Month: November 2022
Brussel Sprouts are Good
Have you noticed that Brussel sprouts are enjoying a renaissance? Once scorned they are now showing up at top-notch restaurants.
NPR: Foods go in and out of style. Few of them, though, have gone through as dramatic a renaissance in their reputation as Brussels sprouts.
…Shannan Troncoso remembers hearing, about a decade ago, that celebrity chef David Chang was doing amazing things with Brussels sprouts and bacon at his restaurant Momofuku, in New York. Then she encountered some crispy fried Brussels sprouts at a restaurant in San Francisco. “It was so good, I was like, I can figure this out! And I can introduce this back into my area,” she says.
When she launched her own restaurant — Brookland’s Finest Bar & Kitchen, a neighborhood establishment in Northeast Washington, D.C. — they were on the menu from very beginning.
“We peel the leaves off, each tiny little leaf. That’s like a full-time job for somebody,” she says. The actual cooking takes no time at all. Troncoso drops a basket of leaves into the fryer. Within seconds, they’re turning brown. She pulls them out, lets them drain for a bit, then tosses them with a bit of lemon juice and salt.
Troncoso says that her customers had to be talked into ordering them at first. “People are kind of like, ‘ugh, Brussels sprouts,’ ” she says. But now it’s one of her most popular dishes.
There’s a reason for the renaissance. The Brussel sprouts you remember as a kid did taste bitter and, yes, you can blame that on capitalism and big business. A new variety of Brussel sprouts was developed in the 1960s that was great for mechanized production but it had the side-effect of being bitter. Prices fell but Brussel sprouts got a bad reputation. What the anti-big business people overlook, however, is that this wasn’t the end of the story. Capitalism works to lower prices and increase quality.
IFLScience: By the 1990s, the Big Sprout industrial complex had had enough and started to look into ways to Make Brussels Great Again. A study published in 1999 by scientists from the seed and chemical company Novartis managed to pinpoint the specific compounds that gave Brussel sprouts their undesired bitterness: two glucosinolates called sinigrin and progoitrin.
This helped to prompt a number of seed companies to sift through gene banks to look for old varieties of vegetables that happened to have low levels of the bitter chemicals, according to NPR. These less bitter varieties were then cross-pollinated with modern high-yielding ones, aiming to get the best of both worlds: a better-tasting product that could be cultivated on an industrial scale. After years of patience, they eventually produced a crop that was both tasty and economically viable.
And just like that, the former glory of Brussels sprouts was restored, shifting this vegetable from a culinary pariah to a prized side dish.
So this Thanksgiving, give thanks to science, capitalism and delicious Brussel sprouts!
Addendum: Here’s a good, simple recipe for roasted Brussel sprouts. Enjoy!
*The Harvest Moon*
In the second chamber of the UK Parliament this last week
Lord Triesman: I will tell the noble Baroness, Lady Smith, that at Cambridge University, after the faculty of economics was redecorated, I was inveigled into taking part in a debate as to the order in which the portraits of its Nobel prize winners should be rehung and whether it should be Marshall or Keynes in the pre-eminent position. I left that debate after eight hours. No one was an inch further down the line of resolving it and, to my knowledge, the portraits have never been hung, because 20 years later no one is any further down the path of resolving it.
Via Martin.
Wednesday assorted links
1. Happy to see that Alexa is losing money.
2. What does an inflation-proof Thanksgiving dinner look like?
3. Ross D. on indigenous America (NYT).
5. Native Land, a service to help map indigenous ownership.
6. Fantasy League for economists?
7. Supreme Court agrees to hear Jack Daniel’s trademark case against dog toy company.
8. The Vitalik hypothesis, about language.
AI Conquers Diplomacy
Diplomacy is a 7-player game in which players must persuade, cajole, coordinate, strategize, bluff and lie to one another in order to take over the world. For the first time, an AI has achieved success in Diplomacy:
Over 40 Diplomacy games with 82 human players involving 5,277 messages over 72 hours of gameplay, CICERO achieved more than double the average score of the other players and ranked in the top 10% of players!
Note that this AI isn’t just a large language model, it’s a strategic engine connected to a language model–thus it figures out what it wants to do and then it convinces others, including gaining sympathy, bluffing and lying, to get others to do what it wants to do.
Here’s some correspondence from one game. Can you tell which is the AI?
CaptainMeme, a professional Diplomacy player, runs through an entire blitz game here. What’s interesting is that he hardly comments on the AI aspect and just treats it as a game with 6 other very good players.
