Thursday assorted links

1. Markets in everything: “New Zealand has ordered about 1,290 square feet of human skin from the United States to help treat patients severely burned in Monday’s volcanic eruption on White Island, as emergency workers scramble to find at least nine people still missing amid concerns the volcano could erupt again.”

2. What David Perell learned this year.

3. No-Castling chess, a new variant from Kramnik.

4. Old MR post on the Junker fallacy.  A lot of claims about stock buybacks commit this fallacy.

5. “My boss lets’us book hangover days.” (UK)

6. New results on Millennium Village Project.

7. New results on health insurance saving lives (NYT).

Comments

Regarding #1, where does the skin actually come from?

The article says only: "New Zealand has ordered about 1,290 square feet of human skin from the United States." I picture Homer Simpson picking up the phone, asking for the United States, then asking to buy about 1,290 square feet of human skin. Who is selling skin? Where are they getting it? And how do you get all that skin to New Zealand - can you FedEx it down there in special containers? A lot of questions remain.

Have you not seen Silence of the Lambs?

For decades we've read about pig skin being grafted onto human burn victims. And there are very recent articles about ongoing advances in the use of pig skin.

So I don't know why they seem to be using only human skin. Maybe it's become more available in recent years? Or maybe pig skin has become more scarce? Did the African swine fever epidemic create a shortage?

Orange Man Bad.

Donor skin comes from the dead. So if you'd like to help out, please become an organ donor. Australia's skin banks are now almost empty because of the volcano eruption.

#3. I like this idea. Just being a casual player myself, castling always seemed like a sort of contrivance to make the game easier for weaker players. It's a easy move you can make early in the game that puts your king in a safer position while freeing up your rooks to work together. So it makes it easy to build up a strong defense faster without having to be a chess expert. However, at higher levels of play, where both players are already experts, it just makes them that much harder to defeat. Both sides end up with these strong defenses very quickly and then it's a war of attrition that often ends in a draw. Getting rid of castling would make it harder for players to build up a strong defensive position early in the game, allowing more opportunities for offensive strategies to win early, shorter games, and fewer draws.

+1

I agree completely.

Castling requires setting it up. Setting it up distracts your game AND alerts your opponent. In general it is a poor tactic and hardly makes the game easier for weak players.

Even in grandmaster chess games, castling is more frequent than not castling.
https://www.quora.com/Why-is-it-so-common-to-not-castle-in-grandmaster-chess-games

#3. So, how long would it take current computers to re-work opening strategy? This has to be measured in weeks, if that. Then it's just more memorization and analysis of opening lines.

I've been playing a lot of Fischer random online in the past few months, and in that variant it's not clear there's always an advantage to castling. Sometimes it seems better to defend the king from the center.

I've not played a game in years but seems to me that castling levels the 'playing field', reducing the first player's advantage by incentivizing deployment of back-rank pieces and requiring a more diffuse/flexible attack strategy. I wonder if the chess A.I.'s agree? I'm totally unaware of current theory. But there is a stark difference between using a move and being able to use a move. "not clear there is always an advantage" suggests that "there is sometimes a disadvantage" of having the choice. Well, obviously - 1. There's never a disadvantage of me having the option and 2. there is frequently a disadvantage of my opponent of having the choice. (presuming that the added time/effort/computational power of castling is ignored).

Can anyone explain how the Junker fallacy applies to which claims about stock buybacks?

Here's a good example:

The concern is that companies, especially in prioritizing buybacks, are rewarding stockholders instead of investing in their workers, research and development, new facilities, or other more productive arenas.

https://www.vox.com/2018/8/2/17639762/stock-buybacks-tax-cuts-trump-republicans

I don't know if that's a good example. The fallacy as defined in the original article makes sense to me, because the concern is the national economy. If your concern is the country's economy, it's true that companies deciding to delegate spending to shareholders does not mean any capital is lost. However, they are doing just that, repurposing money from what would typically be a company's additional spending to whatever investor priorities are. Now you may prefer the spending/investment decisions of investors to that of the public companies in question, or specifically to what Vox would like to see more of, but I don't see that argument as being a fallacy.

