Month: September 2022

A White Supremacist Under Every Bed

by  Alex Tabarrok in

AlphaHistory: The Red Scare (1947-57) was a decade-long period of intense anti-communist paranoia in the United States. During this period, millions of ordinary Americans were paralysed by an irrational fear of ‘Reds under the bed’ – the belief that thousands of communist agents and sympathisers were secretly living amongst them, plotting or waiting to overthrow the government.

Today, we live under the White Supremacist Scare, the irrational fear that there is a white supremacist under every bed. An email sent to the parents of University of Virginia students, for example, warns that “events have occurred on Grounds that have been cause for concern” and “the nature and timing of these events have caused some to speculate that they are linked or part of a larger pattern of racially motivated crimes…”. Here is one such event:

Last weekend, several community members reported that a flag bearing a symbol that looked either like a crown or an owl, depending on how the flag is held, was left on the grass near the Memorial to Enslaved Laborers. That same person also left a check for $888.88 that was ultimately delivered, as a surprise, to a student’s room, and the check had the same symbol that was on the flag. As rumors swirled around this bizarre set of events, some speculated that the flag represented a white supremacist organization and that the check was somehow a targeted act of intimidation against a student of color.

A crown! An owl! A check for $888.88! Heil Hitler! It seems odd that giving a check to someone is “targeting” a person of color. But no matter. Logic isn’t important here. What else could this mean but white supremacy? Bear in mind that this is a university where streaking the lawn is a tradition and there are weird numbers, signs, and sigils all over campus.

The UVA police and the FBI—yes, the FBI!—were called in to investigate (n.b. there isn’t even a hint of any crime!). And they got the culprit! Of course, what they discovered was entirely banal. Does it even matter?

“…we discovered that he is part of an organization focusing on micro-philanthropy that occasionally engages in random acts of kindness to current students.”

Moreover, the UVA administration is advertising their investigation, as if how seriously they took this potential threat is a credit to the organization instead of an embarrassment of poor judgment and fevered imagination.

The Truss economic plan

by  Tyler Cowen in

On Friday [as indeed it happened], Ms. Truss’ government is expected to announce a series of tax cuts, including cutting taxes for new home purchases as well as reversing planned hikes in the corporate tax and cutting a recent increase in payroll taxes. It will also abolish limits on bonuses for bankers and allow fracking for shale gas across the U.K.

The measures come in addition to a big government spending plan to cap household and corporate energy bills this winter that could cost the U.K. government roughly £100 billion, equivalent to about $113 billion, over the next two years.

The goal is to spur growth in an economy facing weak growth and high inflation, partly brought on by an energy price shock from higher natural-gas prices from the war in Ukraine, as well as a U.S.-style labor shortage. Absent the government bailouts, economists warned that many Britons would be unable to pay their energy bills this coming winter and thousands of companies would go broke…

The government is also planning a deregulation drive, in particular in the finance sector, to try to bolster London’s role as a business hub.

Taken together, the Truss plan is a bold but risky gamble that the payoff from higher growth will more than offset the risks from a big expansion in the government’s deficit and debt at a time of high inflation and rising interest rates, which will increase the cost of servicing the debt and could shake investors’ confidence in the U.K. economy and its currency.

Here is more from the WSJ.  Elsewhere Ryan Bourne covers the tax changes in more detail:

    • the recent 1.25 percent employer and employee national insurance tax rises have been reversed;
    • the basic rate of income tax would be cut from 20 percent to 19 percent;
    • the highest 45 percent marginal income tax rate would be abolished entirely, making 40 percent the top official marginal rate band;
    • stamp duty (the property transactions tax) on all transactions up to home values of £250,000 and £425,000 for first-time buyers has been scrapped;
    • the planned increase in the corporate profits tax has been abandoned (so maintaining it at 19 percent);
    • full and immediate expensing in the corporate tax code for the first £1 million invested in plant and machinery would be made permanent;
    • new investment zones would be introduced, in which there would be a 100 percent first year enhanced capital allowance relief for plant and machinery and building and structures relief of 20 percent per year.

