Month: May 2021

My Conversation with Pierpaolo Barbieri

Here is the audio, visual, and transcript.  Here is part of the summary:

Pierpaolo joined Tyler to discuss why the Mexican banking system only serves 30 percent of Mexicans, which country will be the first to go cashless, the implications of a digital yuan, whether Miami will overtake São Paolo as the tech center of Latin America, how he hopes to make Ualá the Facebook of FinTech, Argentina’s bipolar fiscal policy, his transition from historian to startup founder, the novels of Michel Houellebecq, Nazi economic policy, why you can find amazing and cheap pasta in Argentina, why Jorge Luis Borges might be his favorite philosopher, the advice he’d give to his 18-year-old self, his friendship with Niall Ferguson, the political legacy of the Spanish Civil War, why he stopped sending emails from bed, and more.

Here is just one bit:

COWEN: Why did Argentina’s liberalization attempt under Macri fail?

BARBIERI: That’s a great question. There’s a very big ongoing debate about that. I think that there was a huge divergence between fiscal policy and monetary policy in the first two years of the Macri administration.

The fiscal consolidation was not done fast enough in 2016 and 2017 and then needed to accelerate dramatically after the taper tantrum, if you want to call it, or perceived higher global rates of 2018. So Macri had to run to the IMF and then do a lot of fiscal consolidation — that hadn’t been done in ’16 and ’17 — in’18 and ’19. Ultimately, that’s why he lost the election.

Generally speaking, that’s the short-term electoral answer. There’s a wider answer, which is that I think that many of the deep reforms that Argentina needed lack wide consensus. So I think there’s no question that Argentina needs to modify how the state spends money and its propensity to have larger fiscal deficits that eventually need to be monetized. Then we restart the process.

There’s a great scholar locally, Pablo Gerchunoff, who’s written a very good paper that analyzes Argentine economic history since the 1950s and shows how we move very schizophrenically between two models, one with a high exchange rate, where we all want to export a lot, and then when elections approach, people want a stronger local currency so that we can import a lot and feel richer.

The two models don’t have a wide acceptance on what are the reforms that are needed. I think that, in retrospect, Macri would say that he didn’t seek enough of a wider backing for the kind of reforms that he needed to enact — like Spain did in 1975, if you will, or Chile did after Pinochet — having some basic agreements with the opposition that would outlive a defeat in the elections.


COWEN: The best movie from Argentina — is it Nine QueensNueve reinas?

BARBIERI: It is a strong contender, but I would think El secreto de sus ojos, The Secret in Their Eyes, is my favorite film about Argentina because of what it says about the very difficult period of modernization, and in particular, the horrors of the last military regime that marked us so much that it still defines our politics 50 years since.


Born to be Managers?

The paper’s subtitle is “Genetic Links between Risk-Taking and the Likelihood of Holding Managerial Positions.”  It is hard for me to verify or assess this kind of result, but I pass it along for its interest:

Do genes determine who will become managers? Using the UK Biobank data, we study the phenotypic and genetic correlations between the likelihood of holding managerial positions and physical, cognitive, and mental health traits (n = 297,591). Among all traits we examine, general risk tolerance and risky behaviors (e.g., automobile speeding and the number of sexual partners) have the strongest phenotypic and genetic correlations with holding managerial positions. For example, the genetic correlation between automobile speeding and being managers is 0.39 (P = 3.94E-16). Additionally, the genetic correlations between risk-taking traits and being managers are stronger for females. Genome-wide association study (GWAS) shows holding managerial positions is associated with rs7035099 (ZNF618, 9q32), which has been linked to risk tolerance and adventurousness. Overall, our results suggest individuals with risk-taking-related genes are more likely to become managers. To the best of our knowledge, this paper is the first GWAS of the genetic effects on leadership.

That is from a new paper by Jinjie Lin and Bingxin Zhao.  Via a loyal MR reader.

It feels like we are living in a science fiction novel

That is the theme of my latest Bloomberg column, here is one excerpt:

Now, for the first time in my life, I feel like I am living in a science fiction serial.

The break point was China’s landing of an exploratory vehicle on Mars. It’s not just the mere fact of it, as China was one of the world’s poorest countries until relatively recently. It’s that the vehicle contains a remarkable assemblage of software and artificial intelligence devices, not to mention lasers and ground-penetrating radar.

There is a series of science fiction novels about China in which it colonizes Mars. Published between 1988 and 1999, David Wingrove’s Chung Kuo series is set 200 years in the future. It describes a corrupt and repressive China that rules the world and enforces rigid racial hierarchies.