Right, and didn't the Junkers repurpose money that could have been used for industrialization towards enlarging their agricultural holdings? I still think the fallacy holds. Returning capital to investors frees them to find other similar or more lucrative investments. And even if they decide to blow a big chunk of it on Bentleys and fancy cigars, instead, what do you think Bentley and the local cigar shop owner are going to do with their new wealth?

Not all spending is equal. You may care more about money spent in a particular sector, or even consumption in one country versus another. It really depends on what you're criticizing and what point you are making.

When it comes to national economic performance as measured, all spending IS equal. Only once you have a preference which industries succeed or fail do you have an issue.

All spending is equal to me because I don’t pretend to be able to foretell what my country will have comparative advantage in.

2. Cool. One item learned: 80% of Americans live, work, and hang out in 3.6% of America's landmass (in the lower 48 states). And this:

Love this paragraph from Tyler Cowen:

"At critical moments in time, you can raise the aspirations of other people significantly, especially when they are relatively young, simply by suggesting they do something better or more ambitious than what they might have in mind. It costs you relatively little to do this, but the benefit to them, and to the broader world, may be enormous. This is in fact one of the most valuable things you can do with your time and with your life."

I'm not sure about Cowen's advice. Young people who aim too high can suffer disappointment, disappointment that can discourage them for a lifetime. Cowen's advice is great advice for young people who won't suffer disappointment. Young people like Cowen when he was young. For the rest of us, maybe not so much. When I was a senior in college, I was undecided whether to attend graduate school or law school. As for the former, I only applied to a couple of highly prestigious programs, wasn't accepted, went to law school, and suffered little if any disappointment with my moonshot. Thus, I'd add to Cowen's advice: Always have a satisfying fallback if you shoot too high and miss.

The US went majority urban in the 1920s. Like most people, on any given day I am usually confined to a city. But I'm never over any given year. So it's a silly statistic if it doesn't mention timescale.

I actually dislike this paragraph. If you want to help someone, DO something for that person. Suggestions are cheap (like Cowen said, "relatively cheap") and anyone can give them by the bucket load.

There is a saying in Portuguese that goes something like the following: "If advice were good, it would be expensive."

Number 7 is noise. Since 2014, the first full year of obamacare, male life expectancy has decreased by 0.4 years in 3 years while insured rates increased. That is the largest experiment

https://www.cdc.gov/nchs/data/hus/2018/004.pdf
https://www.census.gov/content/dam/Census/library/visualizations/2018/demo/p60-264/figure2.pdf

The reaction to #7 is curious. The results of this randomized experiment are profoundly embarrassing to health insurance proponents. The result on all-cause mortality was finally detected, and the effect is minute. Note how the results are expressed in a highly unusual fashion, because if you expressed it normally in terms of life expectancy or QALY gains (it can't be more than a month or so total, given the percentage reduction in mortality reported, which is an upper bound given intent-to-treat), people would ask, "that is the *entire* effect of going from no insurance to insurance?"

There's still a selection issue for the population studied in this case. The uninsured are poorer than the average, but controlling for income the uninsured are also healthier than the average (e.g. younger).

How important is health insurance for people who were initially willing to go without, and are then randomly nudged to get insurance? That is the question this study can quantitatively pin down.

#1 The skin is harvested on babies foreskins. Circumcision is a mutilation.

I can't speak for where you are, but in Australia and New Zealand it comes from fresh dead organ donors.

Stock buybacks are very good for wealthy managers and wealthy stock-holders. That's just not a very good use of public money. $437 billion in tax handouts flooded into these buybacks instead of supporting public education, infrastructure, or healthcare. I'd be curious to see Cowen's estimate of ROI on $437 billion distributed among the wealthiest Americans versus $437 billion distributed among the neediest.

https://money.cnn.com/2018/07/10/investing/stock-buybacks-record-tax-cuts/index.html

"Public Money?"

Also, the money isn't and was never going to be distributed among the needy, at least not in the cases you mentioned. Education - the money goes to teachers and school administrators as wages and benefits. Infrastructure - construction companies. Healthcare - doctors, nurses, hospital administrators. Most of these people aren't needy; they're solidly middle class. Some of them might be happy if the stock market went up, too, by the way.

