Month: December 2019
Brussels has been striving to secure the deal for six years, as it seeks to prove it has the negotiating muscle to broker meaningful agreements with Beijing that can defend European companies from unfair competition.
The European Commission and the bloc’s foreign policy chief signalled a tougher approach to China in March in a landmark document that branded it a “systemic rival” in some areas — an allegation Beijing denies. Ms Weyand, the chief official working for Phil Hogan, the EU’s trade commissioner, said that “we are moving at a snail’s pace on the investment agreement”.
That is from the FT., and of course that hardly counts as much progress. Elsewhere you will see Paul Krugman suggesting Trump has lost the trade war, but I don’t think he comes close to even seeing what the trade war with China is about. No matter what Trump says, the trade war is not about lowering the trade deficit. It is about (for a start) two major considerations: a) ensuring that national security-motivated partial economic decoupling takes place on terms not so unfriendly to America, and b) giving America levers to make sure China does not make such significant inroads into the world’s tech infrastructure, most notably with 5G but not only.
The stipulation of Chinese purchases of American exports, which probably they will not and cannot meet, is in fact a lever to give the United States enforcement power over the less tangible parts of agreement, which is indeed most of the agreement. We want China to be in default of the agreement terms, so we may threaten them with tariffs to enforce compliance elsewhere, and so that is a better rather than worse outcome for the United States.
On the trade war, agnosticism is still the correct opinion, at least so far, as we are not even sure we know of the full agreement, or if America and China are visualizing signing literally different versions of the “same” agreement. And even once (or if) the full text(s) is revealed, we still won’t for some while know how either a) or b) are going, much less relative to the relevant counterfactuals.
In general, I am finding that commentary on the trade war is of relatively dubious value, in part for partisan reasons. The key here is to set aside your political views, and spend a lot of time talking with national security people.
4. Stephen L. Carter best books picks. And Australian best book of the year picks, hardly any overlap with any other lists. Or try these Irish lists. El Pais picks books of the century, very good selections.
Emmanuel Todd, Lineages of Modernity.
Susan Gubar, Late-Life Love: A Memoir.
Bernardine Evaristo. Girl, Woman, Other: A Novel. The Booker co-winner and yes the focus of black women’s gender-fluid lives in Britain sounds too PC, but I was won over. There is a Straussian reading of it as well.
Elizabeth Strout, Olive, Again: A Novel.
On the classical music front, Jean-Paul Gasparian’s Chopin CD is one of the best Chopin recordings ever, which is saying something.
The list of add-ons is I think a bit shorter than usual, which suggests that other people’s “best of” lists are declining somewhat in quality. In essence I construct this add-on list by ordering the items off other people’s lists which I am not already familiar with. I didn’t find so many undiscovered-by-me winners this time around, the Gubar and Strout being the main choices I drew from the discoveries of others.
Rather it is kludgy free trade we are getting these days, as I argue in my latest Bloomberg column. Here are a few scattered excerpts:
When it comes to China, the WTO structures were already being jerry-rigged. If anything, you could say that the point of the new trade regime is to make the jerry-rigging more transparent.
In fact, it is hard to see how trade relations with China could be anything but jerry-rigged. The Chinese economy is simply too different, and far more statist, than those of the economically developed Western nations or Japan. And yet China is now the world’s No. 2 economy and largest exporter.
The more important technology becomes to the U.S. and global economies, the more issues such as data storage and access will move to the forefront. Can the Chinese government demand that a technology company hand over user data? On whose servers do the data need to be stored? Can national storage be treated as a prerequisite for market entry? Again, the right answers cannot help but be complicated.
It is well-known in economics that exporting services is much more difficult than exporting resources or manufactured goods. It then follows that trade law for services will be messier and kludgier as well. Trade arrangements for services may feel ugly and excessively bureaucratic, but the underlying reality is that the principles of free trade are being extended, not repudiated.