Paper and more discussion here. Keep in mind that since the game is zero-sum to do well the AI must convince humans to do what is NOT in their interest. We really do need to invest more in the alignment problem.
Addendum: Austria and France were the AI.
Best non-fiction books of 2022
Behind the links are sometimes but not always my longer reviews. The list is (mostly) in the order I read them. Here goes:
Markus Friedrich, The Jesuits: A History.
Barbara Bloemink, Florine Stettheimer: A Biography.
Anna Keay, The Restless Republic: Britain Without a Crown.
Caroline Elkins, Legacy of Violence: A History of the British Empire.
Richard Overy, Blood and Ruins: The Last Imperial War, 1931-1945.
Mark Bergen, Like, Comment, Subscribe: How YouTube Conquered the World.
Julie Phillips, The Baby on the Fire Escape: Creativity, Motherhood, and the Mind-Baby Problem.
Mancur Olson, reprinted new edition of The Rise and Decline of Nations: Economic Growth, Stagflation, and Social Rigidities.
The Malcolm Gladwell audiobook Miracle and Wonder: Conversations with Paul Simon.
Tyler Cowen and Daniel Gross, Talent: How to Identify Energizers, Creators, and Winners Around the World.
Mark Koyama and Jared Rubin, How the World Became Rich: The Historical Origins of Economic Growth.
Katherine Rundell, Super-Infinite: The Transformations of John Donne.
Anthony Beevor, Russia: Revolution and Civil War, 1917-1921.
William C. Kirby, Empires of Ideas: Creating the Modern University from Germany to America to China.
Peter Loftus, The Messenger: Moderna, the Vaccine, and the Business Gamble That Changed the World.
Kevin Kelly, Vanishing Asia, three volumes, expensive, mostly photos, worth it.
Richard R. Reeves, Of Boys and Men. One of America’s biggest problems.
Andrea Wulf, Magnificent Rebels: The First Romantics and the Invention of the Self. A+ academic gossip, so to speak.
Pekka Hämäläinen, Indigenous Continent: The Epic Contest for North America.
Johann Peter Eckermann, Conversations with Goethe. The new translation, much better than the old.
Julia Voss, Hilma af Klint: A Biography.
Hayek: A Life, 1899-1950, by Bruce Caldwell & Hansjoerg Klausinger.
John Higgs, Love and Let Die: Bond, the Beatles, and the British Psyche.
Garett Jones, The Culture Transplant: How Migrants Make the Economies They Move to a Lot Like the Ones They Left.
I don’t think I can pick a favorite this year! But maybe the Kevin Kelly and the Catherine Rundell books, if I had to say? And please keep in mind this is a meritocratic list, not based on any quotas or any attempt at “balance.” These were the best books!
I will be issuing an addendum at the very end of the year, since I will be reading more between now and 2023.
What determines graduate admissions for economics?
We introduce a model of the admissions process based upon standard agency theory and explore its implications with economics PhD admissions data from 2013-2019. We show that a subjective score that aggregates subjective ratings and recommendation letter features plays a more important role in determining admissions than an objective score based upon graduate record exam (GRE) scores. Subjective evaluations by references who write multiple letters are not only more influential than those of references who write one letter, but they are also more informative. Since multiple-letter references are also more highly ranked economists, this implies that there is a constraint on the supply of high-quality references. Moreover, we find that both the subjective and objective scores are correlated with job placement at a top economics department after the completion of the PhD. These indicators of individual achievement have a smaller effect than an undergraduate degree from an Ivy Plus school (i.e., Ivy League + Stanford, MIT, Duke, and Chicago). In the self-selected pool of applicants, Ivy Plus graduates are twice as likely to be admitted to a top 10 graduate program and are much more likely to obtain an assistant professor position at a top 10 program upon PhD completion. Given that Ivy Plus students must pass a stringent selection process to gain admission to their undergraduate program, we cannot reject the hypothesis that admission committees use information efficiently and fairly. However, this also implies that there may be a return to attending a selective undergraduate program in order to be pooled with highly skilled individuals.
That is from a new paper by
Tuesday assorted links
1. SBF as lobbyist. And William Hazlitt on Bentham.
2. The Index Shirt, the price is tied to the NASDAQ index.
3. Scott Aaronson on AI risk. A good piece.
4. What happened with Sweden? (Bloomberg)
5. Okie-dokie. And more detail here.
6. Talent makes the FT Best Business Books of the Year list.
The most controversial claim in *Stubborn Attachments*
Except that the claim generates virtually no controversy. I argue that moral comparisons are possible only within the “cone” of an episode of (potentially) sustainable economic growth. So you can compare a growth-maximizing policy to a non-growth-maximizing policy, and judge the former to be superior, at least subject to human rights constraints. It is within that realm that (some) aggregation problems can be solved.
