Month: July 2022

Labor Unions Reduce Product Quality

by  Alex Tabarrok in

A very nice paper in Management Science by Kini, Shen, Shenoy and Subramanian finds that labor unions reduce product quality. Two strengths of the paper. First, the authors have relatively objective measures of product quality from thousands of product recalls mandated by the FDA, the Consumer Product Safety Commission and the National Highway Traffic Safety Administration covering many different industries. Second the authors use 3 different methods. First, they find that unionized firms are more likely to have recalls than non-unionized firms (a simple difference in means subject to many potential cofounds but I still like to see the raw data), second they find that in a panel model with industry and year fixed effects and other controls that firms which are more unionized have a greater frequency of product recalls. Finally they find that firms where the union just barely won the vote are more likely to have subsequent product recalls than firms for which the union just barely lost the vote–a regression discontinuity study.

In this paper, we study the impact of labor unions on product quality failures. We use a product recall as our measure of quality failure because it is an objective metric that is applicable to a broad cross-section of industries. Our analysis employs a union panel setting and close union elections in a regression discontinuity design framework to overcome identification issues. In the panel regressions, we find that firms that are unionized and those that have higher unionization rates experience a greater frequency of quality failures. The results obtain even at a more granular establishment level in a subsample in which we can identify the manufacturing establishment associated with the recalled product. When comparing firms in close elections, we find that firms with close union wins are followed by significantly worse product quality outcomes than those with close union losses. These results are amplified in non–right-to-work states, where unions have a relatively greater influence on the workforce.

The authors put more weight on financial strains caused by unionization as a mechanism whereas my story would be that unionization prevents firms from disciplining shoddy workers and that leads to lower product quality. Note that my theory would also cover teachers unions which the author’s mechanism would not.

Hat tip: Luke Froeb.

Photo Credit: Joe Piette.

U.S.A. fact of the day

by  Tyler Cowen in

What’s new is this: Almost a quarter of Americans over the age of 18 are now medicated for one or more of these conditions.

More specifically, according to data provided to The Times by Express Scripts, a pharmacy benefits manager, prescriptions across three categories of mental health medications — depression, anxiety and A.D.H.D. — have all risen since the pandemic began. But they have done so unevenly, telling a different story for each age group and each class of medication.

Here is more from the NYT, depressing throughout.

Geographic mobility is one secret of successful immigration

by  Tyler Cowen in

According to Boustan and Abramitzky, the secret weapon deployed by immigrant parents wasn’t education. It wasn’t a demanding parenting style like the one described in Amy Chua’s “Battle Hymn of the Tiger Mother,” either.

It was geographic mobility.

Immigrant kids tended to outperform their peers from similar economic backgrounds because, unencumbered by deep hometown roots, their parents were willing to move to where the jobs were. If you compare immigrants to similar native kids born in the same place, they succeed at similar rates. It’s just that immigrant kids are much more likely to have grown up in one of those high-opportunity places.

“Immigrants are living in locations that provide upward mobility for everyone,” Boustan said.

Here is the full article, which also argues that recent immigrants have been climbing the economic ladder no slower than in the days of Ellis Island.  By Andrew Van Dam, based on the work of Leah Boustan and Ran Abramitzky.

DC markets in everything

by  Tyler Cowen in

ShutDownDC, a liberal advocacy group in Washington, D.C., said on Friday that it will offer up to $250 to service industry workers in the district for every sighting of the justices who overturned Roe v. Wade.

Here is the story, and like Charles Cooke (and presumably Dan Klein) I object to the word “liberal” in this context.

And maybe they won’t get the check right away either:

  • “We’ll Venmo you $50 for a confirmed sighting and $200 if they’re still there 30 mins after your message.”

Sunday assorted links

by  Tyler Cowen

1. What is new in China this past week (a lot).

2. China’s population had been overcounted.

3. The South Korean population pyramid.

4. What is the likelihood Catherine the Great ever ate a banana?

5. Top importers and exporters of frog.

6. Is the future of opera to be found in Detroit? (NYT)  “By middle school he’d become a self-described “loner kid”; by high school he was watching Bergman’s “Persona” for pleasure.”

7. Hydrogen fuel cells and electrolysis for generation are getting more efficient.

Colombia markets in everything those new service sector jobs

by  Tyler Cowen

Ex-guerrillas offer birdwatching, hiking and hearty campfire cuisine as part of Tierra Grata Ecotours in La Paz, a town near the border with Venezuela. Over a two-day hike along boggy mountain paths, Jhonni Giraldo, a former farc footsoldier, leads hardy tourists to Marquetalia, a hamlet. In 1964 the military bombed an armed commune founded by refugees here into oblivion; the survivors headed to the hills and the farc insurgency was born. There is not much to see other than the rusted remains of a downed helicopter. Mr Giraldo is mulling over reconstructing the house of Manuel Marulanda, the founder of the farc.

