Month: August 2021
Why Didn’t the 2009 Recovery Act Improve the Nation’s Highways and Bridges?
Kevin Lewis has been on such a roll lately, I am pleased to bring you all more content that he has sent my way:
Although the American Recovery and Reinvestment Act of 2009 (the Recovery Act) provided nearly $28 billion to state governments for improving U.S. highways, the highway system saw no significant improvement. For example, relative to the years before the act, the number of structurally deficient or functionally obsolete bridges was nearly unchanged, the number of workers on highway and bridge construction did not significantly increase, and the annual value of construction put in place for public highways barely budged. The author shows that as states spent Recovery Act highway grants, many simultaneously slashed their own contributions to highway infrastructure, freeing up state dollars for other uses. Next, using a cross-sectional analysis of state highway spending, the author shows that a state’s receipt of Recovery Act highway dollars had no statistically significant causal impact on that state’s total highway spending. Thus, the amount of actual highway infrastructure investment following the act’s passage was likely very similar to that under a no-stimulus counterfactual.
The paper is by Bill Dupor, of the St. Louis Fed. Kevin is a shy, unassuming man, a family man at that, and still deeply underrated!
What I’ve been reading
1. M.J. Ryan and Nicholas Higham, The Anglo-Saxon World. I’ve been reading more books in this area, even though data limitations make it difficult to form an accurate picture of what was happening. Here is Wikipedia on King Alfred, plenty of facts, broader context often difficult to recreate. (What exactly would they have debated on Twitter, and why?) I would put this as one of the two or three best Anglo-Saxon books I have seen, and with excellent visuals and photos.
2. John B. Thompson, Book Wars: The Digital Revolution. Thompson’s Merchants of Culture was surprisingly excellent, now the quality is no longer a surprise. This book covers the Kindle revolution (now dominated by romances), Google books, how electronic publishing rights evolved, crowdfunding books, the ascent of Amazon, and much more. In all or most of these areas he offers you more substance and more inside scoops than the other discussions you might have read, thus recommended.
3. Max Siollun, What Britain did to Nigeria: A Short History of Conquest and Rule. It is hard to find good books on Nigeria that are easy to follow and not just for specialists. This new one is maybe the best overall treatment I know? The British conquest of Nigeria took seventy-seven years to accomplish. Siollun also stresses the role of missionaries in bringing literacy to Nigeria, noting that what you might call Nigerian literacy skills, for instance in native scripts, were longstanding in many regions. Before the British arrived, the north of Nigeria was much more advanced economically than the south, though colonialism inverted this relationship. I found this sentence interesting: “Perhaps no question makes Nigerians disagree as much as why Britain created their country.”
4. Matthew Affron, et.al. Inventing Abstraction, 1910-1925: How a Radical Idea Changed Modern Art. Clustered discoveries are one of the best areas to read about, whether they be scientific or artistic. There will be many overlapping treatments, biographies, and so on. And the people who write about these areas may do so with a certain amount of passion. The rise of abstract art early in the twentieth century is one of the most remarkable of such clusters, as in so many countries top-rate artists made major breakthroughs in similar directions. This book shows you how better than any other I know, with excellent color plates as well.
5. Trevor Rowley, The Normans: A History of Conquest. As I understand the author, he presents the Normans as an essential part of what fed into the creation of modern Europe, also serving to spread those practices and norms. I hadn’t known that Tocqueville was in part originally a Scandinavian name, deriving from “Toki’s ville,” the Scand name tacked onto the Norman suffix.
Sunday assorted links
1. A problem in Baumol’s cost-disease argument.
2. Further fluvoxamine coverage. With a dose of Canadian nationalism. And Andy Slavitt agrees with the Israelis.
3. The culture that is Tlaxcalan the Tlaxcalan view of the Conquest and Cortes.
4. Soros on Xi (WSJ).
5. Did you expect the Spanish Inquisition (to have long-run, persistent effects)?
Shame. Shame. Shame.