And yet, after the Billionaire Bailout, the administration is now cutting food benefits for the poorest Americans.

Given the fiscal indiscipline of this administration, tax cuts and spending cuts seem unlikely to have anything to do with each other.

It's taxpayers' money, not "public money" and so allowing taxpayers to keep more of their own money is not a "tax handout." It's the people who want to gorge at the public trough like teachers unions who want to receive handouts.

# 2 "Between 2011 and 2013, china used 50% more cement than the United States in the 20th century."
Thank you, Obama.

We're falling behind in concrete. I propose damming the Mississippi with the world's largest concrete structure to catch up, creating an inland sea as well as a recreational sporting and fishing area.

How can we make chess unanalysable by computer? That is the more interesting question. Make the combinatorial explosion beyond any analysis. 3d chess ?

Expand the board from 8×8 to 19×19. Instead of all pieces starting in standard positions on the back ranks, let players place them anywhere on the board, one at a time. But we wouldn't want to make it too difficult, so make all the pieces of the same type. A few other rules would change too.

How can you control for the effects of the specific psychology behind receiving a letter from the IRS? The IRS tends to light a fire under most people’s butts, even if it’s just a coupon for chewing gum.

Not sure about that. There aren’t many differences in reactions when receiving mail from a paternalistic entity- whether it be the IRS or any government entity that imposes a general sense of subjugation

I've been pondering the Junker fallacy issue Tyler likes to bring up so often. I think its best to think about the use of these arguments in a Straussian way - as Tyler is so fond of emphasizing.

I think it is better to think of the "stock buyback" argument in terms of the debate between efficiency and redistribution. To what extent are tax cuts reducing deadweight loss (increasing aggregate investment) vs. producing a windfall for investors. To the extent that tax cuts are mostly a windfall for investors, the stock buyback argument is a way to give this impression in household's minds. It also, indirectly, pushes back against some of the stories about why corporate tax cuts improve efficiency in the economy.

It is definitely true that just because a particular cash flow (stock buyback, purchases of land, etc) are not investment does NOT mean that aggregate investment is low. The typical story an economist would say is - the funds received from stock buybacks or land purchases will be recycled to whatever the typical use might be, e.g. a hedge fund receiving a stock buyback from company A will ultimately end up funding investment in company B.

This is all true, as far as it goes. But there are still reasons to make the "Junker" argument in a public piece, and reasons the "Junker" argument gives suggestive evidence against the optimistic story about investment. First, the general public has what I'd call the "household finance" heuristic, which suffers from a fallacy of composition. The "househod finance" heuristic goes something like: "if my taxes go down, I will both consume more and 'invest' more, thus lower taxes should raise both aggregate consumption and aggregate investment." The obvious problem from a standard neoclassical model with inelastic inputs is that output is fixed, so consumption and investment cannot both go up together (in the initial period). One obvious way to square the circle is that 'investment' for households may take the form of consumption loans to other households and/or lending to government. To the extent that the "Junker" argument activates a distrust of this simple heuristic, it is useful to include it in an argument.

Second, the economist's way to square to better ground the "household finance" heuristic is to appeal to financial frictions. Firms prefer internal to external financing, so that reducing taxes should relax firms' financing constraint by increasing internal funds. However, to the extent that most firms use tax cuts to return funds to investors it undermines the financial frictions story. The most obvious example of this is the "funds trapped overseas" fallacy - Apple can borrow in the bond market at low rates because everyone knows someday it will get the windfall from remitting profits from its Irish subsidiary. There is no financial constraint for Apple, and thus no benefit from relaxing the internal financing constraint. This also undermines the 'flow of funds' story for why stock buybacks from company A fund investment in company B. Again, to the extent that there are no financial frictions, the investment in company B has already happened! Again, the tax cut is just a windfall for investors.

Of course, this is a bit unfair, since the economic model would acknowledge that the short-run effect is mostly a windfall while the long-run effect is to increase investment. To focus on the short-run windfall misses the overall tradeoff of the policy. But of course, not everything has to be fair in political debate (and, as noted, we are also pushing back against the investment story as well).