Here is more from The Economist, via Yana.

*The World the Plague Made*

by  Tyler Cowen in

The author is James Belich, and the subtitle is The Black Death and the Rise of Europe.  This is a fascinating but not entirely persuasive book.  In any case it is one of the books to read this year.  Here is a summary sentence:

This book has argued that plague’s dire crucible triggered the Fourth Divergence.

My main worry is simple, namely that the author does not demonstrate his main proposition that the Black Death significantly boosted living standards where it hit.  That might be true, and I would say I don’t have a view of my own view on the matter one way or the other.  (Here is a recent and very useful survey indicating the positive effects were mostly short-run.)  But I would need to see a more careful presentation of wage data, and the author too frequently invokes a) massive literature citations, and b) a pat “half the people, so twice the per capita wealth” argument.  Losing up to half the people is highly disruptive, including for the ability to exploit material resources.  And is it per capita wealth that matters, or income?  Matters for what and for which income classes?  I needed to see much more on this.

Anyway, if you buy into the main premise (or even if you don’t) what follows is interesting throughout.  Belich takes on exactly when and why various plagues stopped circulating, and whether insufficiency of rats was a major reason.  Here is one interesting passage:

The rise of rat resistance — and the decline of it — seems like to have played a major role in the decline of plague — and the exceptions to it — throughout West Eurasia.  But as we saw in the last chapter, plague history increasingly diverged regionally from 1500.  Epidemics ended in Western Europe by 1720 and Eastern Europe by 1780.  Major strikes continued to afflict the Muslim South until about 1840.  the end of plague is conventionally attributed to human agency, notably the growing power of states to run effective quarantine measures, public health regulations, and border controls.  Other factors include a shift from wood to brick and tile, which was less rat-friendly , and to cheaper arsenic in the 1720s, which was not rat-friendly at all.  The decline of wooden houses and thatched roofs, ideal black rat environments, and their replacement by brick and tile varied by class, which may account for the trend toward higher casualties among common folk after 1500.

Belich then sheds some doubt on the public health measures argument, noting that Italy had bad plague outcomes in the 17th century, even though it had the best public health measures at the time.  No simple answer, but plenty of interesting discussion.

Another of my favorite sections of the book covered the difficulties at the time in persuading women to emigrate, and how that shaped colonial policies.  You also get the author’s take on the Persianate nature of the Mughal invasions, a lengthy account of how the plague shaped the settlement of Siberia, an optimistic take on the capabilities of peak Ottoman empire, how the fiscal state was Britain’s main innovation, how Britain manned its sea fleets from the Nordic countries, and much more.  You might say this is all too much, but who am I to complain?  I did find every page of the book substantive and interesting, even if I often felt the author was biting off more than he could chew.

So definitely recommended, though with caveats on the side of some of the actual conclusions.

Here are my previous posts on the work of James Belich.  In general he is someone whose books I always will read.

Saturday assorted links

by  Tyler Cowen

1. Why do soft sounds numb pain?

2. “The Subway Series features 12 all-new signature sandwiches, which you can order by name or number. The chain has created new meat, cheese, veggie, sauce, and bread combos to give guests options beyond their build-your-own.

“The Subway Series is the most ambitious undertaking in company history, as we are changing the nearly 60-year-old blueprint that helped make Subway a global phenomenon,” President for North America at Subway Trevor Haynes said in a press release.”  Link here.

3. Matt Levine on where the Elon/Twitter stuff stands.

4. #TheGreatForgetting, who is the economist in the room?

5. FT Lunch with Emily Oster, it is clear who is the economist in the room.

6. New paper on the public funding of science.

7. Noah Smith on Abe (not sure if this one is gated or not).

Academia, and economics in particular, is becoming too elite

by  Tyler Cowen

In 1970, just 1 in 5 U.S.-born PhD graduates in economics had a parent with a graduate degree. Now? Two-thirds of them do, according to a new analysis from the Peterson Institute for International Economics. The trends are similar for other fields (and for foreign-born students), but economics is off the charts.

This partly reflects population trends: Over that same period, the share of parents with graduate degrees and college-age children rose 10 percentage points, to 14 percent, our analysis of Census Bureau data shows. But compared with the typical American, a typical new economist is about five times more likely to have a parent with a graduate degree.

The new analysis comes from Anna Stansbury of the Massachusetts Institute of Technology and University of Michigan graduate student Robert Schultz, who got their hands on detailed data on U.S. PhD recipients going back more than 50 years. The data includes extensive information about almost half a million recipients in the 2010-to-2018 period alone.