The Afghanistan war was an epic disaster. Nothing good came of it. The least we can do as we evacuate, however, is to help all the Afghanis who helped us and who are now under death threat from the Taliban. But our record on Afghan refugees is shameful. At right from Daniel Bier is a chart of Afghan refugees resettled in the United States–604 last year 494 this year (data here). There are more Afghan immigrants accepted under other programs (not just the refugee program) and we have made motions to accept more but it may now be too late.
Canada in contrast is accepting 20,000 refugees.
Canada plans to resettle more than 20,000 vulnerable Afghans including women leaders, human rights workers and reporters to protect them from Taliban reprisals, Immigration Minister Marco Mendicino said on Friday.
The effort is in addition to an earlier initiative to welcome thousands of Afghans who worked for the Canadian government, such as interpreters, embassy workers and their families, he told a news conference.
“As the Taliban continues to take over more of Afghanistan, many more Afghans’ lives are under increasing threat,” he said. He did not provide a timetable.
Defense Minister Harjit Sajjan said some Canadian special forces were in Afghanistan taking part in the relocation effort but gave no details.
“The challenges on the ground are quite immense,” he said.
Eating out for big occasions is correlated with a lower quality of food
This paper incorporates applied econometrics, causal machine learning and theories of reference-dependent preferences to test whether consuming in a restaurant on special occasions, such as one’s birthday, anniversary, commencement, etc., would increase people’s expectations and would make consumers rate their consumption experiences lower. Furthermore, our study is closely linked to the emerging literature of attribution bias in economics and psychology and provides a scenario where we can test two leading theories of attribution bias empirically. In our paper, we analyzed reviews from Yelp and combined the text analyses with regressions, matching techniques and causal machine learning. Through a series of models, we found evidence that consumers’ ratings for restaurants are lower when they went to the restaurants on special occasions. This result can be explained by one theory of attribution bias where people have higher expectations about restaurants on special occasions and then misattribute their disappointment to the quality of the restaurants. From the connection between our empirical analysis and theories of attribution bias, this paper provides another piece of evidence of how attribution bias influences people’s perceptions and behaviors.
Here is the full paper by Ying-Kai Huang, via the excellent Kevin Lewis. I don’t think it is just about the expectations. If you go out for a special occasion, you have to bring grandma and Uncle Joe share a bunch of bland dishes with them. You are not choosing the crowd, and in any case the least common denominator effect kicks in (imagine instead choosing a dinner guest who knows all the best food at the place!). Plus everyone is bickering. You are also less likely to be eating at 5:00 p.m. when the food is best, and more likely to be eating at 8 p.m. when the food is at its worst, again a kind of least common denominator effect.
Don’t go out for special occasions is one obvious lesson here. Really. And choose your dining companions optimally.
*Pragmatism as Anti-Authoritarianism*
That is the new Richard Rorty book, released ten years after his death. Parts feel unfinished or underdeveloped, but mostly it is splendid. Imagine Rorty defending the Enlightenment (but not the Enlightenment epistemology of representation), and then tracing how that might lead to a defense of democracy and liberalism. Some of the themes overlap with my own Stubborn Attachments, and here is one short excerpt:
Plato’s mistake, on Dewey’s view, was having identified the ultimate object of eros with something unique, atemporal, and non-human rather than with an indefinitely expansible pantheon of transitory temporal accomplishments, both natural and cultural.
Rorty makes a much better case for Dewey being an important philosopher of liberalism than I have seen anywhere else. Imperfect as a work, but to my eye this is by far Rorty’s best stab at political philosophy.
You can buy the book here.
Saturday assorted links
2. New IMF working paper “Mask Mandates Save Lives,” note pre-Delta.
3. People who have been working two jobs from home (WSJ): “The money is incredible, the 29-year-old software engineer says. So is the stress: “I’ll wake up in the morning and I’m like, ‘Oh, this is the day I’m gonna get found out.’ ”
4. Those new (and temporary) service sector jobs. And circa 2020, NYT publishes Op-Ed from the Taliban, outlining what they in fact want.