At a larger scale, what to think of the first phase of the U.S.-China trade agreement? It is still difficult to divine the entire agreement, or how much of it will be announced publicly. The real core of the deal may be an impossible demand on the Chinese to buy many additional billions of dollars of goods from the U.S., with the very impossibility of that demand serving as a cudgel for enforcing Chinese compliance with the less tangible, harder-to-measure aspects of trade relations.
In short, this new era of international trade certainly looks messier. But maybe that’s because the resources of simplicity have been all but exhausted. Free trade isn’t yet dead. It’s just not quite as free as it used to be.
5. Firefighting expenditures in the western U.S.: “The expected net present value of this subsidy can exceed 20% of a home’s value.”
Established in 1945, the CFA franc is used in two African monetary zones, one for eight west African countries and the other for six mostly petro-states in central Africa. Since 1999, it has been pegged to the euro, giving the member states monetary stability while supporting trade with Europe.
In return, the members have to keep half of their foreign reserves in France, on which the French treasury pays 0.75 per cent interest.
A French official sits on the board of the regional central bank in both zones, and the currency is printed by France.
Here is more from David Pilling and Neil Munshi at the FT. The French don’t like the optics it seems, and not all of the African nations benefit from losing the option of devaluing their currencies. The nature of the replacement system, however, is not yet clear.
As an aside, occasionally you will meet people who claim this system costs the African nations hundreds of billions of dollars a year, through some kind of under-specified colonial imperialistic theft, combined with Junker fallacies I believe. You can file that one under “Big Time Conspiracy Theories That Most Americans Are Hardly Aware Of.” But I am, and it ain’t true: “…the current deal was actually profitable for the two African central banks because bank-to-bank credit is attracting a negative interest rate of -0.4%, but the central banks are receiving 0.75%.”
That said, if those nations are capable of running their own central banks, flexible exchange rates would indeed be an improvement. Is this one more like public health or electricity?
In the bad old days, health care in poor countries was just terrible. It wasn’t only the poverty, lack of hospitals and pharmaceuticals, and unsanitary conditions. In addition, doctors gave very bad advice and they also didn’t work very hard, as outlined in this paper. Citizens suffered accordingly.
Those conditions have improved somewhat, but actual health outcomes have improved a lot. You still can’t trust the local medical advice in Tanzania, but guess what? You have much better vaccines, greater access to antibiotics, more NGOs running health clinics, and better health care information, sometimes through the internet. If your kid has diarrhea, let the kid drink water, even unclean water! As for antibiotics (NYT):
Two doses a year of an antibiotic can sharply cut death rates among infants in poor countries, perhaps by as much as 25 percent among the very young, researchers reported on Wednesday.
In other words, the quality of the most important part of health care treatments bypassed the rest of the problems in poor economies and grew rapidly, even in countries with only so-so economic growth. The rate of reduction in child mortality has tripled in many countries since the 1990s, and by no means are those locales major economic winners as say Singapore and South Korea were.
Therein lies one of the most important (and under-reported) global changes in the last twenty years. It is now possible to have a decent public health system in a country with poor or mediocre political and economic institutions.
In other words, public health is no longer such an O-Ring service, an O-Ring service being one where everything has to go right for the service to be of decent quality. And advances are much, much easier when the O-Ring structure no longer rules.
The O-Ring citation is to a famous Michael Kremer paper — a trip to the moon is definitely an O-Ring process, because if one step is off the whole mission probably is a failure. But tasty fish curry is not — you can get a splendid version in some pretty dumpy countries, maybe even a better version in poorer places.
Electricity, however, it seems is still an O-Ring service, as evidenced by the recent power blackouts in South Africa.
What else is likely to become less of an O-Ring good or service in the next few decades to come? And what can we do to hasten such progress? Is there any chance of quality software production making that same kind of transition? Or might some goods and services return to a greater connection with the O-Ring model?
For this post I am very much indebted to a conversation with Garett Jones.
The author is Steven G Medema, and the subtitle is From Xenophon to Cryptocurrency, 250 Milestones in the History of Economics. It is over 500 pages, one page per idea, with lovely color plates next to each page of text. Test both your knowledge of economics and of history of economic thought. For instance, it covers the median voter theorem, linear programming, the socialist calculation debate, and much more. Very well done, and also a good gift book.
