Month: October 2021

The Future is Getting Farther Away

In Launching the Innovation Renaissance I said that “If total factor productivity had continued to grow at its 1957 to 1973 rate then we today would be living in the world of 2076 rather than in the world of 2014.” Sadly, the future is continuing to recede. Consider the graph below. If growth had continued at the rate expected by the CBO in 2005 then we today would be living in the world of 2037 rather than in the world of 2021. (n.b. I am eyeballing.)

By the way, don’t blame the forecasters. The forecast was reasonable, the reality is below expectation.

Hat tip: Matt Yglesias reupping a graph originally produced by Claudia Sahm who I thought had a different interpretation but maybe not!.

From the comments, on nuclear waste storage

“Nuclear has a waste storage problem that remains largely unaddressed .”

Not so. The first, and easiest way to address it is to reprocess spent fuel as France does. The next is to use modern reactor designs that actually clean up old fuel from light water reactors. For example, Canada’s CANDU reactor, a proven common design, can burn the fuel from U.S. LWR reactors, and its own spent fuel is only dangerous for on the order of a thousand years (600-1200), instead of the 30,000 from current US designs. Maintaining waste for hundreds of years is feasible, and on a whole different scale than a 30,000 year storage plan.

Another plan for the waste problem os small modular reactors, which are never refueled onsite. You bring in the fueled reactor, run it for 10 years, then exchange it for a new one and take the old one back to the factory to be refueled. That centralizes waste and prevents all the problems with on-site storage. With waste reprocessing, 90% of it goes back into the reactor for the next decade.

There are known, robust solutions to these problems. Anti-nuke types just ignore them.

That is from Dan Hanson from the comments section.

School quality in cities, from my email

On your podcast recently you asked Ed Glaeser for his political economy model to explain why schools in cities are so bad. I think it may just be schools in American cities that are bad rather than schools in cities in general, and the political economy reason why is probably local control over schools.

I am familiar with the situation in England, where outcomes are better in large cities. English children on free school meals (usually because their parents are on welfare) have substantially better exam results and are a lot more likely to go to university in large cities than in the rest of the country, while children not on free school meals do about as well as in large cities or slightly better.

That said, schools in large English cities were bad 20-30 years ago – in 2001 educational outcomes in inner London were the worst in England – and the improvement coincided with major policy change. Starting in 1990, school governance reforms in England have nearly eliminated the powers of local authorities over schools. Most schools are now ‘academies’ entirely independent from local authorities, and local authorities have very little discretion in how they manage schools theoretically under their control. On the other hand, in the US local government makes more of the decisions on education than in any other OECD country: 72% of decisions in the US are local, compared to the OECD average of 3%.

Why is local control bad for cities? I think it comes from the interaction between selection effects, measurement of school quality and local control. It’s genuinely quite hard for parents to assess school quality, and the data that is comparable and easy to use, like test results, combines underlying quality and selection effects. US Cities are surrounded by independently governed suburbs, some of which will always appear to have better schools than the city because of selection effects. This draws the parents that are most motivated by education to move out of the city and to those suburbs, leaving the cities with an electorate less motivated by education as an issue – these parents are probably also better educated. Local governments have no incentives to compete over the capacity to improve the outcomes of poorly performing children, since this could attract more of these students and make their test results look worse.

The problem of a less interested electorate is aggravated by the complexity of school governance. School districts in cities are usually  run by elected school boards, and often too large to be able to compare to other areas, or be held accountable for the performance of any given school. Urban voters have little in the way of partisan cues to help them choose between candidates – elections are either explicitly non-partisan or dominated by Democrats. This makes it easy for powerful interest groups (teachers unions) to dominate school board elections. Suburbs not only have more interested, more educated voters, but have much smaller school districts: a quick look on Google tells me the best school districts in big city suburbs often run fewer than 5 high schools. Suburban voters can easily compare school performance to other suburbs, and hold their boards accountable.