With regards to the land purchases, I think a similar case can be made although it is more subtle. The problem is not that land purchases are a problem, per se, but rather it tells us about the preferences of the current wealthy. One of the justifications for wealth and inequality is that the wealthy will use their funds to make useful investments which have positive externalities. If the wealthy are reinvesting in land, then at least the first stage of this capital accumulation process is not working. If you think the land sellers are similarly non-entrepreneurial, then land purchases are effectively consumption loans. The economy is organized towards the preferences of the rich (see , negishi weights) so we may think we could do better for the ACTUAL social planner's function by redistributing away from the current non-entrepreneurial rich towards a more entrepreneurial class or even just to the general public.

Basically all of the above are fairly esoteric arguments that are not worth the time in an Op-Ed. So we are stuck making the - incorrect - exoteric argument. Pointing out the Junker fallacy is a - perhaps digestible - bit of esoteric knowledge, but insofar as emphasizing this gives the impression "these people are stupid/wrong, and none of this debate matters" it is doing a disservice.

On the Junker Fallacy:
It's correct that when money changes hands (such as by burning it or stealing it), no real resources have been lost.
However, if person A is Scrooge and person B is a noninvestor, B stealing from A will actually result in an increase in consumption at the expense of investment.
I think it's possible for corruption to on net result in money going from investment-minded people to consumption-minded people, but this may not always be the case (maybe the recipients of bribes are inclined to invest).

#3 - How about Chess in which there is a menu of a few abilities (e.g. double-step pawns, castling, pawn-promotion, etc.) from which each player can select a different subset, giving each player slightly different capabilities.

TC, no breaking analysis or dopamine rush from the Horowitz report huh?

#2: A few of the items on the list were pretty good:

Kobe Bryant reading the manual that tells referees where to locate themselves, so he'd know where the blind spots on the court were and could bend the rules there. That's Bill Russell-level strategizing there, albeit in the service of bending the rules.

The media dominance of Pokemon, and of video games although I think Tyler's commented on the video game statistic before.

The Ira Glass quote about your taste being developed earlier than your creative skills, so you won't (and shouldn't) like your early creations. But keep working to improve.

Some good photos, but who hasn't seen an image of a baobab tree at this point? Even the children's book _The Little Prince_ had them.

I was not super-impressed by this one: “Most geniuses—especially those who lead others—prosper not by deconstructing intricate complexities but by exploiting unrecognized simplicities.” — Andy Benoit

I consider finding unrecognized simplicities to be a standard and key way to "deconstruct intricate complexities". E.g. solving an optimization problem by ignoring it and solving its dual problem. Mendeleev recognizing that the elements can be arranged in a periodic table. John Snow recognizing the typhoid cases centered around a town water pump. Or just coming up with an analytic solution so you can use an equation to come up with the answer instead of approximating it with a bunch of loops. Some of those examples require more genius than others, but in all cases the solver is looking for the yet-unfound simplicity.

And the point about pedestrians exploiting self-driving cars' requirement to stop is correct but I've been saying that for years. And I doubt the guy behind the quote is serious about adding random road-rage behavior into the cars' programming, it's a lawsuit waiting to happen. The correct lesson to draw is not road-rage algorithms, but the inherent impossibility of self-driving cars -- unless they're in a controlled space (interstate freeways might be a good candidate) or roads become rigidly policed to prohibit jaywalking.

7. I'll bet most workers and taxpayers have coverage already. So who were these people? One glowing statistic does not a story tell.

#5

"I would have been more embarrassed trying to pretend that I was ill. If I'd had to ring her and pretend to be ill I would have felt really bad every time I saw her and would have had to keep up a lie.

My policy has always been 'I don't care why you're not showing up to work, but I hired you to do certain tasks and if they're not getting done I'm going to let you go'. I think it works because I make it clear that if you're worth a damn I don't care how many days you need off and if you're not then I don't care *why* you need those days off. No need to lie. 'I just don't feel like coming in today'.

Saves me from a lot of 'hm-hmming' when someone calls up and tells me had 'had to take his girlfriend/sister/mother/child to the hospital'.

When I saw that person not an hour beforehand.

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