Month: March 2020
1. “The NWMC nongovernmental organization provides soft propaganda while they operate alongside the Russian military and imbed military tactics into foreign Russian populations through their corporate entity Wolf Holding of Security Structures.” (Huh?)
2. The heroism of Chinese doctors in Wuhan (WSJ, though I believe the paywall is off on this one). Recommended.
6. Michael Strain on what to do (Bloomberg).
The line in the men’s room was to wash hands, not to use the other facilities. During the concert, there was remarkably little coughing compared to usual times. Is this because?:
1. The coughers were self-quarantining at home (there were more empty seats than usual).
2. Potential coughers didn’t want their seat neighbors to think of them as infecting pariahs.
3. Potential coughers abstained for fear of having to think, if they are coughing, that they might have coronavirus.
In any case, the elasticity of coughing with respect to self-reputation is higher than I had thought.
Yana and I were pleased to have watched from a private box (to be clear, we had a private box because the other people did not show up).
In poor countries the price of electricity is low, so low that “utilities lose money on every unit of electricity that they sell.” As a result, rationing and shortages are common. Writing in the JEP, Burgess, Greenstone, Ryan and Sudarshan argue that “these shortfalls arise as a consequence of treating electricity as a right, rather than as a private good.”
How can treating electricity as a right undermine the aim of universal access to reliable electricity? We argue that there are four steps. In step 1, because electricity is seen as a right, subsidies, theft, and nonpayment are widely tolerated. Bills that do not cover costs, unpaid bills, and illegal grid connections become an accepted part of the system. In step 2, electricity utilities—also known as distribution companies—lose money with each unit of electricity sold and in total lose large sums of money. Though governments provide support, at some point, budget constraints start to bind. In step 3, distribution companies have no option but to ration supply by limiting access and restricting hours of supply. In effect, distribution companies try to sell less of their product. In step 4, power supply is no longer governed by market forces. The link between payment and supply has been severed: those evading payment receive the same quality of supply as those who pay in full. The delinking of payment and supply reinforces the view described in step 1 that electricity is a right [and leads to] a low-quality, low-payment equilibrium.
The Burgess et al. analysis coheres with my observations in India where “wire anarchy” is common (see picture). It’s obvious that electricity is being stolen but no one does anything about it because it’s considered a right and a government that did do something about it would be voted out of power.
The stolen electricity means that the utility can’t cover its costs. Government subsidies are rarely enough to satisfy the demand at a zero or low price and so the utility rations.
The consequences for electricity consumers, both rich and poor, are severe. There is only one electricity grid, and it becomes impossible to offer a higher quantity or quality of supply to those consumers who are willing and sometimes even desperate to pay for it.
Moreover,the issue is not poverty per se.
…the vast majority of customers in Bihar expect no penalty from paying a bill late, illegally hooking into the grid, wiring around a meter, or even bribing electricity officials to avoid payment. These attitudes are in stark contrast to how the same consumers view payment for private goods like cellphones. It is debatable whether cellphones are more important than electricity, but in Bihar we find that the poor spend three times more on cellphones than they do on elec-tricity (1.7 versus 0.6 percent of total expenditure).
Burgess et al. frame the issue as “treating electricity as right,” but one can can also understand this equilibrium as arising from low state capacity and corruption, in particular corruption with theft. In corruption with theft the buyer pays say a meter reader to look the other way as they tap into the line and they get a lower price for electricity net of the bribe. Corruption with theft is a strong equilibrium because buyers who do not steal have higher costs and thus are driven out of the market. In addition, corruption with theft unites the buyer and the corrupt meter reader in secrecy, since both are gaining from the transaction. As Shleifer and Vishny note:
This result suggests that the first step to reduce corruption should be to create an accounting system that prevents theft from the government.
Burgess et al. agree noting, “reforms might seek to reduce theft of electricity and nonpayment of bills” and they point to programs in India and Pakistan that allow utilities to cut off entire neighborhoods when bills aren’t paid. Needless to say, such hardball tactics require some level of trust that when the bills are paid the electricity will be provided and at higher levels of quality–this may be easier to do when there are other sources of authority such as trusted religious leaders.