In summary, schools in American cities are bad because they have strong local government control over education, most often through elected school boards. Suburbs in the metro area can select for high-performing students, and parents concerned over education will confuse that with high school performance and move to the suburbs. This leaves the parents least capable of organising to reform schools concentrated in cities, which, compounded by complex governance and the size of urban school districts, leaves parents in cities incapable of overcoming the resistance of interest groups.

That is from Igor Zurimendi.

New results on the Child Tax Credit

Here is my “Control C” from Greg Mankiw:

A new paper by Kevin Corinth, Bruce Meyer, Matthew Stadnicki, and Derek Wu finds the following (emphasis added).

The proposed change under the American Families Plan (AFP) to the Tax Cuts and Jobs Act (TCJA) Child Tax Credit (CTC) would increase maximum benefit amounts to $3,000 or $3,600 per child (up from $2,000 per child) and make the full credit available to all low and middle-income families regardless of earnings or income. We estimate the anti-poverty, targeting, and labor supply effects of the expansion by linking survey data with administrative tax and government program data which form part of the Comprehensive Income Dataset (CID). Initially ignoring any behavioral responses, we estimate that the expansion of the CTC would reduce child poverty by 34% and deep child poverty by 39%. The expansion of the CTC would have a larger anti-poverty effect on children than any existing government program, though at a higher cost per child raised above the poverty line than any other means-tested program. Relatedly, the CTC expansion would allocate a smaller share of its total dollars to families at the bottom of the income distribution—as well as families with the lowest levels of long-term income, education, or health—than any existing means-tested program with the exception of housing assistance. We then simulate anti-poverty effects accounting for labor supply responses. By replacing the TCJA CTC (which contained substantial work incentives akin to the EITC) with a universal basic income-type benefit, the CTC expansion reduces the return to working at all by at least $2,000 per child for most workers with children. Relying on elasticity estimates consistent with mainstream simulation models and the academic literature, we estimate that this change in policy would lead 1.5 million workers (constituting 2.6% of all working parents) to exit the labor force. The decline in employment and the consequent earnings loss would mean that child poverty would only fall by 22% and deep child poverty would not fall at all with the CTC expansion.

Worth a ponder.

The New Top Chef

During the pandemic a pasta restaurant launched on UberEats in Paris. Cala quickly attracted a top 1% rating for it’s high quality to price ratio. Only now has it been revealed that the chef is a robot.

“We wanted to make sure that the quality of the product was what was really driving customers to come to a restaurant,” says Ylan Richard, who founded Cala in 2019, when he was 19 . “No one knew there was a robot behind the restaurant on the platforms.”

The economics are interesting.

Most restaurants spend roughly 30% of their costs on food; 30% on labour and 30% on real estate (rent, maintenance, electricity, heating and cleaning.)

In Cala’s restaurant, the kitchen is entirely removed and replaced by the robot, which measures 3m2 — significantly reducing the space needed. The restaurant also doesn’t have any seating.

The robot also allows Cala to produce many more meals per hour per square metre than other restaurants.

“With three metres squared, we can serve 1.2k meals an hour,” says Richard. “A traditional McDonald’s restaurant is 125m2, and usually they can serve 550 meals an hour.”

The robot means Cala saves 60% on real estate costs, which it says it puts into spending more on the cost of food ingredients, allowing it, Richard says, to deliver higher quality meals at a better price.

More generally, one can see top chefs producing recipes that are then scaled not just to restaurants but also to home robot preparation services. Meals would be produced by a subscription service (“We have 10,000 recipes from the greatest chefs on every continent.”). Restaurants would compete even more on ambience.

Remember when people used to savage real business cycle theory?

In Germany, where one in four jobs depends on exports, the crisis gumming up the world’s supply chains is weighing heavily on the economy, which is Europe’s largest and a linchpin to global commerce.

Recent surveys and data point to a sharp slowdown of the German manufacturing powerhouse, and economists have begun to predict a “bottleneck recession.”

Almost everything that German factories need to operate is in short supply, not just computer chips but also plywood, copper, aluminum, plastics and raw materials like cobalt, lithium, nickel and graphite, which are crucial ingredients of electric car batteries.

