Month: January 2020
This is a profound trend. The average age of incoming CEOs for S&P 500 companies has increased about 14 years over the last 14 years.
From 1980 to 2001 the average age of a CEO dropped four years and then from 2005 to 2019 the averare incoming age of new CEOs increased 14 years!
This means that the average birth year of a CEO has not budged since 2005. The best predictor of becoming a CEO of our most successful modern institutions?
Being a baby boomer.
Here is more from Paul Millerd.
3. NBA loses possibly $100 million or more in China revenue. And: “Our findings suggest that nationalist propaganda can manipulate emotions and anti-foreign sentiment, but does not necessarily divert attention from domestic political grievances.”
4. 25 greatest classical pianists of all time? A good list, except for Rachmaninov at #1, and I am pleased to have heard virtually all of the moderns in concert. I would add Leif Andsnes and take off Lang Lang and Clara Haskil. And come on people — Pollini has to be top ten (he is not on the list at all), in spite of his recent age-related decline. And Grosvenor is a fine pianist, but I wouldn’t quite put him in this exalted territory, replace with Rudolf or even Peter Serkin? And if you are looking for peaks, Michelangeli surely belongs as well. Solomon?
5. Ryan Bourne on state capacity libertarianism. I will note that a possible coronavirus pandemic would likely boost the plausibility of state capacity libertarianism.
6. “…we construct counterfactual growth paths of Puerto Rico, Cuba, the Philippines and Greenland in the scenario where they joined the USA at times in history where this might have been a (remote) possibility.”
7. John Cochrane on woke academia, recommended, and horrifying.
Russ Roberts defends Milton Friedman (and many others, implicitly), excerpt:
What about spending for public schools? Has that been reduced in this allegedly draconian neoliberal era?
In 1960, per pupil expenditure for elementary and high school students was just under $4000. In 1980, when the neoliberal ideology allegedly began its ascendance, it was a little less than $8000. The latest numbers from 2015–2016 are just under $15,000. All numbers are corrected for inflation (in 2017–2018 dollars). So under this time of alleged cutbacks and resource starvation, per pupil expenditures rose dramatically.
What about transportation infrastructure? Total spending is up in real terms. What about as a percentage of GDP? There has been a decline since 1962 as a percentage of GDP but the numbers are basically flat since 1980…
What about investment in non-defense research and development, and health? Up dramatically since 1980 in real terms.
There is much more at the link, including excellent visuals.
That is a theme running throughout my latest Bloomberg column, here are some excerpts:
Why so many of America’s best and brightest college graduates go into management consulting, finance or law school is a perennial question. There are some compelling theories, which I will get to, but first I would like to turn the question around: Why are so many people in top positions, whether in the public or private sector, so old?
I submit that these two trends — and a third, declining productivity growth — are related: Many tasks have become increasingly complex in America, often more complex than people can learn in just a few years. By the time you have experience enough to perform them, you are less interested in taking risks. In your young adventurous years, by contrast, the only jobs you can get are those that don’t reward (or allow) adventure. The result of all this is a less audacious America.
…the smart graduates of America’s top universities will seek relatively thick, liquid job markets, with high upside but also protection on the downside. Management consulting is perfect. If you are intelligent and hard-working, you can signal that quickly, and the entry-level tasks are sufficiently anodyne that few very specific skills are required. These jobs are designed to attract talent, so the consulting companies have an eventual option on promoting the best candidates. The same is true of law and the less quantitative parts of finance.
In the short term, this system seems to work for everyone. If you don’t like those vocations after a few years of trying, you still have elite connections and credentials that you can take somewhere else.
On net, America is selling its talented young people insurance value — but at the expense of long-term innovation. It might be better for the country if more of these individuals started businesses, tried their hand at chemistry or materials science, or worked in obscure corners of manufacturing in the Midwest. Of course, rates of failure or stagnation are higher in those areas, while glamour is often lower. Who wants to work on mastering a complex task for 10 or 15 years, with no real guarantee of commercial success?
The slower rates of growth in scientific progress are part of this picture. Older scientists are more likely to be in charge, but they also make fewer conceptual breakthroughs. Younger scientists are more temperamentally inclined to be revolutionaries, but that is hard when it may take you until your late 20s just to learn the basics of your field. Most areas are too complex for a 23-year-old to make new scientific advances, no matter how brilliant he or she may be.
Tech of course is an exception. And please do note that de-bureaucratization could do a great deal to lower this task complexity, while other parts of it are inescapable — I didn’t have the space for that point in the column but will return to it and what might be done. Finally, I thank a number of people who contributed ideas and examples to my argument.
When officials at the Texas A&M University System sought to determine how much Chinese government funding its faculty members were receiving, they were astounded at the results—more than 100 were involved with a Chinese talent-recruitment program, even though only five had disclosed their participation.
