Month: August 2019
One of the more important things I’ve changed my mind about recently is the best cause to donate to. I now put the most credence on the possibility that the best option is donating to a fund that invests the money and disburses strategically in the future. I will refer to this as “giving later”, though I actually support giving now to a donor-advised fund set up to disburse in the future, for the value that donating now can have for encouraging others to donate (and because of the risk that even if one thinks one will donate later, one will at some point change one’s mind).
There are several reasons why I prefer a fund that disburses in the future. First, I believe people currently discount the future too much (see hyperbolic discounting, climate change). If people discount the future, that causes the rate of return on investments to always be higher than the growth rate (else people would not be willing to invest). In economics, the Ramsey equation is often used to determine how much a social planner should discount future consumption. It is specified by r=ηg+δ, where r is the real rate of return on investment, η is the extent to which marginal utility decreases with consumption, g is the growth rate, and δ represents pure time preferences. Unless one personally puts a particularly high value on δ, it makes sense to invest today and spend later to take advantage of the gap between the real rate of return on investment (~7%) and the growth rate (~3-4%).
…A second reason that I prefer a fund that disburses in the future is that I think we have very limited knowledge today and that our knowledge is increasing. I am concerned about the problem that research results do not generalize all that well, but with respect to economic development I am optimistic that the situation can improve. With respect to technological change which could bring huge benefits or risks, I think we know even less about the problems future generations will face and may be able to understand them better in the future. It seems unlikely to me that we are at the exact moment in time, out of all periods of time from here on out into the future, that we actually have the best opportunity to do good. We may not recognize the best moment when it comes, but that just pushes the argument back a step: I also think it unlikely that we are at the best moment, out of the whole foreseeable future, to have the best combination of knowledge and opportunity to do good.
Interesting throughout, here is the link, and in sum:
I think it appeals psychologically to many people – myself included – to think that we are living at a particularly important time. However, I recognize that people have thought this throughout history. As more time has passed, I have become increasingly confident that my gut antipathy to the idea that it’s better to “give later” is just a cognitive bias.
Here is the transcript and audio, here is the summary:
Masha joined Tyler in New York City to answer his many questions about Russia: why was Soviet mathematics so good? What was it like meeting with Putin? Why are Russian friendships so intense? Are Russian women as strong as the stereotype suggests — and why do they all have the same few names? Is Russia more hostile to LGBT rights than other autocracies? Why did Garry Kasparov fail to make a dent in Russian politics? What did The Americans get right that Chernobyl missed? And what’s a good place to eat Russian food in Manhattan?
Here is excerpt:
COWEN: Why has Russia basically never been a free country?
GESSEN: Most countries have a history of never having been free countries until they become free countries.
COWEN: But Russia has been next to some semifree countries. It’s a European nation, right? It’s been a part of European intellectual life for many centuries, and yet, with the possible exception of parts of the ’90s, it seems it’s never come very close to being an ongoing democracy with some version of free speech. Why isn’t it like, say, Sweden?
GESSEN: [laughs] Why isn’t Russia like . . . I tend to read Russian history a little bit differently in the sense that I don’t think it’s a continuous history of unfreedom. I think that Russia was like a lot of other countries, a lot of empires, in being a tyranny up until the early 20th century. Then Russia had something that no other country has had, which is the longest totalitarian experiment in history. That’s a 20th-century phenomenon that has a very specific set of conditions.
I don’t read Russian history as this history of Russians always want a strong hand, which is a very traditional way of looking at it. I think that Russia, at breaking points when it could have developed a democracy or a semidemocracy, actually started this totalitarian experiment. And what we’re looking at now is the aftermath of the totalitarian experiment.
GESSEN: …I thought Americans were absurd. They will say hello to you in the street for no reason. Yeah, I found them very unreasonably friendly.
I think that there’s a kind of grumpy and dark culture in Russia. Russians certainly have a lot of discernment in the fine shades of misery. If you ask a Russian how they are, they will not cheerfully respond by saying they’re great. If they’re miserable, they might actually share that with you in some detail.
There’s no shame in being miserable in Russia. There’s, in fact, a lot of validation. Read a Russian novel. You’ll find it all in there. We really are connoisseurs of depression.
