Month: April 2022

Why is the U.S. inflation rate especially high?

However, since the first half of 2021, U.S. inflation has increasingly outpaced inflation in other developed countries. Estimates suggest that fiscal support measures designed to counteract the severity of the pandemic’s economic effect may have contributed to this divergence by raising inflation about 3 percentage points by the end of 2021.

That is from a recent San Francisco Fed piece by Òscar Jordà, Celeste Liu, Fernanda Nechio, and Fabián Rivera-Reyes.

I recall not so long ago when the overwhelming majority of Democratic-leaning economists on Twitter and elsewhere strongly favored the additional $2 trillion in stimulus.  In the campaign, it was a kind of electorally defining policy of the Biden administration.  I also recall that Larry Summers explained in very clear terms why this was the wrong policy, and hardly anyone listened.  “Progressive catnip” is the phrase I use to describe such policy options.  It involved “stimulus,” “sending people money,” and it “boosted demand,” all popular catchphrases of the moment.  It was seen as part of a broader push simply to be sending people money all the time.

This has to count as one of the biggest economic policy failures of recent times, and we still are not taking seriously that it happened and what that implies for our collective epistemic capabilities moving forward.

Wednesday assorted links

1. U.S.A. fact of the day.

2. Short of replication, the errors in papers can be increasingly difficult to find.  What should we infer from that?

3. Good James Wood review of the new Fintan O’Toole book on Ireland (New Yorker).

4. Would the Chinese opt for a blockade against Taiwan?

5. When does Matt Levine publish Money Stuff? (Cowen’s Third Law)

6. A guy live-tweeting his human challenge trial for a dysentery vaccine.

7. Revisionist defense of Star Trek: The Motion Picture.

My wish list for Twitter

Unlike many people, I am not obsessed with an edit function.  But I do wish for the following:

1. A better organization of DMs, including functional search.  And why do some of my DMs seem to disappear?

2. End-to-end encryption for DMs.

3. Available blue checks for more people.

4. Lately they have begun serving me up “popular” tweets from major tweeters multiple times.  I hate this.

5. Eliminate the quote tweet function, to limit pile-ons.  Addendum: I have changed my mind on this one.  Sabina Knight notes:

The quote tweet has many excellent functions, particularly for translations and more substantive conversations. I use Twitter to read and write in multiple languages. I love others’ short intros to articles and tweets. Many are humorous, and laughing is a reason to read Twitter for meI enjoy writing intros and comments myself. The philosophers, very active on twitter, quote to closely reply to others in a discussion. If Twitter eliminated the quote tweet function, I would use Twitter much less.

6. Sometimes my “scroll down” function gets stuck.  Unstick it.

7. I don’t myself prefer Promoted Tweets, and in theory yes I hate the bots.  But in practice, viewed only selfishly, neither has been a major problem for me.  I am not doubting they may be problems for others.

8. Longer-run, when AI is better and cheaper, how about a button “You didn’t subscribe to these tweets, but we think you really might like them.”  But apart from the main flow and screen.

9. I wish for a slightly smarter list of trending topics.  Yes I am greatly interested in the war in Ukraine, but I really don’t need “Zelenskyy says Russia is trying to hide ‘guilt in mass killing’ as the war in Ukraine continues”.

What else?

*Arbitrary Lines*, by M. Nolan Gray

The subtitle is How Zoning Broke the American City and How to Fix It, and here is one bit:

By today’s standard, New York’s 1916 zoning code is surprisingly liberal.  Modern zoning mainstays, like use subcategories or explicit floor area limits, are absent.  This is because the framers of New York’s zoning ordinance saw themselves as balancing a desire for some control against a natural skepticism of this new institution.  After all, as a historically unprecedented curtailment of property rights, the constitutionality of zoning was very much in question, and one ill-conceived regulation risked a court decision that could imperial the entire project.  The strategy of starting small worked, and the code survived, expanding from just a small pamphlet to hundreds of pages over the coming decades, before the 1961 rewrite.

And this:

At the end of 1916, 8 municipalities had adopted some form of zoning, and over the next seven years, a steady stream of municipalities would follow, such that by 1923, 218 municipalities had adopted zoning.