It is striking to read the review of the book published in the New York Times in 1990. It notes that in the book “the Chinese somehow regained their sense of purpose in the latter half of the 21st century” — which hardly sounds like science fiction, the only question at this point being why it might have taken them so long. The book is judged unrealistic and objectionable because its “vision of a Chinese-dominated future seems arbitrary, ungrounded in historical process.” The Chung Kuo books don’t reflect my predictions either, but it does seem that reality has exceeded the vision of at least one book critic.

I also consider Asimov, Dogecoin, and Stephenson at the link.

The question about secular stagnation that always has bugged me

I have never understood how savings is supposed to remain above investment for extended periods of time.  In a recent Op-Ed, Krugman summed up the secular stagnation view nicely, but you will find similar claims all over:

To maintain full employment, a market economy must persuade businesses to invest all the money households want to save.

If the demand to investment is so low, why don’t the prices of investment goods fall, thereby increasing the marginal return to new investment?  (I do get why the zero lower bound may limit the ability of interest rates to fall).  That would then equilibrate planned savings and planned investment once again and eliminate the savings overhand.  Of course price stickiness may prevent this from happening in the short run, but secular stagnation is a longer run theory.

This point resembles Hayek’s response to Foster and Catchings way back when.  Has it been answered?

News You Can Use

1. Popular wisdom says the second cheapest bottle of wine has the biggest markup because no one wants to look like a cheapskate and buy the cheapest bottle and restaurants take advantage of that tendency to markup the second cheapest bottle relatively more so it’s a poor value. Popular wisdom is wrong according to an analysis of wines at London restaurants. Peak markup is near the middle. Buying by the glass is also ok.

2. How to cook cicadas. An entire cookbook, albeit a short one. No word on what wine pairs well with cicada.

3. The Invisible Graveyard: A Conversation with Economist Alex Tabarrok a good podcast with with physicians in training Mitch and Daniel Belkin. You may also be interested in Metformin and the Biology of Aging with Nir Barzilai.

4. 1729–earn Bitcoin for completing tasks & tutorials. Balaji Srinivasan’s newsletter that pays readers. 1729, a very interesting number and an effort to bootstrap the community and technology to eventually deliver online countries. Here’s a good winning entry, a review of Balaji’s essay Founding vs. Inheriting.

Model this art market illiquidity what would Hayek say?

She [an artist] tries to do a show a year, one every three years at each of the three galleries.  The idea, she explained, is for your prices not to have a sudden rise, precisely because they can crash, but rather for your dealers to increase them slowly as your work receives exposure through venues like group shows, exhibitions, and biennials.  Auctions can be dangerous for just that reason.  At the time we spoke, Wilcox’s works on paper (19″ x 24″) were selling for around $6,000; her largest paintings (12′ x 6′), for $45,000.  Dealers take 50 percent.  Prices are based on size, not judgments of quality, because you don’t want to influence buyers’ opinions.  Smaller works are cheaper, but more expensive per square inch (kind of like real estate).  Large paintings are easier to sell in Los Angeles than London or New York, because the houses are bigger.

That is an excerpt from William Deresiewicz, The Death of the Artist: How Creators are Struggling to Survive in the Age of Billionaires and Big Tech, an excellent book (ignore the subtitle).

Philosopher Jimmy Alfonso Licon interviews me

Here is the full exchange (written only), here is one segment in the middle:

JL: I’m a philosopher, and you’re an economist. Do you think there are economic insights and tools philosophers could benefit from? What about vice versa?

TC: Philosophers are much better readers than economists are, and (some of them) are better at being self-critical and insisting on ever greater levels of depth. And they recognize the complexity of normative statements much better than economists do. Those are big advantages.

Working back toward the other direction, philosophers simply are not interested enough in basic empirical facts, in understanding statistics, or in understanding expected value theory (of course there are exceptions, especially for the latter point).

I also find that many philosophers, including many of the best ones, tend to be interested only in speaking with other philosophers. That is a sign of narrowness and provinciality, and it relates to the relative lack of interest in the empirical. You would not have found the same in David Hume, for instance, as his six-volume History of England remains a classic, as do his writings on economics and the arts.

The concluding sequence in fact refers obliquely to MR commentators, but you will have to click on the link for that.  Here is the home page of Jimmy Alfonso Licon, here is his research page.  I am very pleased that Jimmy will be a visiting Emergent Ventures fellow at GMU this coming fall.

Monday assorted links

1. “We suggest that economic growth explains the survival of constitutional monarchy rather than vice versa.

2. Why the EU fails repeatedly (NYT).

3. “Although the most inexperienced quartile of borrowers underestimate their likelihood of future borrowing, the more experienced three quartiles predict correctly on average. This finding contrasts sharply with priors we elicited from 103 payday lending and behavioral economics experts, who believed that the average borrower would be highly overoptimistic about getting out of debt.”  Link here.