And this:

The widespread assumption that suppliers close to home are more reliable has not always proved true. During the turmoil caused by the pandemic, some German companies had more trouble getting supplies from France or Italy, because of strict lockdowns, than they did from Asia.

Here is the full NYT piece by Jack Ewing, recommended.

Who are the greatest Irish artists? part V, Harry Clarke

Harry Clarke, 1889-1931, born Dublin, stained glass artist and book illustrator, styles broadly Art Nouveau and symbolist.

He produced over 130 stained glass windows, the majority of which are in Ireland and then England.  He was renowned for his rich, original colors and his deep blues.  The value of his work is often site-specific (it would make for a great “go around Ireland” tour), and, unlike with most paintings, a jpeg picks up only one part of the broader work. Nonetheless here is one image:

Or try this:

Still not good enough.  I don’t feel I can make a real case by giving you more images, maybe you would do better to just view a bunch en masse.  A visit to the National Gallery in Dublin is better yet.  Barring that, this excellent catalog has fine images.  Here is a good short piece on Clarke’s weirdness (“the Irish artist welded Christian, Celtic and pagan imagery with the decadence of Klimt and Beardsley into an exotic futuristic fantasy”), also with quality images.

I see a few reasons for giving Clarke serious consideration:

1. He did most of his major work in Ireland.  And his “Celtic revival” emphasis is perhaps closer in spirit to contemporary Ireland than are the Anglo-Irish backgrounds of many of the other leading contenders for best Irish artist.

2. He expresses the playful, dramatic, and rebellious sides of the Irish national spirit.

3. He is strikingly original.  Some of his work also influenced later developments in illustration and graphic novels.  He in turn drew on varied sources, including religious illustrations, Russian ballet and Russian theatre art, and the cinema.

4. The colors are memorable and the technical execution is very strong.

5. He and his studio did church stained glass for Bayonne, New Jersey.

6. You could imagine him doing a cover for a Camille Paglia book.  As it stands, he did illustrate Goethe, Swinburne, and Hans Christian Andersen.

Ultimately he seems a little too concentrated in one direction to be my top pick, and maybe my number one Irish artist shouldn’t be so…”fruity”?  But I enjoy his work greatly those (few) times I have been able to see it and I do recommend him highly.

I hope you’ll be getting the final installment in this series — my #1 pick — pretty soon.

My Conversation with the excellent Claudia Goldin

Here is the transcript and audio.  Here is part of the CWT summary:

Claudia joined Tyler to discuss the rise of female billionaires in China, why the US gender earnings gap expanded in recent years, what’s behind falling marriage rates for those without a college degree, why the wage gap flips for Black women versus Black men, theoretical approaches for modeling intersectionality, gender ratios in economics, why she’s skeptical about happiness research, how the New York Times wedding announcement page has evolved, the problems with for-profit education, the value of an Ivy League degree, whether a Coasian solution existed to prevent the Civil War, which Americans were most likely to be anti-immigrant in the 1920s, her forthcoming work on Lanham schools, and more.

Here is an excerpt:

COWEN: If you look at a school, say, like Duke or Emory, is it a long-run problem that if they admit people on their merits, there’ll be too many women in the school relative to men, and some kind of affirmative action will be needed for the males?

GOLDIN: These are private institutions, and they can generally accept whom they would like to accept for various reasons of diversity.

COWEN: Should they do that? Or should they just get in 76 percent women, say?

GOLDIN: I’m brought back to the original issues that were raised by a small number of liberal arts colleges and universities in the ’50s and the ’60s about why they should become coeducational institutions.

Those reasons were that their marginal student was not going to Princeton but going to Harvard, not going to Princeton but going to Penn, not going to Princeton but going to Cornell, because that student wanted an education that was more balanced in terms of what the world would look like when they got out. And that more balanced, then, was not necessarily Blacks, Hispanics, and Jews, but the one major thing that was missing from Princeton and Yale and Dartmouth and Amherst and Wesleyan and a whole bunch of places was women.