A plant pathologist at the Texas system, where the median annual salary for such scientists employed by the state is around $130,000, told officials that the researcher had been offered $250,000 in compensation and more than $1 million in seed money to start a lab in China through one of the talent programs. The researcher ultimately rejected the offer, according to the Texas system’s chief research security officer, Kevin Gamache, who led the recent 18-month review that has garnered praise from U.S. officials.
That is from Aruna Viswanatha and Kate O’Keeffe at the WSJ. As for Harvard:
Charles Lieber, a pioneer in nanotechnology, allegedly signed a contract with Chinese counterparts under which he would be paid around $50,000 a month, plus another $150,000 a year for personal expenses; he was also promised—and received—more than $1.5 million to establish a research lab at the Wuhan University of Technology, according to prosecutors.
He is specifically charged with deliberately lying to U.S. government investigators when asked if he received Chinese talent-plan funding, rather than simply omitting the information on forms.
If you need a toilet while on the go, trust Toto Ltd. to come up with a solution. Just summon one up with your smartphone, the company says.
The toilet manufacturer unveiled the “mobile toilet concept” at the CES tech show held in Las Vegas in early January. The company intends to develop an exclusive app that brings a portable restroom trailer to a spot near the location the call is made.
Here is the full story, via Nigel B.
The Mercatus Center at George Mason University is currently accepting applications for our graduate student programs for the 2020-2021 academic year, including several graduate student fellowships for students in any discipline and from any university. The application deadline is March 15, 2020.
The Adam Smith Fellowship is a one-year, competitive program for doctoral students interested in political economy and is co-sponsored with Liberty Fund, Inc. Fellowships are awarded to students attending PhD programs from any university and in any discipline, including economics, philosophy, political science, and sociology.
The Frédéric Bastiat Fellowship is a one-year, competitive program for graduate students interested in applying political economy to pressing public policy issues. Fellowships are awarded to students attending master’s, juris doctoral, and doctoral programs at any university and in any discipline, including economics, law, political science, and public policy.
The Oskar Morgenstern Fellowship is a one-year, competitive fellowship program awarded to doctoral students with training in quantitative methods who interested in applying these methods to issues in political economy. Fellowships are awarded to students attending PhD programs from any university and in any discipline, including economics, political science, and sociology.
Here is the overall fellowships page.
1. A Bayesian approach to Bernie Sanders (show your work).
5. Taste for Indian food predicts Bernie Sanders support (NYT). But what does an interest in Pakistani food correlate with? In the United States, Pakistani food usually is better than Indian.
6. “A professor at one of China’s top universities has quit what many academics would regard as a dream job after he gained celebrity status through an online “knowledge-sharing” platform.” (former GMU student, 2008 Ph.d)
In recent years, new research has significantly increased my belief that air pollution has substantial negative effects on productivity, IQ and health (see previous posts). Research in the field is exploding which means that there must also be more false positives. Consider two recent papers. The first, The Real Effect of Smoking Bans: Evidence from Corporate Innovation by Gao et al. finds that smoking prohibition increased patenting!
We identify a positive causal effect of healthy working environments on corporate innovation, using the staggered passage of U.S. state-level laws that ban smoking in workplaces. We find a significant increase in patents and patent citations for firms headquartered in states that have adopted such laws relative to firms headquartered in states without such laws. The increase is more pronounced for firms in states with stronger enforcement of such laws and in states with weaker preexisting tobacco controls. We present suggestive evidence that smoke-free laws affect innovation by improving inventor health and productivity and by attracting more productive inventors.
But the second, Do Firms Get High? The Impact of Marijuana Legalization on Firm Performance, Corporate Innovation, and Entrepreneurial Activity by Wang et al. finds that marijuana legalization increased patenting!
We find that state-level marijuana legalization has a positive financial impact on firms, likely by affecting firms’ human capital. Firms headquartered in marijuana-legalizing states receive higher market valuations, earn higher abnormal stock returns, improve employee productivity, and increase innovation. Exploiting firm level inventor data, we directly test the human capital channel and find that post legalization, firms retain inventors that become more productive and recruit more innovative talents from out of state. We also find that marijuana-legalizing states experience an increase in the number of new startups and venture capital investments.
Would anyone have been surprised if these two papers had shown exactly the opposite results? Indeed, there is some evidence that nicotine is solid cognitive enhancer and Tyler recently argued, on the basis of good evidence, that pot makes people dumb. Is it a coincidence that anti-cigarette and pro-pot papers appear as the country moves in this direction? Social desirability bias also applies to research. So no knock on either paper but I am unconvinced. As I like to say, trust literatures not papers.
Hat tip: The excellent Kevin Lewis.
