Month: September 2019
The lack of growth response to “Washington Consensus” policy reforms in the 1980s and 1990s led to widespread doubts about the value of such reforms. This paper updates these stylized facts by analyzing moderate to extreme levels of inflation, black market premiums, currency overvaluation, negative real interest rates and abnormally low trade shares to GDP. It finds three new stylized facts: (1) policy outcomes worldwide have improved a lot since the 1990s, (2) improvements in policy outcomes and improvements in growth across countries are correlated with each other (3) growth has been good after reform in Africa and Latin America, in contrast to the “lost decades” of the 80s and 90s. This paper makes no claims about causality. However, if the old stylized facts on disappointing growth accompanying reforms led to doubts about economic reforms, new stylized facts should lead to some positive updating of such beliefs.
4. “We find that respondents who expect severe global climate change damages and who have little confidence in current mitigation efforts are more opposed to geoengineering than respondents who are less pessimistic about global damages and mitigation efforts.”
5. English is weird.
It’s often said that Australia hasn’t had a recession in nearly 30 years. Paulina Restrepo-Echavarria and Brian Reinbold of the Federal Reserve Bank of St. Louis take a closer look. If a recession is defined as two quarters of negative growth in GDP then the claim is true but if you define a recession as two quarters of negative growth in GDP per capita then there have been three such recessions since 1991: circa 2000-2001, 2005-2006 and 2018-2019.
Most countries, however, have had more recessions when measured in GDP per capita than in GDP and Australia still looks comparatively good on this measure. Moreover, the official definition of a US recession is not two quarters of negative growth in real GDP it’s the more holistic
A significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.
Did Australia have three recession since 1991 by this measure? It’s difficult to say but I would look more to unemployment rates. The following graph shows Australian real GDP growth rates in purple measured quarterly, real GDP per capita in green measured annually and the unemployment rate in blue. (The data is not identical to Restrepo-Echavarria and Reinbold (RER) as I use FRED data and the FRED economists do not!). As per RER the purple line is generally above the green so you are more likely to see recessions in GDP per capita than in GDP. Take a look at the unemployment rate, however. The 2005-2006 Australian “recession” is completely absent in unemployment so I would rule that out. I also do not see any recession as measured by unemployment in 2018-2019, perhaps it is coming but I would rule it out as of today. The unemployment measure clearly identifies recessions circa 2001-2002 which agrees with RER and also in 2008-2009 where RER do not identify a recession!. Thus, the RER identification of recessions doesn’t work very well as it has both false positives and false negatives.
On the larger issue of Australian economic performance, at worst, I would identify two mild recessions since 1991, circa 2001-2002 and 2008-2009. Now look again at the graph. The shading is US recessions! The Australian and US economies are united enough and subject to similar enough shocks that US recession dating clearly picks out Australian recessions as measured by increases in unemployment rates.
The bottom line is that however you measure it, Australian performance looks very good. Moreover RER are correct that one of the reasons for strong Australian economic performance is higher population growth rates. It’s not that higher population growth rates are masking poorer performance in real GDP per capita, however, it’s more in my view that higher population growth rates are contributing to strong performance as measured by both real GDP and real GDP per capita.
Evidence for the Gurri thesis:
How does the internet affect government approval? Using surveys of 840,537 individuals from 2,232 subnational regions in 116 countries in 2008-2017 from the Gallup World Poll and the global expansion of 3G networks, we show that an increase in internet access reduces government approval and increases the perception of corruption in government. This effect is present only when the internet is not censored and is stronger when traditional media is censored. Actual incidents of corruption translate into higher corruption perception only in places covered by 3G. In Europe, the expansion of mobile internet increased vote shares of anti-establishment populist parties.
With the arrival of autonomous weapons systems (AWS) on the 21st century battlefield, the nature of warfare is poised for dramatic change. Overseen by artificial intelligence (AI), fueled by terabytes of data and operating at lightning-fast speed, AWS will be the decisive feature of future military conflicts. Nonetheless, under the American way of war, AWS will operate within existing legal and policy guidelines that establish conditions and criteria for the application of force. Even as the Department of Defense (DoD) places limitations on when and how AWS may take action, the pace of new conflicts and adoption of AWS by peer competitors will ultimately push military leaders to empower AI-enabled weapons to make decisions with less and less human input. As such, timely, accurate, and context-specific legal advice during the planning and operation of AWS missions will be essential. In the face of digital-decision-making, mere human legal advisors will be challenged to keep up!
p.s. What’s with the “Frank”? How about just Frank?
p.p.s. Don’t ask about the judges.
The author is James Hankins, and the subtitle is Soulcraft and Statecraft in Renaissance Italy. Here is one excerpt:
I have sought to present the political ideas of the humanists as the expression of a movement of thought and action, similar in its physiognomy if not in its content to the movement of the philosophes of the Enlightenment. It was a movement that was stimulated by a crisis of legitimacy in late medieval Italy and by widespread disgust with its political and religious leadership. Its adherents were men who had wide experience — often bitter, personal experience — with tyranny. They knew that oligarchs and even popular governments could be as tyrannical as princes. Their movement was largely in agreement about its goals: to rebuild Europe’s depleted reserves of good character, true piety, and practical wisdom. They also agreed widely about means: the revival of classical antiquity, which the humanists presented as an inspiring pageant, rich in examples of noble conduct, eloquent speech, selfless dedication to country, and inner moral strength, nourished by philosophy and uncorrupt Christianity. The humanist movement yearned after greatness, moral and political. Its most pressing historical questions were how ancient Rome had achieved her vast and enduring empire, and whether it was possible to bring that greatness to life again under modern conditions. This led to the question of whether it was the Roman Republic or the Principate that should be emulated; and, once the humanists had learned Greek, it provoked the further question of whether Rome was the only possible ancient model to emulate, or whether Athens or Sparta, or even the Persia of Xenophon’s Cyrus, held lessons for contemporary statesmen.