It shows that the elite dominate even more among the top schools that produce about half of all future economics professors. Among the top 15 programs, 78 percent of new PhDs since 2010 had a parent with a graduate degree while just 6 percent are first-generation college students.

Here is the full story, via Daniel Lippman.

Operation Warp Speed Should Not have Been Disbanded

by  Alex Tabarrok in

Operation Warp Speed produced a new vaccine for a novel virus in record time but when Operation Warp Speed was disbanded by the Biden administration, vaccine research and development slowed from warp speed to impulse power. It’s ridiculous that it is taking longer to develop and deploy tweaks to the mRNA vaccines to deal with new variants than it took to develop the original vaccines from scratch. By the time we get an Omicron-specific vaccine that variant will have disappeared. This is no way to run a civilization.

We should be investing in a universal vaccine for all sarbecoviruses (of which SARS-COV-II is a member) and, as I have long argued (and here) a nasal vaccine. We need not exaggerate, for the vaccinated the dangers are no longer acute, but we should be better prepared for future variants and the savings from less sickness alone easily trump the costs. Indeed, the issue isn’t even so much the cost as the need to coordinate regulatory agencies, as OWS did, to speed approvals and reduce bureaucracy.

Patrick Collison, writing at Slow Boring, has the details (as Tyler also noted):

Despite excellent technology and promising early results in animal models, we estimate that the very earliest we will have access to these vaccines in humans is 2024. These groups need to run primate trials, then run human clinical trials, and then ramp manufacturing and distribution. Beyond having to jump through a lot of hoops, we’ve observed that they’re frequently tripped up by stupid things outside of their control, any one of which may hold their work back by months. (One group’s monkeys have been delayed by US Customs, which will push the start of their primate trial back ‘till September. Another is struggling to obtain necessary adjuvants. Multiple groups are unable to get access to current mRNA vaccines for research purposes because of legal barriers.) All groups we’ve interacted with are underfunded compared to what would be ideal.

Broadly speaking, the holdups involve some combination of logistical challenges and regulatory requirements, and the intersection between both. (You don’t in principle have to run a primate trial, but the FDA makes it harder to run a human trial if you don’t. You don’t in principle need to use “acute infection” as a trial endpoint; you could also use neutralizing antibody titers, which would be much faster and simpler.)

To speed things up:

  • We should lower the barrier for human clinical trials and use simpler endpoints. For many vaccine candidates, we could run human trials concurrent with primate trials (once basic safety data has been obtained). In humans, we don’t need to repeat Phase I trials for platforms that have already been validated and derisked. (In this vein, the FDA’s recent announcement about not requiring trials for updated platforms was encouraging.)
  • We should help these groups to scale manufacturing faster. Operation Warp Speed itself cost $10 billion; a second incarnation, with a tenth of that budget, could almost certainly accomplish a great deal.

…In our view it is probably true that, with competent execution, we could roll out pan-variant COVID vaccines before the end of 2022. Actually making that happen would require significant and coordinated logistical, regulatory, and administrative action. However, it would by no means be impossible. Not having pan-variant vaccines in 2022 is best thought of as a choice.

*Adventure Capitalism*

by  Tyler Cowen in

The author is Raymond B. Craib and the subtitle is A History of Libertarian Exit, from the Era of Decolonization to the Digital Age.  This is really two books in one.  The first is a quite useful and well-researched history of various libertarian attempts to ease the costs of political exit, or sometimes to obtain exit altogether.  He is well-informed about the 1972 Michael Oliver attempt to set up the libertarian “Isle of Minerva,” nearby to Tonga.  The King of Tonga nixed it, but even Rothbard and Tuccille mocked it.  And remember Jimmy Stevens and the Phoenix Foundation and their plans near New Caledonia?  This stuff was never the libertarian mainstream, or close to it, but it dominates this book (that said it is a fascinating story and well-researched).

Nonetheless these odd goings-on are treated as “the history of libertarian exit” when in fact plenty of other plans were afoot, how about say free movement within the European Union? The dismantling of capital controls?  Fighting to have the Berlin Wall come down?

The narrative then continues through seasteading, charter cities, Balaji, and so on.

The second book contained herein is simply a use of smear terms and sneering, Nancy MacLean style, to indicate that these various ventures are bad, playthings of the evil wealthy, anti-democratic, even loose affiliates of these ventures were bad people, and so on.  Usually there is not even an argument, rather it is assumed that somehow the reader is on board with an anti-exit perspective.  In this regard the author is simply a defective thinker.

I’ll leave the final evaluation up to you.