And on regulation:

  • new investment zones would encompass streamlining existing planning applications (and these are potentially big zones, if the councils and authorities in discussions are any guide – the Greater London Authority, for example);
  • environmental reviews would be shortened and reformed;
  • childcare deregulation proposals (probably on staffing and occupational licensing) are forthcoming;
  • new planning reforms for housing are forthcoming;
  • the onshore wind generator ban will be lifted;
  • the fracking moratorium has been lifted;
  • the cap on bankers’ bonuses will be abandoned;
  • agricultural regulation will be reformed;
  • the sugar tax and lots of other anti-obesity regulations will be abandoned;
  • the arduous tax rules on contractors known as IR35 will be scrapped;
  • all future tax policy will be reviewed through this prism of simplification;

  • there will be an expansion of the number of welfare claimants who must submit to more intensive work coaching with the aim of increasing their hours

The FT details the negative reaction from UK bond, equity, and currency markets.  Furman and Buiter are very negative, Summers too.  In my view, these are mostly good policies, but how will all that borrowing go over?  And is the Bank of England up to doing the appropriate offsets?  I will cover these policies as they unfold…

What should I ask Ken Burns?

by  Tyler Cowen in

I will be doing a Conversation with him, here is the beginning of his rather formidable Wikipedia entry:

Kenneth Lauren Burns (born July 29, 1953) is an American filmmaker known for his documentary films and television series, many of which chronicle American history and culture. His work is often produced in association with WETA-TV and/or the National Endowment for the Humanities and distributed by PBS.

His widely known documentary series include The Civil War (1990), Baseball (1994), Jazz (2001), The War (2007), The National Parks: America’s Best Idea (2009), Prohibition (2011), The Roosevelts (2014), The Vietnam War (2017), and Country Music (2019). He was also executive producer of both The West (1996), and Cancer: The Emperor of All Maladies (2015). Burns’s documentaries have earned two Academy Award nominations (for 1981’s Brooklyn Bridge and 1985’s The Statue of Liberty) and have won several Emmy Awards, among other honors.

His forthcoming book is the lovely Our America: A Photographic History.  So what should I ask?

India fact of the day

by  Tyler Cowen in

Not even 200 of the approximate 10,000 students from the Indian Institutes of Technology took up positions outside India last year. Fifty students, who make up the largest contingent, will be leaving from IIT-Bombay, followed by 40 from Delhi, 25 from Kharagpur, 19 from Kanpur, 13 from Madras, 17 from Roorkee and five from Guwahati. In 2012, 84 IIT-B candidates had accepted international job offers.

“Compared to 20 years ago, a very small percentage of students go abroad today. This is contrary to the general perception ,” says IIT-Delhi director V Ramgopal Rao. “Twenty years ago, 80% of the BTech class used to go abroad. Now these numbers are insignificant.”

Here is the full story, from 2017, via Elad Gil.

From the comments, on single payer

by  Tyler Cowen in

Single payer’s magic has historically worked via just a few channels:
1. Some amount of monopsony allows the government to bid down medical services below market rates.
2. Political imperatives lead to lower training burdens, lower staffing ratios, and lower certainty in diagnosis and treatment.
3. Obfuscation of possible alternatives diminishes demand for costlier care.

Option 1 means that you pay health professionals worse. There is some utility in this even. But it has some long run consequences that are only now being discovered. First, you see the exit of the most skilled people from medical careers. Second, the physicians unionize (or equivalent) and become political actors. Third, with everyone trying this and some semblance of open borders, it becomes ever harder to keep people in the places you need them (which rarely match the places where the sort of folks who can become Western physicians want to live). At some point you can no longer suppress wages below their natural clearing rate and it becomes ever harder to import foreign talent when other places (e.g. the US) offer a more lucrative immigration option.

