Month: August 2023

YouTube does not polarize, yet further results in this direction

by  Tyler Cowen in

We find that while the [YouTube] algorithm pulls users away from political extremes, this pull is asymmetric, with users being pulled away from Far Right content stronger than from Far Left. Furthermore, we show that the recommendations made by the algorithm skew left even when the user does not have a watch history.

That is from a new research paper by Hazem Ibrahim, et.al.  For further cites showing that YouTube does not polarize, see this CWT.  Via Matt Grossman.

Austin Vernon on the IRA (from my email)

by  Tyler Cowen in

I’ve thought about this some, but honestly some of the subsidies are so mind bogglingly large that I find myself constantly going back to read the rules to make sure I’m not getting it wrong.

So I think the first thing is that the law is not fiscally sustainable because the subsidies are large and uncapped. I would expect it to quickly get into the trillions over the ten year period without adjustments.

One example is that with all the adders, solar panels get a $26/MWh subsidy when using the production tax credit. Lazard says solar can cost as little as $24/MWh in the best spots in its latest release. So it will spark a boom and all kinds of inflation in the solar supply chain, while also favoring utility scale solar over distributed solar since distributed is more hamstrung by regulation so the impact isn’t so dramatic. The process of selling these tax credits can be pretty complicated, though there are provisions to make it slightly easier in the bill. So the finance industry should earn a lot of new business.

Most attention has gone to the factories, but batteries already made sense before the IRA and you can see this in pre IRA announcements. So I think a lot of those factories would have happened, anyway. Car makers like to have their suppliers local and with batteries being such a big portion of cost there was no other way to do it. And naturally these factories are going near car manufacturing regions like the southeast or the upper midwest. There is no reason to ship batteries further than necessary.

Solar panel factories are a different bag of worms. I think we would have gotten more module assembly and possibly more polysilicon. That is because most of the module weight and volume is low value stuff like aluminum or glass that is expensive to ship. And we have restrictions on using Chinese polysilicon from the Uyghur provinces. But wafers and cells would have been slower to come over. Also some module assembly might have been in Mexico instead of the US. Of course these factories are going to states with lower labor costs where it is easier to build, which happen to be Republican. Another wrinkle with solar factories is that they depreciate at an extreme rate. Usually they are obsolete after 2-3 years and need to shut down. So there is a real possibility at the end of the law that you see a massive drop in solar deployment because the inflated supply chain will have to rationalize to non-subsidy conditions and then our factories will not have the revenue to upgrade to the next generation. That will then kill the supplier ecosystem, etc. So the earlier the subsidies get ratcheted down to prevent the boom-bust cycle, the better for long term health. It may also be like the wind PTC a decade ago where things collapsed after lapse of the subsidies and they brought them back.

Hydrogen also has crazy subsidies similar in magnitude to the solar PTC, especially because you can stack the solar PTC on top of the hydrogen one. Who knows where that will show up. But it will be frothy. We should be able to tell how crazy these were because I imagine few other countries will be so generous and we’ll be able to see what use cases happened here that made sense nowhere else. Hydrogen is the lazy answer to decarbonization problems and there is almost always a better way. Free of subsidies hydrogen demand would probably fall because refining lighter fuels like gasoline and diesel is the main use case. I’m optimistic about hydrogen and CO2 feedstocks for chemicals on longer horizons, but the US is the last place they make sense because of our inexpensive natural gas.

So overall you have inflationary/budget pressure on the negative side while support could be relatively bipartisan at the national level because of a climate/economic development alliance. I don’t think local and state will align as well. Probably there will be more local bans if people are building solar to mostly farm subsidies. And state utility regulators and ISOs might resist further solar+wind deployment where the natural gas lobby is strong (you could rename IRA “natural gas demand destruction bill”). The sweet spot would be solar + wind directly powering local industry by providing things like process heat (sorry geothermal!).

Here is the Substack of Austin Vernon.

Monday assorted links

by  Tyler Cowen

1. What happens to your returns? (New Yorker)

2. “The hobby of “collecting” had the highest average IQ.”

3. Is there a new accent developing in Antarctica?

4. How one man created a multimillion-dollar resale market for Buc-ee’s snacks (Texan throughout).

5. More Heidi Williams (and others) on speeding scientific progress, and the co-authored (various luminaries) Nature article is here.

6. One take on the roots of China’s current problems.  And “Also a widely published poet, his [Gewirtz’s] achievements echo the polymath scholar-officials in the Chinese tradition, including major historian poets from Ban Gu (32–92 CE) through Ouyang Xiu (1007–72 CE) and beyond.”  Link here.

The Jones Act Enforcer

by  Alex Tabarrok in

The Offshore Marine Service Association has a ship, the Jones Act Enforcer, whose only job is to spy on and harass European vessels that are installing wind farms off the coast of New England.

BostonGlobe: To get Vineyard Wind done, developers are turning to vehicles such as the Sea Installer, which arrived in Salem in early August. Owned by the Danish firm DEME Group, the vessel is one of the few on the planet capable of installing GE Haliade-X wind turbines that are the size of a skyscraper into the ocean floor.

Measuring more than 430 feet in length and 150 feet wide, Sea Installer is a “jack up” vessel that lifts itself out of the water on legs more than 300 feet long. Once elevated, the vessel becomes a platform where an immense crane, capable of lifting more than 1,600 tons, can install the tower sections, nacelle, and blades for each turbine.

The Jones Act Enforcer does not board the suspected ships. Instead, as it did this day with the Sea Installer, the crew photographs the vessels from about half a nautical mile away and, if they suspect violations, files complaints with US Customs and Border Protection and the Coast Guard. The outcomes of the complaints are confidential, Smith said.

…The law prohibits foreign ships from transporting goods between two points within the US. But the actions that ships can and can’t take on American waters gets very technical.

