in society. We expect differences between both groups, because CEOs are more experienced with strategic decision making than comparable people in other professional roles. Yet, due to the difficulties in recruiting this high-profile group for academic research, few studies have explored how CEOs make incentivized decisions in strategic games under strict controls and how their choices in such games differ from those made by others. Our study combines a stratified random sample of 200 CEOs of medium-sized firms with a carefully selected control group of 200 comparable people. All subjects participated in three incentivized games—Prisoner’s Dilemma, Chicken, Battle-of-the-Sexes. Beliefs were elicited for each game. We report substantial and robust differences in both behavior and beliefs between the CEOs and the control group. The most striking results are that CEOs do not best respond to beliefs; they cooperate more, play less hawkish and thereby earn much more than the control group.

Here is the paper, by Håkan J. Holm, Victor Nee, and Sonja Opper, via the excellent Rolf Degen.

The culture and polity that is Brazil

Pentecostalist Churches, like Macedo’s Igreja Universal do Reino de Deus, which promise instant wealth, offer competing live prophecies and other supernatural theatre, and exorcise demons in public. The leading Brazilian polling organisation, Datafolha, estimated them at 30 per cent of the voting population this time around, and they have electoral discipline…

The evangelists are everywhere. In the prisons, in the favelas, among the black poor, but increasingly also appealing to the financially insecure middle classes. Over the last decade, defections from the Catholic population are estimated at 1 per cent per year, but this is arguably accelerating. Bolsonaro may not achieve much else, but he may well prove to be the first president of post-Catholic Brazil, with a new moral order perpetuated by a new television regime. The rest of Latin America is not far behind.

Such is life in Bolsonaro’s Brazil!  Here is the full piece, a letter to the LRB by Christopher Lord, via Alexander Papazian.

The impact of the Trump trade war

We analyze the short-run impacts of the 2018 trade war on the U.S. economy. We estimate import demand and export supply elasticities using changes in U.S. and retaliatory war tariffs over time. Imports from targeted countries decline 31.5% within products, while targeted U.S. exports fall 9.5%. We find complete pass-through of U.S. tariffs to variety-level import prices, and compute the aggregate and regional impacts of the war in a general equilibrium framework that matches these elasticities. Annual losses from higher costs of imports are $68.8 billion (0.37% of GDP). After accounting for higher tariff revenue and gains to domestic producers from higher prices, the aggregate welfare loss is $6.4 billion (0.03% of GDP). U.S. tariffs favored sectors located in politically competitive counties, suggesting an ex ante rationale for the tariffs, but retaliatory tariffs offset the benefits to these counties. Tradeable-sector workers in heavily Republican counties are the most negatively affected by the trade war.

Here is the full paper, by Pablo D. Fajgelbaum, Pinelopi K. Goldberg, Patrick J. Kennedy, and Amit K. Khandelwal.  Full pass-through, of course, means that monopoly in these markets is likely not such a big deal.

A modest proposal

So let me offer this modest proposal: When a child receives government assistance, we should deduct the cost from his parents’ future Social Security benefits. If one parent fails to provide child support, we should deduct the cost from his Social Security benefits alone; otherwise, the parents split the cost. Administratively, this seems quite manageable. Of course, this modest proposal means that many deadbeat dads will have to endure late retirement, but that seems a lot fairer than burdening taxpayers.

That is from Bryan Caplan.

Differences in the Quran treatment of the themes from the Book of Genesis

1. There are more angels.

2. Satan plays a larger role.

3. There is virtually no literary suspense.

4. Adam is not made in God’s image.

5. There is considerably less complexity of narrative perspective.

6. Allah does not speak directly, rather it is all coming from Allah.

7. Noah is more of a prophet of doom, and Abraham (“the first Muslim”) is a more important figure.

8. The Abraham story is more central.

9. Isaac is aware that he is slated for sacrifice, and accepts his fate.  (That he is not killed of course you can think of as an “alternative” to the Christ story, namely that the blessed do not have to undergo a brutal, ugly death.)