Those institutions, in a process that I’ve described in the origins of coeducation, led these institutions to move in the direction of accepting more women. Now what’s going through your mind, I think, is, “Yes, but they weren’t lowering quality. In fact, they were increasing quality.” Diversity, in any dimension, can be thought of as a plus for everyone.

It was about 10 years ago that some dean in a small liberal arts college in the Midwest admitted to the fact that they were accepting men with lower SAT, ACT, and grade point averages to increase diversity.

COWEN: Men, probably, are not less intelligent than women, on average. What’s the pipeline problem? Is it too much homework and too many extracurriculars in high school or something else? Where are we failing our young boys?

GOLDIN: We can go back to as early as we have data on high schools and know that girls attended high schools, graduated from high schools at far, far greater numbers than boys. If there is an issue here, it’s certainly not extracurriculars. It may have to do with what’s going on in your cells and this difference between this Y and this double X.

COWEN: The value of an Ivy League degree — what percentage of that value do you think comes from signaling as opposed to learning?

GOLDIN: Very little. I think that it’s not signaling. It’s probably networks.


Wednesday assorted links

1. New Stripe Press site.

2. Ensnaring Sebald.

3. What is in the new budget bill?

4. The origins of Ethereum? 

5. Not how Thomas Friedman frames it, but it does sound as if “the Greens” are partially at fault (NYT).  And UK natural gas prices are up 40 percent in a single day.  Moving away from nuclear was an even bigger mistake than it seemed at the time.

6. Glen Greenwald on Facebook and the Democrats.

7. Gary Gorton on CBDCs and other stuff, using the word “Orkney.”


I think you might be interested in this new entrepreneurial opportunity, the Impact Ventures Competition pilot. 

Through the four-week competition, you will compete to level up your impact venture and entrepreneurial skills. You will receive constructive feedback, strengthen your ideas, and compete to win a prize of USD $50,000. If you are interested, here is a link to sign up. The deadline to apply is Oct 11th at 11:59pm EST. 

For more information, please visit

The Promising Pathway Act

Operation Warp Speed showed that we can move much faster. FDA delay in approving rapid tests shows that we should move much faster. There is a window of opportunity for reform. The excellent Bart Madden and Siri Terjesen argue for the Promising Pathways Act.

One particularly exciting development is the Promising Pathway Act (PPA), recently introduced in Congress. PPA would reduce bureaucracy via legal changes and provide individuals with efficient early access to potential new drugs.

Under PPA, new drugs will receive provisional approval five to seven years earlier than the status quo via a two-year provisional approval. Drugs that demonstrate patient benefits could be renewed for a maximum of six years, and the FDA could grant full approval at any time based on real-world as opposed to clinical trial data documenting favorable treatments results.

The PPA allows patients, advised by their doctors, to choose early access to promising but not-yet-FDA -approved drugs. Patients and doctors would make informed decisions about using either approved or new medicines that demonstrate safety and initial effectiveness compared to approved drugs.

…Patients and doctors can log into an internet registry database for early access drugs that would contain treatment outcomes, side effects, genetic data, and biomarkers. Scientific researchers, as well as patients, will also benefit from the identification of subgroups of patients who do exceptionally well or fail to respond.

Data from the registry will open knowledge pathways to improve the biopharmaceutical industry’s research outlays to benefit future patients.

With radically lower regulatory costs plus heightened competition as more companies participate, expect substantially lower prescription drug prices for provisional approval drugs.

Here is the text of the PPA.

Why are newer, nice neighborhoods so hard to find?

That is the topic of my latest Bloomberg column, Scott Alexander has been covering related issues.  Here is one excerpt:

I can visit many European cities and find lovely parts of town to walk through. Closer to home, there is no recently created neighborhood in my own Virginia, or nearby Maryland, that can compare to the older homes of Shaker Heights, a suburb of Cleveland. The nicest residential neighborhoods of Washington, such as Georgetown, are typically quite old, predating World War II for most of their attractive structures and sometimes going as far back as the 18th century. Do I need to mention Prague, or the contrast between prewar and postwar German buildings?