In essence the problem is that the government is too beholden to electricity consumers. If the government could commit to a regime of no or few subsidies, firms would supply electricity and prices would be low and quality high. But if firms do invest in the necessary electricity infrastructure the government will break its promise and exploit the firms for temporary electoral advantage. As a result, the consumers don’t get much electricity. The government faces a time consistency problem. Independent courts would help to bind the government but those often aren’t available in developing countries. Another possibility is a conservative electricity czar who, like a conservativer central banker, doesn’t share the preferences of the government or the voters. Again that requires some independence.
In short, to ensure that everyone has access to high quality electricity the government must credibly commit that electricity is not a right.
Haven’t you ever wondered why more books shouldn’t just take social phenomena and explain them, rather than preening their academic feathers with a lot of non-committal dense information? Well, this book tries to explain the Miami club where renting an ordinary table for the night costs 2k, with some spending up to 250k, along with the underlying sociological, economic, and anthropological mechanisms behind these arrangements. Here is just a start on the matter:
Any club, whether in a New York City basement or on a Saint-Tropez beach, is always shaped by a clear hierarchy. Fashion models signal the “A-list,” but girls are only half of the business model. There are a few different categories of men that every club owner wants inside, and there is a much larger category of men they aim to keep out.
Bridge and tunnel, goons, and ghetto. These are men whose money can’t compensate for their perceived status inadequacies. The marks of their marginal class positions are written on their bodies, flagging an automatic reject at the door.
A clever man can try to use models as leverage to gain entry and discounts at clubs. A man surrounded by models will not have to spend as much on bottles. I interviewed clients who talked explicitly about girls as bargaining chips they could use at the door.
The older, uglier men may have to pay 2k to rent a table for the evening, whereas “decent-looking guys with three or four models” will be let in for free with no required minimum. And:
Men familiar with the scene make these calculations even if they have money to spend: How many beautiful girls can I get to offset how I look? How many beautiful girls will it take to offset the men with me? How much money am I willing to spend for the night in the absence of quality girls?
How is this for a brutal sentence?:
Girls determine hierarchies of clubs, the quality of people inside, and how much money is spent.
Here is another ouch moment:
…I revisit a second critical insight of Veblen’s on the role of women in communicating men’s status. In this world, girls function as a form of capital. Their beauty generates enormous symbolic and economic resources for the men in their presence, but that capital is worth far more to men than to the girls who embody it.
if you ever needed to be convinced not to eat out at places with beautiful women, this book will do the trick. Solve for the equilibrium, people…
You can pre-order here. (By the way, I’ve been thinking of writing more about “lookism,” and why opponents of various other bad “isms” have such a hard time extending the campaign to that front.)
The Santa Monica Observer noted the death of soap opera actress Marj Dusay who also appeared as the alien thief in the classic Start Trek episode “Spock’s Brain”:
…The episode is generally regarded by most fans, and those who took part in its production, as the worst episode of the series. William Shatner called this one of the series’ worst episodes, calling the episode’s plot a “tribute” to NBC executives who slashed the show’s budget and placed it in a bad time slot.
Leonard Nimoy wrote: “Frankly, during the entire shooting of that episode, I was embarrassed – a feeling that overcame me many times during the final season of Star Trek.”
…In his book What Were They Thinking? The 100 Dumbest Events in Television History, author David Hofstede ranked the episode at #71 on the list.
The rock band Phish performs a song entitled “Spock’s Brain”
So what? Well here is the part that caught my attention:
The episode was referenced in Modern Principles: Microeconomics by Tyler Cowen and Alex Tabarrok of George Mason University as an example of how it is virtually impossible to have a command economy; in that not even Spock’s brain could run an economy.
In other words, we also thought it was one of the worst episodes ever because of the bad economics. Econ instructors should use our textbook! Where else can you learn about Spock’s Brain and the command economy?
By the way, I’m pretty sure the obit was AI generated but heh the AI did a good job! I am aware of the irony.
I saw this on Twitter:
Hard Times for Adjunct Professors: 25% of part-time university faculty nationally rely on public assistance programs.
My immediate reaction was “Given the crowding in the sector, and that they presumably earn non-pecuniary returns from the enjoyment of teaching, shouldn’t we be taxing them at a higher rate?”