Finally there was the segment starting with this:
COWEN: I have so many questions about Russia proper. Let me start with one. Why is it that Russians seem to purge their own friends so often? The standing joke being the Russian word for “friend” is “future enemy.” There’s a sense of loyalty cycles, where you have to reach a certain bar of being loyal or otherwise you’re purged.
1. Why did it take so long to invent the bicycle? (recommended)
3. Italy’s $1 homes.
4. “Milan’s local government says that some 40 per cent of the city’s buildings have been sprayed on, about 40,000 in total.” 2006 link, but I can assure you still relevant.
In an insightful paper with human interest but also public policy implications Jasmin Barman-Aksözen writes:
My parents and I searched throughout my entire childhood for an explanation of why I frequently had unbearable burning pain after spending even short periods of time outdoors on a sunny day. This pain was incapacitating and often left me in agony for days, during which I was unable to go to school, to sleep, to tolerate even weak light exposure, or the body heat of my parents as they tried to comfort me. Not a single pain killer provided any relief, and the only option for me was to wait alone in a darkened and cooled room until the pain sub-sided. Of course, we tried everything that physicians recommended; still, not even high sun protection factor sunscreens helped prevent the symptoms despite the fact that they were obviously caused by sunlight. It must have been hard for my parents to see me in such a painful state without being able to alleviate or prevent it. What’s more, the worst thing was that classmates, teachers, and even physicians did not believe me when I told them about the symptoms; I even brought photographs showing myself with swollen and burnt hands and face. Yet, this didn’t stop some from making fun of me when I wore long clothing, hats, or used an umbrella on sunny days to protect myself from the sun’s rays. Eventually, after I was sent to see a psychologist for my “made-up symptoms,” I could no longer tolerate the derision and being treated with such condescension, and decided to stop sharing my experiences with healthcare professionals altogether.
Finally, a full 26 years after the first symptoms, Dr Google provided the answer! In April 2006, I found myself yet again unable to sleep because, despite all precautionary measures taken, I had burnt myself in the strong sunlight of spring. I entered the combination of my symptoms in the Google search mask and, surprisingly, there was a new link in Wikipedia with an expression I had not encountered before “Erythropoietic Protoporphyria.”
The made-for-tv aspect continues as Barman-Aksözen earns a PhD, moves to Switzerland to join the world’s leading lab studying these issues and, yes, develops the first effective treatment!
Afamelanotide was approved for the treatment of adult EPP patients in the European Union (EU) at the end of 2014.
But now is where reality and public policy step back in.
In April 2019, most EPP patients in Europe, however, still do not have access to the only treatment for their condition and are still unnecessarily suffering from fre-quent excruciating pain, social isolation, and impaired life choices. What went wrong? Before a newly approved medicine reaches patients, most European countries per-form a Health Technology Assessment (HTA) to evaluate the benefits in relation to the costs of the new product in order to support decisions on whether it should be reimbursed by the respective national health systems.
Getting the drug approved is only the first step. Now they have to get the medical authorities to pay for it and that means they have to show the drug is not only effective but cost effective given the disability. Barman-Aksözen goes on to describe her efforts to get the drug approved for actual use. She doesn’t put it this way but essentially she has to solve the collective action problem and form a lobbying group to make the case that patients with her disease, EPP, face a serious disability. It’s easy to measure death, however, but hard to measure the “disability weight” on say blindness. The WHO says blindness has a disability weight of .195 today, but in 2004 they gave it a weight of 0.594. Hmmm. One study of Afamelanotide suggests it has a cost of £373,000 per DALY averted, which is high, even though the article recommends adoption. Many meetings ensue in which the case for and against Afamelanotide is made. The process is slow. Years go by. Much depends on seemingly minor choices in how to present the data.
I was reminded of Mancur Olson’s discussion in the Rise and Decline of Nations:
Distributional coalitions make decisions more slowly than the individuals and firms which they comprise [and] tend to have crowded agendas and bargaining tables…The accumulation of distributional coalitions increases the complexity of regulation, the role of government, and the complexity of understandings, and changes the direction of social evolution.
In other words, socializing health care means socializing decisions about how to allocate health care. A difficult tradeoff.
Addendum: The FDA has yet to approve Afamelanotide.
Hat tip: Joe P.