You cannot, within my framework, ask how many chicken lives are equal to a cow life, or for that matter to a human life.
You cannot resolve the Repugnant Conclusion, or many issues of scale. Here is some further relevant discussion.
You cannot ask if the presence of highly populated alien civilizations would raise or lower the import of existential risk for humans. (For external reasons I think it lowers the import of existential risk.)
You cannot readily answer any question about the potential moral import of living in a simulation.
I am not saying those questions must be discarded, only that they are much harder to answer. And perhaps we won’t make much progress on them at all. At some point “simple pragmatism” will have to step in. “Are we living in a simulation? eh! What’s for breakfast!?”
This is one way in which my framework differs from that held by many Effective Altruists.
How to fix the administrative state
An MR reader request:
You are appointed to the 24 DeSantis cabinet with the task of “fixing the administrative state”. Republicans have a very large Congressional majority. What do you try to do?
I will outsource this one to James Broughel, who works with me at Mercatus:
My main recommendation to a DeSantis cabinet would be a revival of the regulatory budget idea, which began under Trump but has been put on hold by Biden. The Harvard Journal of Public Policy put out a symposium recently on regulatory budgets. It appeared in their online edition and I was a contributor. You can find the link here.
https://www.harvard-jlpp.com/a-symposium-on-regulatory-budgeting/
Personally, I’d like to see an expanded reg budget, with more economic analysis and a reduction goal of some kind, like Virginia and Ohio have recently set. My paper in the series goes into a lot of detail on those state reforms.
I will meta-rationally agree.
Monday assorted links
1. T. Rex skeleton for sale. No, wait…fossil plagiarism! (NYT)
2. Justin Fox on Jacob Soll (NYT, yikes).
3. Why are colleges and universities so encouraging on-line gambling? (NYT, yikes)
4. Sam Hammond on EA. And a redux of the earlier link, now all the more appropriate, on Quakerism and Effective Altruism.
Which country or region has been part of the most empires?
Here is one answer (to a slightly different question) from Reddit:
Asia Minor/Anatolia might be the region which have seen most empires. For example: Akkadians, Hittites, Persians, Alexander’s Empire, Seleucids, Roman Empire, Parthians, Byzantine Empire, Sassanids, Arabians, Seljuks, Mongols and Ottomans.
I think first of Romania. They have been part of the Roman empire, Kingdom of Hungary, the Ottoman empire, various Habsburg monarchies and empires, the Third Reich empire, the Soviet bloc, and the European Union.
Who else might be a contender for this designation?
The FTX Debacle ELI5
Here’s my high-level explanation of the FTX crash.
Imagine that I own a house and I create a million coins representing the value of the house. I give half of the coins to my wife. I then sell one of my coins to my wife for $10. Now the house has a nominal value of $10 million dollars and my wife and I each have assets worth $5 million. Of course, no one is likely to buy my house for $10 million or lend me money based on my coin wealth but suppose I now get my friend Tyler to buy a coin for $15. Tyler says why would I want to buy your s!@# coin! To encourage Tyler to buy I give him a side-deal that is not very public. Say an extra 5% of our textbook royalties. Tyler buys the coin for $15. Now the coins have gone up in value by 50%. My wife and I each have $7.5 million. Other people may want to get in while they can—Tyler bought in! Are you in? I’m in!
Now if it’s not obvious, I am SBF in the analogy, and my wife is Alameda run by his sometimes girlfriend Caroline Ellison. Who is Tyler?—the seeming outsider who gets a kind of under-the-table deal to pump SBF’s coins? One possibility, is Sequoia a venture capitalist firm who invested in FTX, SBF’s house, while at the same time FTX invested in Sequoia. Weird right? Tyler in this example is also a bunch of firms that Alameda invested in but which were then required to keep their funds at FTX. Many other possibilities exist.
Another relevant point to our analogy is that there are one million coins but only a handful of them are traded, the handful that are traded are called the float. Similarly, many crypto coins were created with emissions schedules where only a few coins were released, the float, with a majority of the coins “locked” and only released over time. Keeping the price high, and thus the imputed value of the stock high, meant you only had to control the float.