Is Africa losing its growth window?
The macro side of the story here is underreported, alas:
One of the saddest stories of the year has gone largely unreported: the slowdown of political and economic progress in sub-Saharan Africa. There is no longer a clear path to be seen, or a simple story to be told, about how the world’s poorest continent might claw its way up to middle-income status. Africa has amazing human talent and brilliant cultural heritages, but its major political centers are, to put it bluntly, falling apart.
Three countries are more geopolitically central than the others. Ethiopia, with a population of 118 million, is sub-Saharan Africa’s second-most populous nation and the most significant node in East Africa. Nigeria has the most people (212 million) and the largest GDP on the continent. South Africa, population 60 million, is the region’s wealthiest nation, and it is the central economic and political presence in the southern part of the continent.
Within the last two years, all three of these nations have fallen into very serious trouble.
And:
Based on size and historical and cultural import, Democratic Republic of the Congo ought to be another contender as an influential African nation. But the country has been wracked by conflict for decades. It is not in a position to fill the void created by the failings of Ethiopia, Nigeria and South Africa.
The last few decades have been a relatively propitious time for Africa. There have been a minimum of major wars in the world, and a dearth of major new pandemics (until recently). China was interested in building up African infrastructure, and across the continent countries made great advances in public health.
Could it be that this window has shut, and the time for major gains has passed? And that is not even reckoning with the likelihood of additional damage from Covid on a continent with a very low level of vaccination.
These sub-Saharan political regressions might just be a coincidence in their timing. But another disturbing possibility is that the technologies and ideologies of our time are not favorable for underdeveloped nation-states with weak governments and many inharmonious ethnic groups. In that case, all this bad luck could be a precursor of even worse times ahead.
How did China end up with so many people?
I cannot judge this hypothesis, but I have always wondered about the question:
We hypothesize that besides technology and resource expansion, risk-mitigation improvements pushed the Malthusian limits to population growth in pre-industrial societies. During 976-1850 CE, China’s population increased by elevenfold while the Confucian clan emerged as the key risk-sharing institution for members. To test our hypothesis using historical data from 269 prefectures, we measure each region’s clan strength by its number of genealogy books compiled. Our results show that prefectures with stronger clans had significantly higher population density due to better resilience during natural disasters and fewer premature deaths of children. Confucian clans enabled pre-industrial China to sustain explosive population growth.
That is from a new paper by Zhiwu Chen and Chicheng Ma. Via the excellent Kevin Lewis.
*Cabbage and Caviar: A History of Food in Russia*
That is the title of a new and excellent book by Alison K. Smith. I have watched other people eat this food for eighteen years, and now I am beginning to understand:
The real shift in the world of Soviet salads, however, came in the Brezhnev era of the late 1960s and early 1970s. Then, named prepared salads started to appear, some initially associated with particular places but which soon spread out into the wider culinary world. The salads often features mayonnaise — not a new ingredient, but one increasingly produced not at home but industrially for sale in shops. Two of the most famous are layered salads that also featured another not new but newly prominent product: canned fish. ..In salad ‘Mimosa’, canned fish is layered with chopped boiled potatoes, hard-boiled eggs separated into whites and yolks, cooked carrots and mayonnaise. Finely chopped hard-boiled yolks make up the top layer, giving the salad its name: the yolks mimic mimosa flowers. Another salad, seld pod shuboi — literally herring under a fur coat — is similar, but uses herring instead of other canned fish and adds a layer of grated cooked beetroot under the topping of mayonnaise and chopped egg yolk. The beetroot bleeds into the mayonnaise, making the salad one of the most vibrantly colored parts of the Russian table.