Nolan is an urban planner who is very skeptical of such zoning.  Recomnended, and I am pleased that both Mercatus and Emergent Ventures had a hand in supporting this project.

The extreme illusion of understanding

Though speakers and listeners monitor communication success, they systematically overestimate it. We report an extreme illusion of understanding that exists even without shared language. Native Mandarin Chinese speakers overestimated how well native English-speaking Americans understood what they said in Chinese, even when they were informed that the listeners knew no Chinese. These listeners also believed they understood the intentions of the Chinese speakers much more than they actually did. This extreme illusion impacts theories of speech monitoring and may be consequential in real-life, where miscommunication is costly.

That is from a new paper by Becky Ka Ling Yau,  Via the excellent Kevin Lewis.

Tuesday assorted links

1. Good piece on how top musical stars are increasingly doing private gigs.

2. Thomas Sargent on Learning from Lucas.

3. U.S. warship chased (but not grabbed).  Must be another one of those camera errors.  Or maybe they just made up the story altogether.

4. Are “Great Resignations” common during rapid economic recoveries?

5. Indigenous in Taiwan are receiving higher attention and status.

6. Are there octopus cities?  And NYT coverage of octopuses.  I liked this line: “The enclosures we use for octopuses are incredibly rich, to the point that we often can’t find them.”  There are, by the way, no institutional constraints on how octopuses can be treated in the course of research.

How heritable are various sports abilities?

Let us start with data from identical twins:

Take wrestling.  Of 6,778 Olympic wrestling athletes, there have been something like thirteen pairs of identical twins.  This implied that the identical twin of an Olympic wrestler has a better than 60 percent chance of becoming an Olympic wrestler himself.

That is from the forthcoming Seth Stephens-Davidowitz Don’t Trust Your Gut: Using Data to Get What You Really Want in Life.  From such reasoning you can divine the relative import of genetic factors for success in various sports.  Here are the derived calculations, with the number indicating “Percent of Same-Sex Siblings Who Are Identical Twins” (when both make the Olympics, or achieve some other status):

Track and field: 22.4%

Wrestlers: 13.8%

Rowers: 12.4%

NBA players: 11.5%

Boxers: 8.8%

Gymnasts: 8.1%

Swimmers: 6.5%

Fencers: 4.5%

Shooters: 3.4%

NFL players: 3.2%

MLB players: 1.9%

Alpine skiers: 1.7%

Divers, equestrian riders, and weightlifters: All zero percent.

Making focal points even more focal

Via Glenn Mercer.

Do founders outperform at venture capital?

In a nutshell, yes:

In this paper we explore whether or not the experience as a founder of a venture capital-backed startup influences the performance of founders who become venture capitalists (VCs). We find that nearly 7% of VCs were previously founders of a venture-backed startup. Having a successful exit and being male and white increase the probability that a founder transitions into a venture capital career. Successful founder-VCs have investment success rates that are 6.5 percentage points higher than professional VCs while unsuccessful founder-VCs have investment success rates that are 4 percentage points lower than professional VCs. While successful founder-VCs do get higher quality deal flow than professional or unsuccessful founder-VCs, observably higher deal quality does not explain the entire difference in performance. Using an instrumental variables approach to separate unobservable deal quality from value-add, we find that the outperformance of successful founder-VCs is consistent with them adding more value post-investment.

That is from a new NBER working paper by Paul A. Gompers and Vladimir Mukharlyamov.

Robot Rentals

Economists have long said that r, the interest rate, is the rental rate for capital in the same way that w is the rental rate (wage rate) for labor. Now it’s becoming literally true:

Bloomberg: The robots are coming—and not just to big outfits like automotive or aerospace plants. They’re increasingly popping up in smaller U.S. factories, warehouses, retail stores, farms, and even construction sites.

…a nascent trend of offering robots as a service—similar to the subscription models offered by software makers, wherein customers pay monthly or annual use fees rather than purchasing the products—is opening opportunities to even small companies. That financial model is what led Thomson to embrace automation. The company has robots on 27 of its 89 molding machines and plans to add more. It can’t afford to purchase the robots, which can cost $125,000 each, says Chief Executive Officer Steve Dyer. Instead, Thomson pays for the installed machines by the hour, at a cost that’s less than hiring a human employee—if one could be found, he says. “We just don’t have the margins to generate the kind of capital necessary to go out and make these broad, sweeping investments,” he says. “I’m paying $10 to $12 an hour for a robot that is replacing a position that I was paying $15 to $18 plus fringe benefits.”