You can order it here.
Didn’t everyone used to wish for more and better cooperation? The 1960s left in particular, but pretty much everyone. And isn’t that what we got? And didn’t that — in fact — lead to rather spectacular rises in income inequality?
Consider one implication of the Garett Jones model, which is that more talented people gain more, in percentage terms, from cooperating and working with each other than do less talented people. The mere existence of a (non-universal) export sector is enough to establish this conclusion, but you can see why it is true using other arguments as well. If there are non-linear synergies from bringing together talent, those synergies with be stronger with greater amounts of talent by the very nature of the initial assumptions.
Organizing a high school band brings a modest boost in quality entertainment, but forming the Beatles or Rolling Stones a much much larger gain, again in both absolute and percentage terms. So if it is easier to organize bands of all sorts, income inequality likely will rise.
You are probably aware of the results that the higher wages in super-firms — clusters of lots of talent — relative to normal firms, account for a major share of income inequality. In other words, additional cooperation boosted income inequality.
Or maybe you saw the recent stories “90 percent of growth in high-tech jobs happened in just 5 metro areas.” That too is an instance of greater cooperation, and it has led to more income inequality, with the biggest gains coming in New York City and the Bay Area and a few other places.
More cooperation → → greater income inequality. Think about it.
Be careful what you wish for! Though I very much appreciate the virtues of additional cooperation.
Here is the final paragraph, there is much more detail throughout, recommended:
If we take what is known about the deal, its role as a Phase I deal leading to later deals, and assume it gets executed as described, with each side living up to their commitments, I think it is fair to describe this deal as a solid step forward. Realistically however, each side seems to be positioning themselves for the expected failure of the agreement and little reason to believe the deal will be executed as described. The Trump administration has maintained significant leverage if China does not follow through on its commitments and I have little realistic reason to believe China will meet its commitments. At the end of the day in any contentious negotiation, it comes down to placing risk adjust trust in your counterpart to execute their side of the agreement. Each side is signaling they have little faith in their counterpart. If we start from that premise, the Trump administration seems to have positioned themselves well expecting this deal to eventually collapse but also lower tariffs if by chance China does abide by it commitments.
…I would have to put the risk that this deal doesn’t see 2021 as close to 50%.
Here is the full post.
Men and women are different. A seemingly obvious fact to most of humanity but a long-time subject of controversy within psychology. New large-scale results using better empirical methods are resolving the debate, however, in favor of the person in the street. The basic story is that at the broadest level (OCEAN) differences are relatively small but that is because there are large offsetting differences between men and women at lower levels of aggregation. Scott Barry Kaufman, writing at Scientific American, has a very good review of the evidence:
At the broad level, we have traits such as extraversion, neuroticism, and agreeableness. But when you look at the specific facets of each of these broad factors, you realize that there are some traits that males score higher on (on average), and some traits that females score higher on (on average), so the differences cancel each other out. This canceling out gives the appearance that sex differences in personality don’t exist when in reality they very much do exist.
For instance, males and females on average don’t differ much on extraversion. However, at the narrow level, you can see that males on average are more assertive (an aspect of extraversion) whereas females on average are more sociable and friendly (another aspect of extraversion). So what does the overall picture look like for males and females on average when going deeper than the broad level of personality?
On average, males tend to be more dominant, assertive, risk-prone, thrill-seeking, tough-minded, emotionally stable, utilitarian, and open to abstract ideas. Males also tend to score higher on self-estimates of intelligence, even though sex differences in general intelligence measured as an ability are negligible . Men also tend to form larger, competitive groups in which hierarchies tend to be stable and in which individual relationships tend to require little emotional investment. In terms of communication style, males tend to use more assertive speech and are more likely to interrupt people (both men and women) more often– especially intrusive interruptions– which can be interpreted as a form of dominant behavior.
