Month: April 2019

What I’ve been reading

1. Peter Doggett, CSNY: Crosby, Stills, Nash & Young.  A good management study of a creative foursome doomed to split and splinter pretty much from the beginning.  Oddly, their best work still sounds good to me, even though I never hear much new in it with repeated listenings.  That is a rare combination.

2. David Brooks, The Second Mountain: The Quest for a Moral Life.  David’s best book this century, it has many subtle points.  It is a “wisdom book,” noting that not everyone likes wisdom books.

3. Harold Bloom, Possessed by Memory: The Inward Light of Criticism.  Bloom is now 89 I believe, but unlike in some of his recent shorter books this one seems as thoughtful as much of his best later work.  Yes, it is a bunch of largely separate, short, multi-page essays on topics of Bloom’s choosing, but at this point that is optimal.  It won’t convince the skeptic, but if you are on the fence I say yes, though try The Western Canon first.

4. Fuchsia Dunlop, The Food of Sichuan.  A much-expanded version of her earlier Land of Plenty.  No, I haven’t touched this one yet, but if the word self-recommending ever applied, it is here.  If you don’t already know it, here is my earlier CWT with Fuchsia Dunlop.

5. John Barton, A History of the Bible: The Book and its Faiths.  Anglican, British, highly reasonable, full of useful information, I read it all the way through.  Barton teaches you the Bible is not always easy to understand and why that is.  Already out for ordering on UK Amazon.

Daniel S. Milo, Good Enough: The Tolerance for Mediocrity in Nature and Society, on a quick browse seemed to have interesting points.

Sunday assorted links

1. “All-day Chelsea restaurant the Wilson has debuted a new menu — except it’s only for dogs. The dog food was put together by culinary director Jeff Haskell and includes fancy (and wildly expensive) dishes like a 16-ounce grilled ribeye steak ($42), pan-roasted salmon ($28), and grilled chicken breast ($16). It’ll be available on the restaurant’s side patio for now, but will expand to the front terrace once the weather is warmer. See the full menu below.”  Link here.

2. The strange death of Tory economic thinking.

3. Images of Pedro Figari paintings.

4. No great stagnation for the complacent class.

5. Northern Irish cultural pride.  By Megan McArdle.

6. You’d better not encourage radical Chinese scientists (NYT).

UK fact of the day

Unless Labour and the Conservatives can cobble together a Brexit deal that is supported by parliament, then Britain’s election-weary voters will have their fifth nationwide election in only six years.

That is from Matthew Goodwin in The Times, there is also Matthew’s book National Populism: The Revolt Against Liberal Democracy.  Remember how we used to praise parliamentary systems for their decisiveness?

Early-career setback and future career impact

Setbacks are an integral part of a scientific career, yet little is known about whether an early-career setback may augment or hamper an individual’s future career impact. Here we examine junior scientists applying for U.S. National Institutes of Health (NIH) R01 grants. By focusing on grant proposals that fell just below and just above the funding threshold, we compare “near-miss” with “near-win” individuals to examine longer-term career outcomes. Our analyses reveal that an early-career near miss has powerful, opposing effects. On one hand, it significantly increases attrition, with one near miss predicting more than a 10% chance of disappearing permanently from the NIH system. Yet, despite an early setback, individuals with near misses systematically outperformed those with near wins in the longer run, as their publications in the next ten years garnered substantially higher impact. We further find that this performance advantage seems to go beyond a screening mechanism, whereby a more selected fraction of near-miss applicants remained than the near winners, suggesting that early-career setback appears to cause a performance improvement among those who persevere. Overall, the findings are consistent with the concept that “what doesn’t kill me makes me stronger.” Whereas science is often viewed as a setting where early success begets future success, our findings unveil an intimate yet previously unknown relationship where early-career setback can become a marker for future achievement, which may have broad implications for identifying, training and nurturing junior scientists whose career will have lasting impact.

That is the abstract of a new paper by Yang Wang, Benjamin F. Jones, and Dashun Wang.