And:
In the Soviet era, the kotlet came to take precedent over whole roast pieces of meat. It was economical and could be made so as to stretch out a small portion of meat with breadcrumbs or other starch, and it made tougher cuts more palatable. It was also a challenge.
And:
The preference for mushrooms was extensive, and in a way that struck some as particularly Slavic.
And:
One thing that Russians did not have until relatively recently was cheese — at least, not cheese in the sense of aged or ripened cheese.
I can’t quite utter “recommended,” but the book is really good!
Friday assorted links
1. Growing and shrinking counties.
2. More on the new fluvoxamine trial.
3. “Wounded after U.S. President Joe Biden cancelled the Keystone XL pipeline that would have shipped Alberta crude to the United States, the province snapped at the White House’s call on the Organization of Petroleum Exporting Countries Wednesday to raise production faster than planned.” Link here.
4. At least the photo of the people looking at the Titian paintings is hilarious (and the facts behind it deeply insight-rich, NYT).
The value of seat space during a pandemic
Delta Air Lines did not sell the middle seat in 2020 during the COVID-19 pandemic.
Its principal rivals sold all seats starting in July 2020.
Delta raised its fares by 15%.
Passengers paid $23 to prevent a stranger from sitting next to them.
Delta had to operate more flights, so this was not a profit-enhancing strategy.
Here is the paper, via the excellent Kevin Lewis.
Build
The excellent Eli Dourado in the NYTimes:
Many of our country’s problems are reducible, in one way or another, to the fact that we have lost the imperative to transform the physical world. While the soft technology of the internet has marched forward, development of real stuff — of steel and concrete — has slowed, hampered by laws that privilege the status quo.
…Under the National Environmental Policy Act, passed in 1969, federal agencies must produce a detailed statement of environmental impacts for any action — including granting a permit — that significantly affects the human environment. In contrast with the ugly motivations driving zoning, NEPA came into existence riding a wave of environmental consciousness. It was motivated by two well-meaning but mistaken beliefs: that material progress was of environmental quality and that environmental justice could be served through more citizen voice.
…If we want to build infrastructure as well as housing, we need to address environmental review as well as zoning. We must protect the environment, but we need not do it indirectly with laws that operate only through paperwork and court cases. We should do it directly — with stricter air and water standards, smarter conservation policies and a carbon tax. A direct approach would enable speedy government decisions and get shovels in the ground. A pro-building, pro-environment deal, eliminating environmental review in favor of these direct protections, could improve the environment through stricter substantive standards and through a stimulative effect on new, clean infrastructure.
How did the most dynamic country on the planet become so sclerotic? We did it to ourselves. We enacted laws that privilege the status quo at the expense of change and progress. We liberally passed out veto rights to anyone with the money and wherewithal to hire a lawyer. If we want to reverse the damage and create a more prosperous future, we must make it easy to build.
This is also a good opportunity to plug Ezra Klein’s excellent interview with Jerusalem Demsas, How Blue Cities Became So Outrageously Unaffordable. Notably, neither Erza nor Jerusalem let the left off the hook. The subtitle of the episode is How did the party of big government become the party of paralysis? Ezra also pushes back appropriately on some of the nuttier ideas like expanding the welfare state would make homeowners less likely to push for zoning restrictions.
In many ways, we are rediscovering Mancur Olson’s The Rise and Decline of Nations.
How good was Paul Samuelson’s macroeconomics?
Reading the new Nicholas Wapshott book and also Krugman’s review (NYT) of it, it all seemed a little too rosy to me. So I went back and took a look at Paul Samuelson the macroeconomist. I regret that I cannot report any good news, in fact Samuelson was downright poor — you might say awful — as a macroeconomist.