…In contrast, females, on average, tend to be more sociable, sensitive, warm, compassionate, polite, anxious, self-doubting, and more open to aesthetics. On average, women are more interested in intimate, cooperative dyadic relationships that are more emotion-focused and characterized by unstable hierarchies and strong egalitarian norms. Where aggression does arise, it tends to be more indirect and less openly confrontational. Females also tend to display better communication skills, displaying higher verbal ability and the ability to decode other people’s nonverbal behavior. Women also tend to use more affiliative and tentative speech in their language, and tend to be more expressive in both their facial expressions and bodily language (although men tend to adopt a more expansive, open posture). On average, women also tend to smile and cry more frequently than men, although these effects are very contextual and the differences are substantially larger when males and females believe they are being observed than when they believe they are alone.
Moreover, the differences in the subcategories are all correlated so while one might argue that even among the subcategories the differences are small on any single category when you put them all together the differences in male and female personalities are large and systematic.
Relatively small differences across multiple traits can add up to substantial differences when considered as a whole profile of traits. Take the human face, for example. If you were to just take a particular feature of the face– such as mouth width, forehead height, or eye size– you would have difficult differentiating between a male face and a female face. You simply can’t tell a male eyeball from a female eyeball, for instance. However, a look at the combination of facial features produces two very distinct clusters of male vs. female faces. In fact, observers can correctly determine sex from pictures with greater than 95% accuracy . Here’s an interesting question: does the same apply to the domain of personality?
…There now exists four large-scale studies that use this multivariate methodology (see here, here, here, and here). All four studies are conducted cross-culturally and report on an analysis of narrow personality traits (which, as you may recall, is where most of the action is when it comes to sex differences). Critically, all four studies converge on the same basic finding: when looking at the overall gestalt of human personality, there is a truly striking difference between the typical male and female personality profiles.
Just how striking? Well, actually, really striking. In one recent study, Tim Kaiser, Marco Del Giudice, and Tom Booth analyzed personality data from 31,637 people across a number of English-speaking countries. The size of global sex differences was D = 2.10 (it was D = 2.06 for just the United States). To put this number in context, a D= 2.10 means a classification accuracy of 85%. In other words, their data suggests that the probability that a randomly picked individual will be correctly classified as male or female based on knowledge of their global personality profile is 85% (after correcting for the unreliability of the personality tests).
In other words, you can predict whether a person is male of female from their personality traits almost as well as by looking at their face. Overall, the big differences are as follows:
Consistent with prior research, the researchers found that the following traits are most exaggerated among females when considered separately from the rest of the gestalt: sensitivity, tender-mindedness, warmth, anxiety, appreciation of beauty, and openness to change. For males, the most exaggerated traits were emotional stability, assertiveness/dominance, dutifulness, conservatism, and conformity to social hierarchy and traditional structure.
I have also pointed out that gender equality magnifies differences in gender choices and behavior which is probably one reason why fewer women enter STEM fields in societies with greater equality. Consistent with this, personality differences between the sexes are large in all cultures but “for all of these personality effects the sex differences tend to be larger– not smaller– in more individualistic, gender-egalitarian countries.”
Addendum: See John Nye and co-authors on testosterone and finger length for some biological correlations.
15-year-old Lebron James Jr. goes there, and his games will be on ESPN 15 times this year, even though he is mainly a role player and not a star. Here is more:
What Sierra Canyon strives to provide is controlled madness, controlled chaos. It’s a school not just familiar with athletic fame but celebrity, which has complexities beyond what even LeBron [Sr.] had faced.
For example, Sierra Canyon doesn’t attempt to restrict players’ social media. Players are put through a four-week course to educate them about its benefits and dangers. But Bronny is permitted to say whatever he wishes to his 3.7 million Instagram followers. Stanley and Pippen Jr. had hundreds of thousands of followers themselves.
“We don’t want to stop any of our players from building their brands,” Chevalier says. “They may be able to use that later in life, whether they make it as basketball players or something else.”
LeBron James Jr., by the way, plays on the same team as Zaire Wade, son of Dwayne Wade, LeBron’s former star teammate from the Miami Heat.