10. The covenant with God is not national or regional in its origins.

For those points I drew upon my interpretations of Jack Miles, God in the Qu’ran, among other sources.

The polity that is Oregon

Oregon Gov. Kate Brown signed into law a first-in-the-nation rent control bill Thursday and called on the Legislature to turn its attention to funding new housing initiatives.

Because of an emergency clause, Senate Bill 608′s rent control and eviction protections go into effect immediately.

The details are somewhat less bad than that may sound at first:

The law caps annual rent increases to 7 percent plus inflation throughout the state, which amounts to a limit of just over 10 percent this year. Annual increases in the Consumer Price Index, a measure of inflation, for Western states has ranged from just under 1 percent to 3.6 percent over the past five years.

The rent increase restrictions exempt new construction for 15 years, and landlords may raise rent without any cap if renters leave of their own accord. Subsidized rent also is exempt.

Here is the full story, via Mike Tamada.

Injectable NanoParticles Let Mice See Near InfraRed!

Wow! This paper, Mammalian Near-Infrared Image Vision through Injectable and Self-Powered Retinal Nanoantenna, newly published in Cell seems like something from the future. Basically they injected nano-particles that convert near infra-red to visible light into the retinal layer of the eye in mice enabling the mice to see in the near infra-red.

…we developed ocular injectable photoreceptor-binding upconversion nanoparticles (pbUCNPs). These nanoparticles anchored on retinal photoreceptors as miniature NIR light transducers to create NIR light image vision with negligible side effects. Based on single-photoreceptor recordings, electroretinograms, cortical recordings, and visual behavioral tests, we demonstrated that mice with these nanoantennae could not only perceive NIR light, but also see NIR light patterns. Excitingly, the injected mice were also able to differentiate sophisticated NIR shape patterns. Moreover, the NIR light pattern vision was ambient-daylight compatible and existed in parallel with native daylight vision. This new method will provide unmatched opportunities for a wide variety of emerging bio-integrated nanodevice designs and applications.

…In summary, these nanoparticles not only provide the potential for close integration within the human body to extend the visual spectrum, but also open new opportunities to explore a wide variety of animal vision-related behaviors. Furthermore, they exhibit considerable potential with respect to the development of bio-integrated nanodevices in civilian encryption, security, military operations, and human-machine interfaces, which require NIR light image detection that goes beyond the normal functions of mammals, including human beings. Moreover, in addition to visual ability enhancement, this nanodevice can serve as an integrated and light-controlled system in medicine, which could be useful in the repair of visual function as well as in drug delivery for ocular diseases.

The researchers are mostly from China. It sometimes seems that Chinese researchers are naturally extropian, bolder and more optimistic about technology, human extension and the future than anyone else in the world.

Hat tip: Paul Kedrosky.

If you fear NIMBY, should you favor more immigration?

Many of today’s capitalists also want more immigration.  Ocasio-Cortez also supports more immigration, which is confusing.  According to Ricardo’s economic theory, expanding the population in the current environment will increase the cost of housing, health care, and higher education, just as it increased the price of wheat in the 19th century.  This would hurt workers.

That is from Ronald W. Dworkin, “The New Rentiers: Ricardo Redux,” in the March/April 2019 issue of The American Interest, not yet on-line.

In general, facing up to the policy implications of a strict NIMBY world is something few wish to do.  For instance, it seems to me that increases in the minimum wage, even if they initially went along Card-Krueger lines, would end up being passed along as greater benefits to landlords.  All sorts of other attempts at amelioration could backfire as well.

Or do we live in some kind of intermediate NIMBY world on the coasts, where you get to complain about the land restrictions, but don’t have to live with the policy implications of strict NIMBY?  Maybe so!  But if so, I would like to see this argued for at more length.