US physicians are overtrained. But it also means that as things need ever more understanding to manage, we can deal better with things like CAR-T therapy and the like. And it is not like foreign docs are unaware of these things. As status is the important thing for most educated professionals, there will be continuous pressure towards increasing the prestige of the job at that comes with more training. As much as the government wants to have the minimally trained folks doing as much as possible, single payer countries are starting to see ever more pressure for their physicians, nurses, and the rest to match educational qualifications of the rest of the world.

Tying into all of this is the fact that the alternatives are quite visible. Everyone in the US these days can see an alternative where the masses do not have to pay out of pocket and theoretically fund health care by taxing someone else. But the flip side is also true. Wealthy Britons know that their American friends need not live with chronic pain for years for surgeries the NHS eventually will perform. They know that their American friends get screened more frequently and actually get treatment that cures diseases which are merely managed in Britain. They may still support the tradeoffs that come from single payer, but the days when these sorts of comparisons are no longer discussed are long gone.

Frankly I am always amazed at how much gets attributed to single payer. We know that, at most, only 25% of life expectancy outcomes are due to healthcare. We know that all of the correlates of single payer (e.g. percent of health expenditures paid by government) and health correlates (e.g. life expectancy) get vastly less favorable when you drop the US from the analysis as an outlier. We know that the UK has habitually adopted US practices a decade or so later, once the cost falls into the range where the UK can afford it.

But going forward, I think the old metrics that showed large advantages for single payer are going to continue to slide. Unions (formal or otherwise) are going to militate for higher pay. Governments are going to have to deal with one side of the political spectrum going into hoc to the health employees and the other polarizing to the folks in the disfavored region(s) who are lower priority for healthcare and pay more in taxes for the “giveaways”. And all of it is going to run into the trouble that the developing world is going to have fewer kids and hence fewer physicians while the relative advantage of immigrating is going to continue to fall.

Single payer was overwhelmingly built on the post-World Wars consensus and environment. It operates as a monopsony. What on earth would make us think that it would be stable into the future?

That is from “Sure.”

TC again: There is a natural tendency on the internet to think that all universal coverage systems are single payer, but they are not.  There is also a natural tendency to contrast single payer systems with freer market alternatives, but that is also an option not a necessity.  You also can contrast single payer systems with mixed systems where both the government and the private sector have a major role, such as in Switzerland.

I’ll say it again: single payer systems just don’t have the resources or the capitalization to do well in the future, or for that matter the present. Populations are aging, Covid-related costs (including burdens on labor supply) have been a problem, income inequality pulls away medical personnel from government jobs, and health care costs have been rising around the world.  Citizens will tolerate only so much taxation, plus mobility issues may bite.  So the single payer systems just don’t have enough money to get the job done.  That stance is conceptually distinct from thinking health care should be put on a much bigger market footing.  But at the very least it will require a larger private sector role for the financing.

Thursday assorted links

by  Tyler Cowen

1. Why stamp duty is a bad idea.

2. Thread on morale and Russian mobilization.

3. Thread on Russian training.

4. Straussian Magnus.  And on Dlugy.

5. The very good Johns Hopkins Agora Institute is advertising a position in political economy.

6. Caplan responds on feminism.  I am struck by how Bryan’s response appropriates the “relative grievance” approach of the left egalitarians, rather than the “let’s look at the absolute merits of how things are going and then try to improve them” approach more commonly found amongst classical liberals.

7. And two more links I don’t agree with: David Wallace-Wells on learning loss during the pandemic (NYT), and John Mark McDonald on why nuclear weapons are maybe not such a big deal, a tiny scroll down may be needed.

One reason why the Seoul dining scene still has so many nooks and crannies

by  Tyler Cowen in

There are so many places with dishes you’ve never tried before.  And they are deep into alleyways, or on the second or third floors of retail establishments.  In these places I never see people take out their cameras and photograph the food.  The establishments are not “very on-line,” as they say.