British colonialism in Nigeria lasted some six decades…First, the British sought to run Nigeria on the cheap. This led to a fetish for indirect rule. Much of the work of colonial governance was done in collaboration with traditional African authorities. The British expended little effort to create a centralized rule, a coherent armed force, or a professional civil service. The quality of the state that the British constructed and left behind in Nigeria was fairly poor…
The British depended on import taxes as the main source of revenue for running the colonial state. Little of these minimal revenues was spent on improving agriculture (except for the exportable cash crops), and even less on the promotion of technological or industrial development. When the British left Nigeria, the hand-hoe was still the main tool used for cultivation in the fields…
The British made do with a fairly low rate of taxation: during the interwar period tax revenue were only 2 percent to 3 percent of the GDP. As important was that nearly 60 percent of these revenues came from taxing foreign trade, a bureaucratic task that was much easier than collecting direct taxes…
Between 1900 and 1930, Nigeria’s average per capita income grew at about half a percent per annum and then essentially stagnated until the end of the war.
That is all from Atul Kohli, Imperialism and the Developing World: How Britain and the United States Shaped the Global Periphery. The book is quite good.
Overall, I have found that as I learn more about the history of British imperialism, the lower my opinion of it sinks.
The “growthers” and the “base-raters” — which are you and why? Here is my latest Bloomberg column. Hard to excerpt but good.
“Only 30 percent of small and medium businesses nationwide have resumed work,” Shu Chaohui, an official at the Ministry of Industry and Information Technology, told reporters Tuesday. “It’s a pretty severe situation.”
…A nationwide survey led in February by Peking University found half the country’s small businesses will run out of cash within three months, and 14 percent might not survive past mid-March. Unlike large state conglomerates or multinational companies that could weather the storm, China’s small businesses say they simply do not have cash reserves to continue paying wages and rent.
And while manufacturing giants that mass-produce gadgets such as Apple iPhones can rely on the government to charter buses and trains to shuttle migrant workers back to their factories, nearly 40 percent of smaller businesses say they cannot get their workers back to Chinese cities because of transportation bottlenecks and quarantine restrictions, according to the Peking University study.
Here is more from Gerry Shih.
1. “Our findings indicate that floodplain homes in the US are currently overvalued by a total of $34B, raising concerns about the stability of real estate markets as climate risks become more salient and severe.”
The Report of the WHO-China Joint Mission on Coronavirus Disease 2019 (COVID-19) is the best source of information on COVID-19 that I have seen.
The Joint Mission consisted of 25 national and international experts from China, Germany, Japan, Korea, Nigeria, Russia, Singapore, the United States of America and the World Health Organization (WHO). The Joint Mission was headed by Dr Bruce Aylward of WHO and Dr Wannian Liang of the People’s Republic of China.
Some of the language is more pro-China than is usual in an academic report but the report is full of credible data.
The bottom line is that there is good news and bad news. The good news is that due to extraordinary intervention the epidemic in China has been brought under control and is slowing to manageable levels.
In the face of a previously unknown virus, China has rolled out perhaps the most ambitious, agile and aggressive disease containment effort in history. The strategy that underpinned this containment effort was initially a national approach that promoted universal temperature monitoring, masking, and hand washing. However, as the outbreak evolved, and knowledge was gained, a science and risk-based approach was taken to tailor implementation. Specific containment measures were adjusted to the provincial, county and even community context, the capacity of the setting, and the nature of novel coronavirus transmission there.
…. China’s bold approach to contain the rapid spread of this new respiratory pathogen has changed the course of a rapidly escalating and deadly epidemic. A particularly compelling statistic is that on the first day of the advance team’s work there were 2478 newly confirmed cases of COVID-19 reported in China. Two weeks later, on the final day of this Mission, China reported 409 newly confirmed cases. This decline in COVID-19 cases across China is real.
… Based on a comparison of crude attack rates across provinces, the Joint Mission estimates that this truly all-of Government and all-of-society approach that has been taken in China has averted or at least delayed hundreds of thousands of COVID-19 cases in the country. By extension, the reduction that has been achieved in the force of COVID-19 infection in China has also played a significant role in protecting the global community and creating a stronger first line of defense against international spread. Containing this outbreak, however, has come at great cost and sacrifice by China and its people, in both human and material terms.
The bad news is that the WHO is worried that other countries do not have the capability or will to implement some of the same policies as China did.