Ok, so far this is crazy but despite nominal values in the millions a relatively small amount of real money has actually changed hands. But suppose that I now open a bank or an exchange. People want to bank with me since I have clearly shown that I know how to get wealthy! Now the money coming into the exchange is real money and it’s a bull market so when people check their accounts everything looks great, everyone is making money.
Suppose I take some of these assets and lend them to my wife for her to take speculative bets on. Is this illegal? Well, it’s actually hard to say. A bank is supposed to make loans. It’s more complicated with an exchange. Maybe it’s illegal, maybe not. After all when I lend assets to my wife I can say that there was lots of collateral. What collateral? Well remember my wife has $7.5 million in coins so I am lending say $3 or $4 million which is backed by twice as much collateral—that looks safe, right? Actually, it’s even better since she is going to invest the assets in other assets, unfortunately other coins not the S&P500, but now there is even more collateral. Everything looks safe.
Importantly, if the assets my wife is investing in are going up in price—she is getting very, very rich. She borrowed billions and keeps all the profits on the upside. Give me a house of assets to stand on and with leverage I will rule the earth! Moreover, the more prices go up, the safer this trade looks since the collateral is increasing in value. Also, my wife and I can coordinate on which coins to buy. She buys and then I list the coins on my exchange and offer them to all my customers. More demand, more price appreciation, more demand. My wife decides to borrow even more, since the trade is working so well.
Ok, now we get to the end of 2021 and what happens? After a massive run up in prices, crypto price start dropping.* Other firms in the space including Voyager and BlockFi start to come under pressure because of the TerraUSD-Luna collapse in May of 2022. Now, the bets aren’t starting to look so good. So what do I do. Either I come clean and reorganize or double down. It looks like SBF doubled down. More borrowing and more big bets. Amazingly, SBF offered to buy Voyager and BlockFi and bail them out. At the time, this looked like a visionary move to save crypto. Finance experts compared SBF to JP Morgan, the private banker who took big bets in 1907 to reestablish confidence like a proto-central bank. What we learned later, however, was that SBF owed these firms money and if they started to demand payment that would put pressure on his collateral, the coins on the house that we talked about earlier. So SBFs efforts to buy these firms were an effort to keep his own weakness hidden. Indeed, as people start to sell their coins, Alameda had to step in to buy, to keep the price up.
Eventually, as people began to look more closely at the assets of Alameda and FTX they realized that many of the numbers were huge stock-valuations made on tiny floats–not just the original house coins but also many of the coins, like Serum, bought by Alameda as investments. And once people realized that, they ran to get out before the house burned down. Now everything works in reverse—a $10 trade goes to $1 and your valuation is cut by billions overnight. We also get fire sales—as firms try to sell assets to meet their customer demands the prices of those assets fall which makes people sell other assets and so the contagion spreads (as described in Modern Principles).
Ok, final analogy. Suppose to help me run my house I invite over a bunch of friends and we do a lot of drugs and hook up together and suppose that none of us really knows anything about accounting or financial controls.
Well that about covers it.
N.B. Much of this story is familiar. The assets involved were crypto tokens but they could have been fiat currencies, internet stocks or mortgage backed securities. The new and original aspects of cryptofinance such as decentralized consensus, crypto wallets, and automated marker makers continue to work well. Unfortunately, these fine distinctions are not likely to be widely understood.
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*You might wonder why crypto prices started dropping. One important reason is macroeconomic, rising interest rates. When interest rates are very low a dollar in the far future is worth almost as much as a dollar today. Thus, in a regime of low interest-rates, crypto and other projects with (speculative) long-run payoffs could be valued highly. As interest rates rose, however, long-run speculative returns began to look much less attractive than say T-bills and money flocked out of assets in the long-run sector causing prices to plummet.
Addendum: Drawing on many excellent sources including Matt Levine, the FT, and Milky Eggs.
Favorite fiction of 2022
With translations from foreign fiction and also differing publication dates in the UK, it is hard to classify some of these. But they are of recent vintage, I did read them in 2022, and I found them rewarding:
Olga Tokarczuk, The Books of Jacob.
Claire Keegan, Small Things Like These.
Hervé LeTellier, The Anomaly: A Novel.
Paradais, by Fernanda Melchor, Spanish only.
Paulo Scott, Phenotypes.
Helen DeWitt, The English Understand Wool.
What am I leaving off the fiction list? The non-fiction list will be coming soon.
India fact of the day
Consider three major global equity markets: China, India, and the US. Of the three, would you believe India has been the second-best performer over the past 30 years, well ahead of China? It’s true.
Here is the full link, via Bill Allen.