For instance, during the early 1970s there was a debate about President Nixon’s 1971 wage and price controls. There is some disagreement about the actual stance of Samuelson, as Wapshott (p.152) claims Samuelson opposed Nixon’s wage and price controls, but that doesn’t seem to be true. The Los Angeles Times for instance reported Samuelson opining as follows: “With the wage and price controls, he [Nixon] assured a more rapid short-term economic recovery, and made it absolutely certain he would be the overwhelming victor in the 1972 election.” Maybe that is not quite a full endorsement, but consider Samuelson’s remarks on the August 17, 1971 ABC Evening News: “I don’t think that a ninety-day freeze is going to solve the problem of inflation. But it’s a first move toward some kind of an incomes policy. Benign neglect did not work. It’s time the president used his leadership…We’re better off this Monday morning than we were last Friday. Friday was an untenable situation.”[1]
Really?
For Samuelson and many other Keynesians of his era, it was mostly about wage-push inflation. Do you know what my take would have been?: “The wage and price controls are neither good microeconomic nor good macroeconomic policy.” Samuelson did not come anywhere near to uttering such words. In October 1971, Samuelson argued that Nixon’s NEP [New Economic Policy], which included both severing the tie of the dollar to gold and wage and price controls, was “necessary,” and that the wage and price controls were working better than might have been expected.[2]
In October 1971, Samuelson also argued that the Fed should continue to let the money supply grow, to stave off the risk of a liquidity crisis occasioned by America’s lingering involvement in the Vietnam War (what??…if this is fear of a Bretton Woods collapse, print fewer dollars, besides Samuelson wanted to end Bretton Woods). He said he favored presidential “guideposts” to lower the rate of price inflation from four to three percent, but didn’t favor explicit wage and price controls because it wasn’t enough of an “emergency” situation. That is the extent of his opposition to wage and price controls – lukewarm at best, not objecting in principle, contradicting his earlier stances, and showing a poor understanding of monetary economics more broadly. You don’t have to be a hardcore monetarist to realize that continued money supply growth, in an expansionary period, combined with presidential “guideposts” to lower rates of price inflation, was simply an incorrect view.
In a 1974 piece, Samuelson continued to insist, as he had argued in the past, that the inflation of that era was cost-push inflation, and not driven by the money supply. He also asserted (without evidence) that full employment and price stability were incompatible. In one 1971 piece he made the remarkable and totally false assertion that: “…with our population and productivity growing, it takes more than a 4 per cent rate of real growth just to hold unemployment constant at a high level.”[3]
Really?
In other words, his basic model was just flat out wrong. More generally, the Samuelson Newsweek columns of that era make repeated, dogmatic, and arbitrary stabs at forecasting macroeconomic variables without much humility or soundness in the underlying model.
Milton Friedman did have an overly simplified view of the money supply, as many of his critics have alleged and as Scott Sumner would confirm. But as a macroeconomist he was far, far ahead of Paul Samuelson.
Don’t forget how bad macro was before Friedman came along.
[1] For The Los Angeles Times, see Hiltzi (1994), and also see “Questions and Answers: Paul A. Samuelson,” Newsweek, October 4, 1971. For the ABC News remarks, see Nelson (2020, volume 2, p.267).
[2] See “Questions and Answers: Paul A. Samuelson,” Newsweek, October 4, 1971.
[3] See Paul Samuelson, “Coping with Stagflation” Newsweek, August 19, 1974, and for the 1971 remarks see “How the Slump Looks to Three Experts” Newsweek, Oct.18, 1971. On the four percent claim, see Paul A. Samuelson, “Nixon Economics,” Newsweek, August 2, 1971.
This should be hailed, and yet there is mostly silence from the elites
Florida Gov. Ron DeSantis rolled out a new state treatment plan to help fight COVID-19, announcing Thursday that the state will start dispensing Regeneron monoclonal antibodies through mobile clinics…
DeSantis is urging people at high risk — the elderly, the obese, people with diabetes — to get the monoclonal antibodies at the first indication of COVID-19.
Florida is making the antibody therapies more widely available by opening a rapid response unit in Jacksonville with an eye toward expanding across the state.
Here is the full story.