That was actually a conservative Beatles song of course, and these days the conservatism is popping up in the American lack of enthusiasm for the Hong Kong protestors. That is the focus of my latest Bloomberg column, here is one excerpt:
Since the protests in Hong Kong started two months ago, I have been struck by the coolness of the American response. I am referring not just to President Donald Trump, who has reiterated that the dispute is an internal Chinese matter. Both the social media I sample and the people I know have been fairly quiescent. I haven’t seen that much cheering and rooting for the protesters, nor have the major Democratic presidential candidates made a show of stressing their dissent from Trump on this issue [there is one Elizabeth Warren tweet]…
The relative indifference may be especially hard to explain when it comes to Americans. After all, the U.S. owes its existence to a rebellion against the British Empire, and against especially long odds. America probably would not have won independence without direct French assistance, while Spain and other nations helped to distract the British on the broader global stage.
Remember the enthusiasm we used to have for the Soviet dissidents, or for Solidarity, also movements facing apparently long odds? In sum:
…Americans are preoccupied with fighting each other over political correctness, gun violence, Trump and the Democratic candidates for president. To be sure, those issues deserve plenty of attention. But they are soaking up far too much emotional energy, distracting attention from the all-important struggles for liberty around the world.
It’s 2019, and the land of the American Revolution, a country whose presidents gave stirring speeches about liberty and freedom in Berlin during the Cold War, remains in a complacent slumber. It really is time to Make America Great Again — if only we could remember what that means.
There is more at the link, including a discussion of recent demonstrations in Russia as well.
Venice’s adoption of these Renaissance styles was itself a remarkable break with the past, for the Venetians had always favored the sophisticated East when it came to artistic expression. But times were changing. The flame of Byzantium was flickering and even Venice turned its attention to the Western terra firma. Among the earliest Renaissance artists in Venice was Jacopo Bellini. The son of a Venetian tinsmith, Bellini worked under Gentile da Fabriano, who produced various now-lost works for the Great Council in 1408. Bellini accompanied his master to Florence, where he remained for some years learning the new artistic techniques pioneered there. Later, Bellini traveled to Bruges, where he was introduced to the use of oil paints on canvas — a medium that would forever change Venice.
The seat of high culture in fifteenth-century Venice was not at the governmental center, but in its outskirts at Padua. There, since 1222, a university had flourished that drew the best minds in Europe and provided an excellent education for Venice’s elite. After returning to Venice, Bellini set up shop in Padua with his two sons, Gentile and Giovanni. They were likely influenced by the arrival in 1443 of Donatello, who lived in Padua for about a decade. His masterwork during those years was the equestrian statue of the condottiere Erasmo da Narni…This magnificent life-size bronze was the first such statue produced since the days of ancient Rome.
That is from Thomas F. Madden, Venice: A New History.
I am pleased to have made the longlist (FT link) with my Big Business: A Love Letter to an American Anti-Hero*.
2. Silent book club.
3. Eli Dourado geoengineering schemes (speculative, literally).
4. “Dragons, they say, should survive on wild deer and pigs, not chickens and goats tossed from the back of a truck by a ranger.” (NYT link)
6. Against petitions (NYT).
In a story beloved by economists it’s said that Milton Friedman was once visiting China when he was shocked to see that, instead of modern tractors and earth movers, thousands of workers were toiling away building a canal with shovels. He asked his host, a government bureaucrat, why more machines weren’t being used. The bureaucrat replied, “You don’t understand. This is a jobs program.” To which Milton responded, “Oh, I thought you were trying to build a canal. If it’s jobs you want, you should give these workers spoons, not shovels!”
A funny story but one I was reminded of by Greta van Susteren’s not so funny tweet.
Bear in mind that Van Susteren has 1.2 million followers and, according to Forbes, is the 94th most powerful woman in the world.
Of course, there is something odd about using advanced technology to do a job that could be done by millions of immigrants who would be quite happy for the work, but Van Susteren is also against immigration.
Is there anything to be said for banning automation in low-skilled work? Let’s be charitable and assume that there is a problem with not enough work for low-skill workers. It’s unlikely that the best way to address this problem is by banning improvements in productivity. Which sectors are to be artificially restrained and by how much? Should fast checkout workers be banned? Should we prevent customers from walking the aisles and filling their own shopping carts? Remember, self-selection of goods was also once an innovation. As Friedman pointed out, it’s all too easy to reduce productivity.