More likely than not, a large troupe(s) of middle-aged and older men suddenly come out of nowhere, and descend upon these eateries for dining and intense bouts of conversation.  The men don’t seem to want too many other people to know about their special hangouts.  English-language menus are hard to come by, so use the outdoor food photographs if you can, or otherwise just point.  “I would like your specialty,” translated into Korean on the iPad, works too.

Korea is an especially sexually segregated society, all the more relative to its high per capita income.  And so these restaurants are boys’ clubs of a sort, as much private as public.  Might that be one reason why the small restaurant food scene here has stayed so undercover?

How much is it the presence of women that drives the “Instagram this” trend in dining?

The End of History (of Philosophy)

by  Alex Tabarrok in

Hanno Sauer on why philosophers spend far too much time reading and writing about dead philosophers:

What credence should we assign to philosophical claims that were formed without any knowledge of the current state of the art of the philosophical debate and little or no knowledge of the relevant empirical or scientific data? Very little or none. Yet when we engage with the history of philosophy, this is often exactly what we do. In this paper, I argue that studying the history of philosophy is philosophically unhelpful. The epistemic aims of philosophy, if there are any, are frustrated by engaging with the history of philosophy, because we have little reason to think that the claims made by history’s great philosophers would survive closer scrutiny today. First, I review the case for philosophical historiography and show how it falls short. I then present several arguments for skepticism about the philosophical value of engaging with the history of philosophy and offer an explanation for why philosophical historiography would seem to make sense even if it didn’t.

A devastating example:

Consider Plato’s or Rousseau’s evaluation of the virtues and vices of democracy. Here is a (non-exhaustive) list of evidence and theories that were unavailable to them at the time:
  • Historical experiences with developed democracies
  • Empirical evidence regarding democratic movements in developing countries
  • Various formal theorems regarding collective decision making and preference aggregation, such as the Condorcet Jury-Theorem, Arrow’s Impossibility-Results, the Hong-Page-Theorem, the median voter theorem, the miracle of aggregation, etc.
  • Existing studies on voter behavior, polarization, deliberation, information
  • Public choice economics, incl. rational irrationality, democratic realism
The whole subsequent debate on their own arguments…When it comes to people currently alive, we would steeply discount the merits of the contribution of any philosopher whose work were utterly uninformed by the concepts, theories and evidence just mentioned (and whatever other items belong on this list). It is not clear why the great philosophers of the past should not be subjected to the same standard. (Bear in mind that time and attention are severely limited resources. Therefore, every decision we make about whose work to dedicate our time and attention to faces important trade-offs.)

This is obviously true so I think the more interesting question is why do philosophers do this?

Hat tip: Jason Brennan

The Quantity Theory of Money is underrated

by  Tyler Cowen in

That is the theme of my latest Bloomberg column.  Here is one short bit:

Consider the recent spurt of 8% to 9% inflation in the US. The simple fact is that M2 — one broad measure of the money supply — went up about 40% between February 2020 and February 2022. In the quantity theory approach, that would be reason to expect additional inflation, and of course that is exactly what happened.

The quantity theory has never held exactly, one reason being that the velocity (or rate of turnover) of money can vary as well. Early on in the pandemic, spending on many services was difficult or even dangerous, and so savings skyrocketed. Yet those days did not last, and when the new money supply increase was unleashed on the US economy, there were inflationary consequences.

I do think there are plenty of indeterminacies in macro, but letting M2 rise at such a pace is not one of them!

My Conversation with Byron Auguste

by  Tyler Cowen in

Here is the audio, video, and transcript.  Here is my introduction:

TYLER COWEN:  Today I am here…with Byron Auguste, who is president and co-founder of Opportunity@Work, a civic enterprise which aims to improve the US labor market. Byron served for two years in the White House as deputy assistant to the president for economic policy and deputy director to the National Economic Council. Until 2013, he was senior partner at McKinsey and worked there for many years. He has also been an economist at LMC International, Oxford University, and the African Development Bank.