…Formic is offering to set up robots and charge as little as $8 an hour, aiming first at the most tedious tasks, such as packing and unpacking products and feeding materials into existing machines. The potential market is huge, and it will only grow as the robots become more sophisticated, Farid says.

Robots will bring manufacturing back to America. A robot workforce should also make human unemployment less volatile because a robot workforce can be increased or shrunk quickly and isn’t worried about nominal wage stickiness. Also, as of yet robots don’t unionize. Robot wages will make the minimum wage more salient. Working out the interactions between a monopsony buyer of labor facing a perfectly elastic supply of robots will be interesting.

Econ Journal Watch — new issue

The new issue of Econ Journal Watch is online at

In this issue:Falling short on the GREMichael Weissman criticizes three recent papers on physics education research, finding major errors in methods leading to underestimation of the predictive power of Graduate Record Exams.Compared to what? Stephen Walker looks at an award-winning Review of Accounting Studies article that develops a measure, based on Benford’s law, to identify errors in financial statements, and shows that it does not measure up to simple and sensible alternatives.What’s free about free markets? Jan Ott argues that the Fraser economic freedom index ought not to include government size as a factor in the measurement. Ryan Murphy explains that the meaning of freedom used in the project is based on a conceptualization of freedom that is central to liberal civilization. Professor Ott replies.Misrepresenting Mises: Phillip W. Magness and Amelia Janaskie expose doings of Quinn Slobodian, Contemporary European History, and Cambridge University Press.A deep dive into deep roots: Does the ‘deep’ ancestry of a population correlate with aggregate outcomes in modern times? Jason Briggeman looks carefully at the data and methods of two ‘deep roots’ articles coauthored by Louis Putterman and disputes the claim that they teach us something.From Hume to Smith on the Common Law and English Liberty: Jacob Hall argues that Paul Sagar does less than justice to David Hume.Uncovering errors on measuring the underground economyManuel A. Gómez and Adrián Ríos-Blanco uncover problems in the Journal of Macroeconomics article “Measuring the Size of the Shadow Economy Using a Dynamic General Equilibrium Model with Trends”, by Mario Solis-Garcia and Yingtong Xie, who thank them for pointing them out, and who offer a revised procedure said to meet the goals of the original paper.Liberalism in Colombia across the centuries is documented by Sebastián Rodríguez and Gilberto Ramírez. The article extends the Classical Liberalism in Econ, by Country series to 22 articles. “Liberalism nevertheless continues to pulsate in Colombia. Its future is unwritten.”The inconsistency of “market failure”: Do you want the government to regulate markets with externalities, monopoly power, knowledge asymmetries, and products with false allure? Here is Ronald Coase’s 1974 essay “The Market for Goods and the Market for Ideas.”EJW thanks its referees and others who contribute to its mission.EJW Audio:

Call for papers:Commentaries on Smith/Hume scholarshipWho should get the Nobel Prize in economics, and why?EJW invites ‘journal watch’ submissions beyond Econ.EJW fosters open exchange. We welcome proposals and submissions of diverse viewpoints.

U.S.A. fact of the day

The Census data shows that of the nation’s 10 largest cities in 1950, only New York City and Los Angeles went on to have larger populations in 2020. The other eight — Chicago, Philadelphia, Detroit, Baltimore, Cleveland, St Louis, Washington, D.C., and Boston — all saw their populations fall in the following seven decades.

Here is the full article, about newly released Census data from 1950.  Via Mike Doherty.

Sunday assorted links

1. The slap culture that is Russia (YouTube).

2. Is information the fifth state of matter? Speculative.

3. Would it be possible to detect an industrial civilization in the geological record?

4. “We find that Christians (N = 451) value prayers at an average of $2.34 while non-believers (N = 166) are willing to pay $1.56 not to be prayed for by a Christian stranger…

5. Curtis Yarvin profile.

6. Observations on the air war.