A few caveats: The modern world has produced striking individual buildings, such as Guggenheim Bilbao or the Seattle Public Library, among many others. And there are neighborhoods that sell a kind of livability, such as the Kentlands in Maryland or Celebration, Fla., and it works well. It’s just not that beautiful or striking. In general, modern residential neighborhoods are not very aesthetically appealing.

This is not a purely subjective judgment (though it is my personal subjective judgment). If you ask the objective and measurable question of which neighborhoods tourists pay money to see, the answers are almost exclusively older neighborhoods, dating as far back as medieval times but pretty much never after 1940. Tysons Corner just isn’t as charming as Old Town Alexandria.

The decline of neighborhood beauty is all the more striking because of economic development. The world is not just two or three times wealthier now as it was in the 18th century, it is dozens of times wealthier. That is why the increasing cost of craftsmanship, while real, cannot account for the decline of neighborhood beauty. And note that when it comes to interior design, product design, cinema and many other areas, there are still plenty of notable and beautiful creations, fueled of course by greater wealth.


One common explanation for the decline of urban and neighborhood beauty is the rise of the automobile, which makes it harder to develop such places. Surely cars and traffic can ruin many an attractive scene. Still, this is not even close to a full answer. For one thing, there are autos all over Paris, so at least in principle it ought to be possible to build in ways that are both highly attractive and allow for cars.

Or consider college campuses and their central quads, which typically do not have automobiles even today. The ones people admire are the older ones, not the newer campuses, which tend to be functional but aesthetically mediocre. The beauty of the University of California at Santa Barbara relies a lot on the surrounding scenery, not the architecture.

No need to put this point in the comments:

“Selection effects” are also often cited as an explanation for the decline of neighborhood beauty: The best neighborhoods from the past are (at least partially) preserved, conveying an overly glorified sense of the aesthetics of previous eras. It’s a good point, but it’s hard for me to name many recent neighborhoods that will go down in history as aesthetically admirable.

My solution to the puzzle?  I think we’ve given up on coordination and instead we devote our resources to making interiors much more pleasing, beautiful, and comfortable.  The modern world is not aesthetically bankrupt!  So:

These days, most homeowners decide to “go it alone.” Since they cannot hope for a latter-day Rothenberg ob der Tauber — namely, coordination around exterior excellence in a consistent style — they focus on the interior, and indeed interior design has made huge strides forward. The lovely and comfortable rooms of many modern houses, along with many other recent aesthetic creations, belie the common notion that the world is too depraved to express beauty.

In that equilibrium, the exteriors of houses often end up coordinated — around relatively inexpensive, highly functional, non-aesthetic features so common in suburbs. It doesn’t make sense to aim for a 19th-century-palace look if your neighbor is doing an Art Deco exterior.

We do end up with more beauty on net:

So outward appearances suffer as homeowners save the real beauty for private purchases. And when beauty is privatized, it makes more sense to spend your money on other things — such as a really nice case for your iPhone.

Ever try to sit on one of those older sofas?  Ouch!

Addendum: As a side note, wonderful neighborhoods are great for tourists, but perhaps they are slightly overrated?  There is one splendid neighborhood of modernist homes in Alexandria, and I could live there if I wanted to.  But it would not improve my life, so I am staying put.

This experiment will be run

The New York Public Library is proud to announce a major policy shift: Beginning today, all late fines have been eliminated going forward—and all prior late fines and replacement fees have been cleared—so that everyone gets a clean slate at the Library. Research shows that fines are not effective in ensuring book returns—New Yorkers are quite reliable and responsible, clearly respecting our collections and the need for them to be available for others to borrow. But, unfortunately, fines are quite effective at preventing our most vulnerable communities from using our branches, services, and books. That is the antithesis of our mission to make knowledge and opportunity accessible to all, and needed to change. As New York grapples with the inequities laid bare by the pandemic, it is all the more urgent that we ensure the public library is open and freely available to all.

Anthony W. Marx
President, The New York Public Library

Via ZS.