Much of the global community is not yet ready, in mindset and materially, to implement the measures that have been employed to contain COVID-19 in China. These are the only measures that are currently proven to interrupt or minimize transmission chains in humans. Fundamental to these measures is extremely proactive surveillance to immediately detect cases, very rapid diagnosis and immediate case isolation, rigorous tracking and quarantine of close contacts, and an exceptionally high degree of population understanding and acceptance of these measures.
.. COVID-19 is spreading with astonishing speed; COVID-19 outbreaks in any setting have very serious consequences; and there is now strong evidence that non-pharmaceutical interventions can reduce and even interrupt transmission. Concerningly, global and national preparedness planning is often ambivalent about such interventions. However, to reduce COVID-19 illness and death, near-term readiness planning must embrace the large-scale implementation of high-quality, non-pharmaceutical public health measures. These measures must fully incorporate immediate case detection and isolation, rigorous close contact tracing and monitoring/quarantine, and direct population/community engagement.
I don’t think the WHO is the final authority on what to do, public health is their hammer. I have been dismayed, however, at the failure of the CDC, which surely prior to this crisis one would have rated as one of the best US organizations. As the NYTimes wrote:
The Centers for Disease Control and Prevention botched its first attempt to mass produce a diagnostic test kit, a discovery made only after officials had shipped hundreds of kits to state laboratories.
A promised replacement took several weeks, and still did not permit state and local laboratories to make final diagnoses. And the C.D.C. essentially ensured that Americans would be tested in very few numbers by imposing stringent and narrow criteria, critics say.
The failure of the CDC, which is a failure of the US government at the deepest levels, not just rot from the top, meant that we lost several weeks that we may have needed to avoid more stringent measures. We will know more in a week.
Read the whole thing.
The top 1% are the only affluent group consistently more inclined than the general population to attribute variation in drive and IQ to both internal causes, particularly to innate causes (the top 1% also differ from the other affluent, at p < .01). This said, the affluent are not more dismissive than others of environmental causal explanations. Interestingly, across all income groups, “environmental” explanations for drive and IQ are more popular than the two internal explanations.
1. David Nutt, Drink? The New Science of Alcohol + Your Health.
A very good introduction to the growing body of evidence about the harms of alcohol, in all walks of life.
2. Samuel Zipp, The Idealist: Wendell Willkie’s Wartime Quest to Build One World.
Who cares about Wendell Willkie? I received this review copy determined not to read it, but of course I could not help but crack open the cover and sample a few pages, and then I was hooked. The first thirty pages alone had excellent discussions of early aviation (Willkie was an aviation pioneer of sorts with a cross-world flight), Midwestern family and achievement culture of the time, and the rise of the United States.
3. I was happy to write a blurb for Michael R. Strain’s The American Dream is Not Dead (But Populism Could Kill It).
4. Simon W. Bowmaker, When the President Calls: Conversations with Economic Policymakers.
The interviewed subjects include Feldstein, Boskin, Rubin, Summers, Stiglitz, Rivlin, Yellen, John Taylor, Lazear, Harvey Rosen, Goolsbee, Orszag, Brainard, Alan Krueger, Furman, Hassett, and others.
4. Cheryl Misak, Frank Ramsey: A Sheer Excess of Powers.
Thorough and useful, though not exciting to read.
5. Gabriel Said Reynolds, Allah, God in the Qur’an.
A very good treatment of what it promises, with an emphasis on the concept of mercy in Islam.
6. Sophy Roberts, The Lost Pianos of Siberia.
A wonderful book if you care about the lost pianos of Siberia and indeed I do: “Roberts reminds us in this fresh book that there are still some mysterious parts of our world.” (link here) Also of note is Varlam Shalamov, Sketches of the Criminal World: Further Kolyma Stories, the first third being remarkably moving and incisive as well.
There is also Sidney Powell and Harvey A. Silverman, Conviction Machine: Standing Up to Federal Prosecutorial Abuse is a frank and brutal documentation of why you should never trust a prosecutor or speak to the FBI.
Also new and notable is Lily Collison, Spastic Diplegia–Bilateral Cerebral Palsy: Understanding the Motor Problems, Their Impact on Walking, and Management Throughout Life: a Practical Guide for Families.