4. “…controlling for city fixed effects, population, and personal income, large [U.S.] city governments shrunk by 15% between 2009 and 2018.

5. Some kind of new app that does something or other related to themes on this blog.

6. Production bottlenecks and supply chain distortions have reached extreme levels.

The Moral Foundations of Progress

Applied Divinity Studies has written an excellent and thought-provoking 34-pp. review of my book Stubborn Attachments.  Excerpt:

Naively, say there are three possible timescales for humanity, and we assign equal (33.3%) credence to each of them:

1. Short: Humanity dies out within 100 years or fewer
2. Medium: Humanity dies out within 1,000 years or fewer
3. Long: Humanity dies out within 1,000,000 years or more

In this case, the overwhelming moral importance still lies in the far-future (1,000,000+ years). So long as you accept the basic Atemporal argument of Attachments, the mere possibility of a far-future dominates the expected value calculus.

You could tweak the probabilities to assign 99% credence to the medium-term view and only 1% to the long-term view, and the math will still work out.

Growth will still matter in that it accelerates our arrival at the “saturation” point, but as estimated by Nick Bostrom in Astronomical Waste, the cost of this delay is miniscule compared to the cost of outright extinction. So existential-risk remains of tremendous importance, but where does that leave progress?

There is much more at the link.  And here is the blog of Applied Divinity Studies.

Sarah Ruden’s Gospels translation

Am I the one who should be judging this?  I am neither Christian nor have any fluency in ancient Greek.  Nonetheless as a reader experience I am happy to give this one an A+.  The “discursive glossary of unfamiliar word choices in English” is superbly useful, better arranged than most uses of footnotes.  More importantly, to me it reads “like the New Testament ought to read.”  (Please revisit my first sentence here!)  Other translations, even say the serious Oxford one, sound too much like “a lot of casual stories in colloquial English” for my taste.  This sounds like The Bible.

I had not known that Sarah Ruden was a Quaker, and perhaps that is why she is willing to veer away from the “chatty” approach and delve into the strangeness of these texts.  You should pair this with David Bentley Hart and other translations (do read the first Amazon review), but for now I am willing to call this one “an event.”  Heartily recommended.

Here is the Amazon link, the company came through after San Francisco failed me.

From the Department of Underappreciated Facts

Career earnings growth in the U.S. more than doubled between 1960 and 2017, and the age of peak earnings increased from the late 30s to the mid-50s. I show that a substantial share of this shift is explained by increased employment in decision-intensive occupations, which have longer and more gradual periods of earnings growth…Experience takes longer to accumulate in high variance, non-routine jobs.

That is from a new working paper by David J. Deming.  One implication is that AI leads to lots of angry, frustrated, left-wing young people, and a cementing in of the gerontocracy.

Sunday assorted links

1. Economics, as taught at U Mass Amherst, does not make U Mass Amherst undergraduates more selfish.  Good paper, but incorrectly framed.  And which topics do then make them more selfish?  Any?

2. “Every registered thoroughbred in the world is descended from one of three stallions: the Byerly Turk, the Darley Arabian, and the Godolphin Arabian.” (New Yorker)

3. The 25 most popular foods in Algeria.  And finishing Finnegans Wake.

4. Maybe these should be questions on the GREs? (NYT)

5. Kahneman, Sibony, and Sunstein Op-Ed on Noise (NYT).  And here is a Guardian interview with Kahneman.

6. “Drilling companies rarely recommend dowsers to their clients, but the practice is common nonetheless.”  Starts slow, but interesting.

“The Chiefs Now in This City”

Virginia, the largest British colony, had nearly 350,000 people in 1763, but the capital, Williamsburg, had no more than 2,000 residents, black and white.  The largest urban center in Virginia was actually Norfolk, another port at the intersection of key trade networks.  Norfolk thrived exporting timber, tar, and tobacco to Europe and provisions to the Caribbean, and it was the sixth-largest city in mainland British America by the second half of the eighteenth century.  Like Baltimore, it had a population of more than 6,000 by 1776.  Annapolis, the capital of Maryland, was even smaller than Williamsburg.  Andrew Burnaby, an English vicar, saw it in 1759 and reported: “None of the streets were paved, and the few public buildings here are not worth mentioning.”

The largest city in the southern colonies and the wealthiest in all of the North American colonies was Charleston, or Charles Town, the seat of government in South Carolina.

The author is Colin G. Calloway, the subtitle is Indians and the Urban Frontier in Early America, and the main theme is Native American interactions with the major urban areas of the British colonies.