GSK has made a corporate decision that while it wants to help in public health emergencies, it cannot continue to do so in the way it has in the past. Sanofi Pasteur has said its attempt to respond to Zika has served only to mar the company’s reputation. Merck has said while it is committed to getting its Ebola vaccine across the finish line it will not try to develop a vaccine that protects against other strains of Ebola and the related Marburg virus.
Drug makers “have very clearly articulated that … the current way of approaching this — to call them during an emergency and demand that they do this and that they reallocate resources, disrupt their daily operations in order to respond to these events — is completely unsustainable,” said Richard Hatchett, CEO of CEPI, an organization set up after the Ebola crisis to fund early-stage development of vaccines to protect against emerging disease threats.
Hatchett and others who plan for disease emergencies worry that, without the involvement of these types of companies, there will be no emergency response vaccines.
Randy Shaw, Generation Priced Out: Who Gets to Live in the New Urban America. A YIMBY book, with good historical material on San Francisco, Los Angeles, and other locales involved in the struggle to build more.
Conor Daugherty, Golden Gates: Fighting for Housing in America. Coming out in February, this is a very good book about the YIMBY movement and its struggles, with a focus on contemporary California, written by a NYT correspondent.
Jennifer Delton, The Industrialists: How the National Association of Manufacturers Shaped American Capitalism. Why don’t more books fit this model: take one topic and explain it well?
Economists, Photographs by Mariana Cook, edited with an introduction by Robert M. Solow. Self-recommending. Interestingly, I recall an old University of Chicago calendar of economist photographs, still buried in my office somewhere, with pictures of Frank Hyneman Knight, Francis Ysidro Edgeworth, and others. At least in terms of personality types, as might be revealed through photographs, the older collection seems to me far more diverse. Or is the homogenization instead only in terms of photograph poses?
Michael E. O’Hanlon, The Senkaku Paradox: Risking Great Power War Over Small Stakes. A very useful practical book about what options a U.S. government would have — short of full war — to deal with international grabs by China or Russia. There should be thirty more books on this topic (#ProgressStudies).
Christopher Caldwell, The Age of Entitlement: America Since the Sixties. This is both a very old thesis, but these days quite new, namely the claim that 1965 and the Civil Rights movement created a “new constitution” for America, at variance with the old, and the two constitutions have been at war with each other ever since. It will be one of the influential books “on the Right” this year, I already linked to this Park MacDougald review of the book.
Robert H. Frank, Under the Influence: Putting Peer Pressure to Work. From the Princeton University Press catalog: “Psychologists have long understood that social environments profoundly shape our behavior, sometimes for the better, often for the worse. But social influence is a two-way street—our environments are themselves products of our behavior. Under the Influence explains how to unlock the latent power of social context. It reveals how our environments encourage smoking, bullying, tax cheating, sexual predation, problem drinking, and wasteful energy use. We are building bigger houses, driving heavier cars, and engaging in a host of other activities that threaten the planet—mainly because that’s what friends and neighbors do.”
2. The Discourse Initiative — a new support program from the Institute for Humane Studies.
Tyler posed these questions to Ezra and more, including thoughts on Silicon Valley’s intellectual culture, his disagreement with Jonathan Haidt’s Moral Foundations Theory, the limits of telecommuting, how becoming a father made him less conservative, his post-kid production function, why Manhattan is overrated, the “cosmic embarrassment” of California’s governance, why he loved Marriage Story, the future of the BBC and PBS, what he learned in Pakistan, and more.
Here is one bit:
COWEN: We would agree that what is called affective negative polarization is way up — professing a dislike of the other side, not wanting your Republican kid to marry a Democratic wife, and so on. But in terms of actual policy polarization, what if someone says, “Well, that’s down,” and they say this: “Well, the main issue in foreign policy today is China.” That’s actually fairly bipartisan. Or if people don’t agree, they don’t disagree by party.
Domestic spending, Social Security, Medicare — no one wants to cut those. That’s actually consensus. The other main issue is how we deal with or regulate tech. America has its own system. It’s happened through the regulators. It’s not really that partisan. One may or may not like it, but again, disagreement about it doesn’t fall along normal party lines.
So the main foreign policy issue, the main substantive social issue — we’re less polarized. And then, domestic spending, it seems, we all mostly agree. Why is that wrong?
KLEIN: I’m not sure it is wrong. Two things I would say about it. One, the word main is doing a lot of work in that argument. The question is, how do you decide what are the main issues? I wouldn’t say domestic regulation of tech is a main issue, for instance. I think it’s important, but compared to things like immigration and healthcare, at least in the way people experience that and think about that — or if you ask them what are their main issues, domestic regulation of tech doesn’t crack the top 10.