An excellent book, you can order it here.
Here’s how one MR reader spent his summer vacation:
A study in London found 74.9 per cent of people choose to stand instead of walking, especially on the longer ones. With this ‘stand on the right, walk on the left’ rule, we’re giving up 50 per cent of the space on our escalators for roughly 25 per cent of our commuters.
Look for this problem next time during rush hour where the “standing” side of the escalators ends up with a line of people trying to get on. It may seem counterintuitive, but people who are walking up escalators to save seconds off their commute are actually slowing everyone else down.
Efficiency aside, there’s another reason why walking on escalators might be a bad idea—safety. Escalator accidents are much more common than you think.
Many of those victims were likely walking. A study in Tokyo found almost 60 per cent of escalator accidents between 2013 and 2014 resulted from people using escalators improperly, which includes people walking or running on them.
Here is the full story, via Michelle Dawson. Walking up the escalator remains time efficient, however, if those choosing to walk have much higher valuations of time than those who choose to stand. Might that be the case?
The Prospect has identified 30 meaningful executive actions, all derived from authority in specific statutes, which could be implemented on Day One by a new president. These would not be executive orders, much less abuses of authority, but strategic exercise of legitimate presidential power.
Without signing a single new law, the next president can lower prescription drug prices, cancel student debt, break up the big banks, give everybody who wants one a bank account, counteract the dominance of monopoly power, protect farmers from price discrimination and unfair dealing, force divestment from fossil fuel projects, close a slew of tax loopholes, hold crooked CEOs accountable, mandate reductions of greenhouse gas emissions, allow the effective legalization of marijuana, make it easier for 800,000 workers to join a union, and much, much more. We have compiled a series of essays to explain precisely how, and under what authority, the next president can accomplish all this.
2. Eli Dourado: how do we move the needle on progress?
6. “Rather more surprising, was the fact that the non-religious were willing to part with cold hard cash in order not to be prayed for.”
Nonetheless, 75% of immigrants integrate into the majoritarian culture over the period of a generation. Interestingly, we show by counterfactual analysis that a lower cultural intolerance of Italians towards minorities would lead to slower cultural integration by allowing immigrants a more widespread use of their own language rather than Italian in heterogamous marriages.
That is from a new NBER paper by Alberto Bisin and Giulia Tura.
An excellent review, here is the closing bit:
Labeling it a “love letter,” would render Cowen promiscuous (or is it adulterous?) since the letter is addressed to so many businesses. Seen as a fan letter, the book works much better. Cowen, a huge NBA fan, realizes that his hardwood heroes are supposed to be great at basketball. It’s OK to admire them from afar and not an affront if they cannot be your actual friends, as long as they can drain three-pointers. Likewise, with his business anti-heroes.
Do read the whole thing.
That is the new biography by Benjamin Moser, along with Ingmar Bergman bios you can call this topic my soap opera equivalent. Here are a few scattered bits:
“I’m only interested in people engaged in a project of self-transformation,” Susan wrote in 1971…she read about the University of Chicago, “which didn’t have a football team, where all people did was study, and where they talked about Plato and Aristotle and Aquinas day and night. I thought, that’s for me.”
The connection between sex and pain was so natural for her — “All relationships are essentially masochistic,” she told Burch — that she could never imagine the loving partnership of equals that Freud had posited. Her “profoundest experience,” of her mother’s giving and then withdrawing her love, was perpetually renewed. Harriet dribbled out her affection by the scant thimbleful, which Susan gratefully slurped down: “I suppose, with my sore heart + unused body, it doesn’t take much to make me happy.” A couple of weeks later, she described the “total collapse” of their relationship and “blindly walking through a forest of pain.”
Brodsky, after all, was the friend she dreamed of…the teacher she hoped to find in Philip Rieff; the companion she had sought all her life, an intellectual and artistic equal, and even a superior. She never found another friend as congenial, and it was in these terms that she mourned his premature death, at fifty-five. I’m all alone,” she told a friend. There’s nobody with whom I can share my ideas, my thoughts.”
Recommended, for those who care.
In a follow-up paper released Friday, another economist, Adam Ozimek, revisited Mr. Blinder’s analysis to see what had happened over the past decade. Some job categories that Mr. Blinder identified as vulnerable [to offshoring], like data-entry workers, have seen a decline in United States employment. But the ranks of others, like actuaries, have continued to grow.
Over all, of the 26 occupations that Mr. Blinder identified as “highly offshorable” and for which Mr. Ozimek had data, 15 have added jobs over the past decade and 11 have cut them. Altogether, those occupations have eliminated fewer than 200,000 jobs over 10 years, hardly the millions that many feared. A second tier of jobs — which Mr. Blinder labeled “offshorable” — has actually added more than 1.5 million jobs.
But Mr. Blinder didn’t miss the mark entirely, said Mr. Ozimek, who is chief economist at Upwork, an online platform for hiring freelancers. The new study found that in the jobs that Mr. Blinder identified as easily offshored, a growing share of workers were now working from home. Mr. Ozimek said he suspected that many more were working in satellite offices or for outside contractors, rather than at a company’s main location. In other words, technology like cloud computing and videoconferencing has enabled these jobs to be done remotely, just not quite as remotely as Mr. Blinder and many others assumed.
Here is more from Ben Casselman (NYT).
4. MIE: Mattel launches gender-neutral dolls.
6. Chinese housing privatization: the most important economic policy you’ve never discussed?