Automation and Top Income Inequality

For almost 40 years, inequality within the top percentile of the income distribution, measured as the ratio of income share of top 0:1% to the income share of top 1%, has been increasing in the US. The income of super-rich people increased more than the income of rich people. In this paper, we show that improvements in automation technology (the number of tasks for which capital can be used) is an important factor contributing to this inequality. We consider a model in which labor has a convex cost and capital has a linear cost. This leads to a decreasing returns to scale profit function for entrepreneurs. As capital replaces labor in more and more tasks, the severity of diseconomies of scale diminishes, hence the market share of top-skilled entrepreneurs increases. If entrepreneurial skill is distributed according to a Pareto distribution, then top income distribution can be approximated by a Pareto distribution. We show that the shape parameter of this distribution is inversely related to the level of automation. Finally, we rationalize convex cost of labor using the theory of efficiency wage.

That is from a new paper by Omer Faruk Koru, via the excellent Kevin Lewis.

Solve for the equilibrium

This one concerns China:

A person familiar with the negotiations said Myanmar’s government reached out to the U.S. to request help reviewing the contract [with China] to ensure it didn’t include any hidden traps. This person said other Western countries, including the U.K. and Australia, provided similar assistance.

The negotiations “were very much Burmese-led but armed with the advice of the Americans and others as well. We were able to go to the Chinese [and say], ‘This part is OK, this part is problematic in terms of debt,’” the person said, referring to the country by its previous name.

The Myanmar port deal is part of an economic and diplomatic influence campaign known as the Belt and Road Initiative, a signature effort by Chinese President Xi Jinping to dot the globe with Chinese-funded infrastructure projects.

Here is the full WSJ story by Ben Kesling and Jon Emont.

Should we break up the big tech companies?

That is my piece in the Globe and Mail, excerpted with edits from my new Big Business: A Love Letter to an American Anti-Hero, here is one excerpt:

Furthermore, it is striking just how effective the major tech companies have been as innovators. Other than providing the best free search in the world, Alphabet – the umbrella corporation under which Google is a subsidiary – gave us Gmail, one of the best and biggest e-mail services in the world, for free. Google Maps, which is also free, is pretty neat, too.

Then, despite the risks identified by critics of the deal – that YouTube appeared to be a bottomless pit for copyright-violation suits and nasty comments – Google bought the streaming-video service for US$1.65 billion, and dramatically upgraded it. Google cleaned up the legal issues, using its advanced software capabilities to spot copyright violations while enforcing takedown requests, improving search and heavily investing in the technology that has helped make video so widely used on the internet today.

In 2005, Google purchased Android and elevated the company’s open-source system to the most commonly used cellphone software in the entire world. Because of the Google-Android combination, hundreds of millions of people have enjoyed better and cheaper smartphones. More generally, Google has made most of its software open-source, enabling others to build upon it with additional advances, with entire companies now devoted to helping other companies build upon that infrastructure – meaning Google has not likely been the major beneficiary of its own actions.

Google, by way of Alphabet, has taken a lead role in developing self-driving vehicles and the underlying artificial intelligence, now being developed through Waymo; by throwing its weight behind this, Alphabet made the concept more publicly acceptable, and it could potentially save many lives on the road. After Hurricane Maria devastated Puerto Rico, Alphabet also stepped in to do good, deploying its work-in-progress Project Loon to restore internet access, which may eventually be integral for remote areas in Africa. It’s a bold attempt to create a better and more connected living situation for some of the world’s more vulnerable people.

All that from a company that is just a little more than 20 years old. Is this really the kind of company we should be punishing?

There are other points of interest at the link.

Friday assorted links

1. Wolves return to the Netherlands after 140 years.

2. Points about politics, true ones, from Matt Y.

3. Audiobook of *Big Business: A Love Letter to an American Anti-Hero* is available, here is one sound clip.

4. Markets in everything: “You can now hire someone to drink your bubble tea in China.

5. “Canada: one Indigenous group accuses other of cultural appropriation in award row.

6. There is no great stagnation: “A quieter airplane toilet flush may soon be on its way.

An Interview with Preston McAfee

Here’s a good interview by the Richmond Fed of Preston McAfee. McAfee was one of the designers of the FCC’s spectrum auctions and used that experience to move from academia to technology firms. He has held top positions at Yahoo, Google and Microsoft. Here’s one issue that I have discussed before, tacit collusion among AIs..