COWEN: But again, at any point in time, if positions are shifting rapidly — as they are, say, on trade — if you took all of GDP, even healthcare — that’s what, maybe 18 percent of GDP? But a lot of the system, a lot of people in both parties agree on, even if they disagree on Obamacare. Obamacare is part of that 18 percent. Over what percent of GDP are we more polarized than we used to be, as compared to less polarized? What’s your estimate?
KLEIN: I like that question. Let me try to think about this. I don’t think I have a GDP answer for you, but let me try to give you more of what I think of as a mechanism.
I think a useful heuristic here — people don’t have nearly as strong views on policy qua policy as certainly people like you and I tend to assume they do. The way that Washington, DC, talks about politics is incredibly projection oriented. We talk about politics as if everybody is a political junkie with highly distinct ideologies.
Political scientists have done a lot of polling on this, going all the way back to the 1960s, and it seems something like 20 to 30 percent of the population has what we would think of as a coherent policy-oriented ideology, where things fit together, and they have everything lined up. Most people don’t hold policy positions all that strongly.
What happens is that they do hold — to the extent they’re involved in politics — identity strongly, political affiliations quite strongly. They know who is on their side and who isn’t.
The pattern that I see here, again and again, is that when things are out of the spotlight, when they are not being argued about, when they are not the thing that the parties are disagreeing about, they’re actually quite nonpolarized. You’ll sit there in rooms of experts. There’ll be a panel here, George Mason, whatever it might be, and everybody will have some good ideas about how you can make the system better for everyone.
Then what will happen is, the Eye of Sauron of the American political system will turn towards whatever the policy issue is. Maybe it’s Obamacare, maybe it’s climate change. Remember, climate change was not that polarized 15–20 years ago. John McCain had a big cap-and-trade plan in his 2008 platform —
COWEN: If you could engineer your own political temperament, would you change it from how it is? Mostly, we’re stuck with what we’ve got, I would say, but if you could press the button — more passionate, less passionate, something else? Goldilocks?
KLEIN: I think I like my political temperament. Probably for the era of politics we’re moving into, and for my job, it would almost be better to be of a more conflict-oriented temperament than I am. I think that we are moving into something that, at least in the short term, is rewarding or is going to reward those who really like getting in fights all the time, and I don’t like that.
I’m more consensus oriented. I like hearing people out. I probably have a little bit more of a moderate temperament in that way. But I wouldn’t really change that about myself. I think it’s a shame that so much of politics happens on Twitter now, but that’s the way it is. I wouldn’t change me to operate to that.
Recommended, and again here is Ezra’s new book on polarization.
From Jason Crawford, Emergent Ventures winner in Progress Studies:
…the surprising thing I found is that infectious disease mortality rates have been declining steadily since long before vaccines or antibiotics…
In 1900, the most deaths came from tuberculosis, influenza/pneumonia, and gastroenteric diseases such as dysentery. All of these were effectively conquered by antibiotics in the 1930s and ’40s, but were on the decline since at least the beginning of the century…
Indeed, digging further into the UK data from the late 1800s, we can see that TB was declining since at least 1850 and gastroenteric disease since the 1870s. And similar patterns hold for lesser killers such as measles, which didn’t have a vaccine until the 1960s, but which by then had already declined in mortality by more than 90% from its 1900 levels.
So what was going on? If you read my survey of technologies against infectious disease, you know that other than drugs and immunization, there is one other way to fight germs: cleaning up the environment.
I was surprised to learn that sanitation efforts began as early as the 1700s—and that these efforts were based on data collection and analysis, long before a full scientific theory of infection had been worked out.
There is much more at the link, including the footnotes for citations to the claims made here.
There is a new and updated take on this topic by Autor, Goldin, amd Katz:
The race between education and technology provides a canonical framework that does an excellent job of explaining U.S. wage structure changes across the twentieth century. The framework involves secular increases in the demand for more-educated workers from skill-biased technological change, combined with variations in the supply of skills from changes in educational access. We expand the analysis backwards and forwards. The framework helps explain rising skill differentials in the nineteenth and twenty-first centuries, but needs to be augmented to illuminate the recent convexification of education returns and implied slowdown in the growth of the relative demand for college workers. Increased educational wage differentials explain 75 percent of the rise of U.S. wage inequality from 1980 to 2000 as compared to 38 percent for 2000 to 2017.
Note that for the most recent rise in inequality across 2000-2017, most of it has happened within educational groups. The less polite way of putting that — my words not those of the authors — is that the real marginal product of education is explaining less of the variation in earnings, or in other words the higher earners are drawing upon something they are not getting at school.
Students of the “education as signaling” debate also should note that, due to these results, now a) signaling is more relevant for your early wage offer, and b) signaling is less relevant for your eventual wage profile, which in fact is now more determined by your personal level of skill.