He is author of a 1995 book called The Economics of International Payments Unions and Clearing Houses. He has a doctorate of philosophy and economics from Oxford University, an undergraduate econ degree from Yale, and has been a Marshall Scholar. Welcome.

Here is one excerpt:

COWEN: As you know, more and more top universities are moving away from requiring standardized testing for people applying. Is this good or bad from your point of view?

AUGUSTE: I think it’s really too early to tell because the question is —

COWEN: But you want alternative markers, not just what kind of family you came from, what kind of prep you had. If you’re just smart, why shouldn’t we let you standardize test?

AUGUSTE: I think alternative markers are key. This is actually a pretty complicated issue, and I’ve talked to university administrators and admissions people, and it’s interesting, the variety of different ways they’re trying to work on this.

But I will say this. If you think about something like the SAT, when it first started — I’m talking about in the 1930s essentially — it was an alternative route into a college. It started with the Ivies. It was started with James Conant and Harvard and the Ivies and the Seven Sisters and the rest, and then it gradually moved out.

The problem they were trying to solve back in the ’30s was that up until that point, the way you got into, say, Dartmouth is the headmaster of Choate would write to Dartmouth and say, “Here’s our 15 candidates for Dartmouth.” Dartmouth would mostly take them because Choate knew what Dartmouth wanted. Then you had the high school movement in the US, where between 1909 and 1939, you went from 9 percent of American teenagers going to high school to 79 percent going to high school.

Now, suddenly, you had high school students applying to college. They were at Dubuque Normal School in Iowa. How does Dartmouth know whether this person was . . . The people from Choate didn’t start taking the SATs, but the SAT — even though it was a pretty terrible test at the time, it was better than nothing. It was a way that someone who was out there — not in the normal feeder schools — could distinguish themselves.

I think that is a very valuable role to play. As you know, Tyler, the SAT does, to some extent, still play that role. But also, because now that everybody has had to use it, it also is something that can be gamed more — test prep and all the rest of it.

COWEN: But it tracks IQ pretty closely. And a lot of Asian schools way overemphasize standard testing, I would say, and they’ve risen to very high levels of quality very quickly. It just seems like a good thing to do.

Most of all we cover jobs, training/retraining, and education.  Interesting throughout.

The Martha’s Vineyard saga

by  Tyler Cowen in

I take slaps at both sides, in my latest Bloomberg column, and here is one of the salvos:

Vineyard residents were certainly very kind and hospitable to the new arrivals before they were moved to the mainland. But altruism can only go so far. A true commitment to egalitarianism would mean constructing more affordable housing, for example, making it possible for not just immigrants but lower-income people to live and work there.

Even before the modest number of Venezuelan arrivals, the island was known for its extreme income inequality. Wages there are below the Massachusetts average, and living expenses prohibitively expensive. Those realities stem from decisions about land use made by the island’s population.

And this:

The larger point, of course, is that the US has too many arrivals living in “immigration limbo.” They can cross the border with an asylum claim and then live in the country while they wait for a slow and somewhat arbitrary judicial system to hear their claim. The US would do better with a system of more ex ante immigration approvals, and fewer hanging cases ex post.

I have never been to Martha’s Vineyard — maybe someday!

Hermann Goering on the American war effort

by  Tyler Cowen in

At first, however, we could not believe the speed with which your Merchant Marine was growing. Claims of eight to 10 days to launch a ship seemed fantastic. Even when we realized it referred to the assembly of prefabricated parts, a mere 10 days to put it together was still unthinkable. Our shipbuilding industry was very thorough and painstaking, but very slow, disturbingly slow, in comparison. It took nine months to build a Danube vessel.

Here is the entire (previously overlooked) interview.  Via D., interesting throughout.