To the extent that low-skill workers can’t find work (i.e. ZMP workers) the appropriate policy is a wage subsidy as Nobelist Edmund Phelps has suggested (see also the MRU video and Oren Cass on wage subsidies). A wage subsidy is better targeted than the Luddite smashing of machines and because it doesn’t prevent productivity from growing it makes for greater wealth to support the subsidy.
Generally speaking, most people find the idea of workers being replaced by robots or software worse than if the jobs are taken over by other workers. But when their own jobs are at stake, people would rather prefer to be replaced by robots than by another employee, according to a new study.
…he has done something that even the nonprofits receiving his millions remark is highly unusual: He has given them life-changing money with virtually no restrictions, formal vetting, or oversight, according to Recode’s interviews with eight of those funded by him and others familiar with his donations.
Funders of Bezos’s stature typically cast an open call for proposals, spending months poring over applications from nonprofits and sometimes insisting on site visits, interviews, and reams of financial data. Bezos’s team instead quietly cold-called the nonprofits he was already interested in backing, asked them for a few 500-word answers, and then wired them millions of dollars in cash or Amazon shares within about six weeks of making initial contact.
Funders require nonprofits to fill out reports as often as every quarter, outlining the recipients progress on the funder’s own favorite dozen-plus metrics. Bezos does require an annual report, but he doesn’t even send a rubric; nonprofits can effectively create their own accountability and send him whatever type of update they want.
Funders are also prone to placing copious restrictions on their money to ensure it is spent on whatever it is they care about. What does Bezos do? He’s taken “no strings attached” to the extreme, effectively letting the nonprofits spend the money on anything that offers shelter to homeless families, even if the initiative was nowhere to be found on the original applications or grant agreements.
Brazil’s fiscal incontinence is legendary. The number of civil servants grew by 60% between 1995 and 2016, to 12m. Since public-sector workers cannot be fired or have their pay cut, they become a permanent expense once hired. Perks such as raises for seniority can even extend to widows’ pensions, producing the unique “post-mortem promotion”. Nearly 80% of government spending in Brazil goes on salaries and pensions, compared with a global average of 50-60%. “Instead of a state that serves the public, you have a state that serves the state,” says Samuel Pessôa of the Brazilian Institute of Economics at Fundação Getúlio Vargas, a university.
Here is the full article from The Economist, which focuses on fiscal sanity in the state of Espirito Santo.
Several African countries have introduced state loan schemes. But governments have struggled to chase up debts. The private sector is now trying to do a better job. Kepler and Akilah, an all-female college in Kigali, are working with Chancen International, a German foundation, to try out a model of student financing popular among economists—Income Share Agreements. Chancen pays the upfront costs of a select group of students. Once they graduate, alumni pay Chancen a share of their monthly income, up to a maximum of 180% of the original loan. If they do not get a job, they pay nothing.
There was a thriving trade in human flesh. By the twelfth century the slave trade in Venice far surpassed that of other cities and other countries. The Venetians were incorrigible slave traders, and the markets of the Rialto and S. Giorgio were centres of slavery. They were eager for this particular source of income, since the profit on each item was said to be 1,000 per cent. They sold Russians and even Greek Christians to the Saracens. Men and women and children were bought or captured in the region of the Black Sea — Armenians and Georgians among them — before being despatched to Venice where they were in turn sold on to Egypt and Morocco and Crete and Cyprus. They sold boys and young women as concubines. One doge, Pietro Mocenigo, had in his seventies two young Turkish men in his entourage.
Many of them were consigned to Venetian households. No patrician family was complete without a retinue or three or four slaves; even Venetian artisans owned slaves, and used them in their shops or workshops. Venetian convents possessed slaves for domestic service. The galleys were stocked with slaves. But the city always needed a fresh supply; servile status was not inheritable. Many slaves were freed in the wills of their masters or mistresses. Marco Polo manumitted one of his slaves, Peter the Tartar, before his own death in 1324. In 1580 there were three thousand slaves in the capital. The black gondoliers in Carpaccio’s paintings of Venice are all slaves.
That is from Peter Ackroyd’s Venice: Pure City.