EF: What are the implications of machine learning, if any, for regulators?

McAfee: It is likely to get a lot harder to say why a firm made a particular decision when that decision was driven by machine learning. As companies come more and more to be run by what amount to black box mechanisms, the government needs more capability to deconstruct what those black box mechanisms are doing. Are they illegally colluding? Are they engaging in predatory pricing? Are they committing illegal discrimination and redlining?

So the government’s going to have to develop the capability to take some of those black box mechanisms and simulate them. This, by the way, is a nontrivial thing. It’s not like a flight recorder; it’s distributed among potentially thousands of machines, it could be hundreds of interacting algorithms, and there might be hidden places where thumbs can be put on the scale.

I think another interesting issue now is that price-fixing historically has been the making of an agreement. In fact, what’s specifically illegal is the agreement. You don’t have to actually succeed in rigging the prices, you just have to agree to rig the prices.

The courts have recognized that a wink and a nod is an agreement. That is, we can agree without writing out a contract. So what’s the wink and a nod equivalent for machines? I think this is going somewhat into uncharted territory.

Coasean kidnappings and the bargaining range

One of the highest ransoms ever paid — US $60 million for the two Born brothers in Argentina in 1975 — was negotiated by one of the captives himself: Jorge Born.  As a company insider, he knew how much money could be raised, but it still took seven months before his captors were convinced that they had truly squeezed him dry.  When it finally arrived, the father felt he had no option but to accede to the memorandum signed by his son and his kidnappers.  So negotiators work extremely hard to avoid parallel negotiations and bat away unhelpful interventions from the hostage.  It is not surprising that some victims despair.

That is from the new and interesting Kidnap: Inside the Ransom Business, by Anja Shortland.

Samir Varma on the forthcoming tech breakthroughs

From my email:

We are now starting to get a hint of the future transformative technologies that you guessed were on their way in “The Great Stagnation”. You had not speculated on what they might be, but there are faint hints on what is likely to happen.

I believe this article is one leg: extremely fast air travel. The second leg is the Hyperloop and similar: extremely fast ground travel. The third leg is synthetic biology (e.g: The fourth leg is quantum computing, which is finally starting to show that it might work. And the fifth, and final leg, is fusion energy, which looks eerily like it will actually come to fruition this time.
Put those 5 together and you have the makings of a new economy, with a huge burst of growth to come for many decades. These are just faint hints, of course, but they’re starting to get increasingly clear.

Is work fun?

Ladders runs an excerpt from my book Big Business: A Love Letter to an American Anti-Hero, here is one part:

Another way to think about the non-pay-related benefits of having a job is to consider the well-known and indeed sky-high personal costs of unemployment. Not having a job when you want to be working damages happiness and health well beyond what the lost income alone would account for. For instance, the unemployed are more likely to have mental health problems, are more likely to commit suicide, and are significantly less happy. Sometimes there is a causality problem behind any inference—for instance, do people kill themselves because they are unemployed, or are they unemployed because possible suicidal tendencies make them less well suited to do well in a job interview? Still, as best we can tell, unemployment makes a lot of individual lives much, much worse. In the well-known study by economists Andrew E. Clark and Andrew J. Oswald, involuntary unemployment is worse for individual happiness than divorce or separation. Often it is more valuable to watch what people do rather than what they say or how they report their momentary moods.

There is much more at the link.

Thursday assorted links

1. Umps are bad at calling strikes.

2. The Non-Non-libertarian FAQ.

3. Small towns are doing better out west.

4. “The Travis Corcoran novel (a sequel to last year’s winner) the moon colonists consult a “Cowen wiki” to figure out where to eat, and Corcoran says in the Afterword that this is a hat tip to you.”  Or so I am told.

5. Why doesn’t the price of on-line higher education fall more?  A very interesting and important symposium.

6. “The data don’t seem to support the claim that human capital investments are most effective when targeted at younger ages.”  A very interesting and important post.