For example, the Jones Act Enforcer observed Go Liberty, an American ship, perched beneath the Sea Installer. Smith said the American vessel was most likely transporting materials to the site so the Sea Installer could place a monopile — the bright yellow steel piles that support the turbines — into the ocean.

However, if the Sea Installer received material from the Go Liberty and then physically moved to another monopile in a different location, that act could violate the Jones Act.

The Jones Act Enforcer also observed the Italian ship Giulio Verne, which was working to connect underseas cables to an electric substation that would power the wind turbines. In this case, Smith claimed the Italian ship was violating the law because it was moving the cables from one point (the sea bed) to another point (the substation).

The stupidity, it burns. But Biden supports the Jones Act.

Return to the Econ

by  Alex Tabarrok in

Joshua Gans revisits life among the econ, 50 years after the classic investigation by Axel Leijonhufvud.

In Leijonhufvud’s time, economics was dominated by two super-castes which worshipped different totems.

Today, however, the super-castes are hardly to be seen and the old totems have been replaced by a singular new totem:

The technology powering the Econ runs on one precious resource, d’ta, and the work of obtaining that d’ta rests with the grads. Upon arrival in the dept, they are immediately sent into the D’ta Mines and tasked with collecting seemingly impossible quantities of the resource. They toil in dirty and unsanitary conditions. Ironically, their next task is to painstakingly clean and polish the d’ta they have extracted one at a time — sometimes millions of individual items — so they can then be sorted and made available for processing. With luck, the grads may be assigned processing tasks that take place in windowless rooms twenty-four hours a day operating a single machine. The hope is that they can then produce the new high achievement of the Econ, a tabl. It is hard to describe what a tabl is to outsiders, but it represents the outcome of finely processed d’ta. The more the tabl contains bright, bejewelling in the form of star-like symbols (*), the more valuable it is. Failure to create a sufficiently dazzled tabl means being sent back to the mines.

Which businesses mix the classes best?

by  Tyler Cowen in

Casual restaurant chains, like Olive Garden and Applebee’s, have the largest positive impact on cross-class encounters through both scale and their diversity of visitors. Dollar stores and local pharmacies like CVS deepen isolation. Among publicly-funded spaces, libraries and parks are more redistributive than museums and historical sites. And, despite prominent restrictions on chain stores in some large US cities, chains are more class diverse than independent stores. The mix of establishments in a neighborhood is strongly associated with cross-class Facebook friendships (Chetty et al., 2022).

That is from a new paper by Maxim Massenkoff and Nathan Wilmers.  Via Scott Lincicome.

What have I been thinking about lately?

by  Tyler Cowen in

Robin Hanson asked me this question at lunch last week, and due to the general raucousness of the occasion I didn’t get a chance to answer.  So here is my list of recent questions:

1. How much did the British colonial welfare state for Ceylon in the 1930s help that country and its later social indicators?

1b. How much did it matter that Ceylon was a Crown colony and not part of the Raj?

2. Why has Thailand done considerably better than the other major Buddhist economies?

3. Why are there so few liberal or even technocratic voices in Sri Lanka politics?

3b. How is this consistent with Sri Lanka doing so well on so many social indicators?

4. Why does Qatar seem (at least to me) so much more aesthetic than Dubai?

5. What is the correct Straussian reading of all those 2017 Saudi (and other) demands made on Qatar?

6. To what extent will the developments of the next twenty years favor nations with a lot of scale?

7. Ecuador seems to be moving backwards on the political front, including violence, corruption, and electoral problems.  In the smallest number of dimensions possible, why exactly is this happening?

8. What is the equilibrium, given our current trajectory on drug policy and the rising number of drug-related and also opioid deaths?

9. When generative AI models become better and smarter, how many more people will be interested in incorporating them into their workflows?  Or will most of this happen through a complete turnover of companies and institutions, happening much more slowly over time?

10. Music delivery and distribution mechanisms have changed so many times?  But what exactly will or could succeed music streaming?  When it comes to the economics of music, have we reached “the end of history”?

11. What exactly does one learn that is special when traveling to places that are not at all on the cutting edge?

12. Which exactly are the political economy principles governing the allocation of green energy projects in the IRA?

There are more.

Which countries are the losers in the new mercantilism?

by  Tyler Cowen in

New tax credits for manufacturing batteries, solar-power equipment and other green technology are drawing a flood of capital to the U.S. The European Union is trying to respond with its own green-energy support package. Japan has announced plans for $150 billion of borrowing to finance a wave of investment in green technology. All of them are working to become less dependent on China, which has a big lead in areas including batteries and the minerals to make them.

Now, some smaller players are getting left behind. Many are nimble economies that were on the rise during decades of free trade, but are at a disadvantage in a new era of aggressive industrial policy. Industrialized nations such as the U.K. and Singapore lack the scale to compete against the biggest economic blocs in offering subsidies. Emerging markets such as Indonesia, which had hoped to use its natural resources to climb the economic ladder, are also threatened by the shift.

Here is more from Ballard, Douglas, and Emont at The Wall Street Journal.

Listen to Lech

by  Alex Tabarrok in

WashPost: Of the giants who brought down the Iron Curtain — among them Ronald Reagan, Margaret Thatcher, John Paul II, Vaclav Havel — only Walesa is still with us. At 79, he still looks as vigorous as the young electrician who led a workers’ uprising against the “dictatorship of the proletariat”; forced Poland’s Marxist regime to recognize the first independent trade union in the communist world; was imprisoned under martial law only to later force his former jailers at the negotiating table to allow free elections; and who, as the first president of the newly free Poland, anchored his former Warsaw Pact country in the institutions of the West.

Sitting in his office at the European Solidarity Center, the museum built on the grounds of the old Lenin Shipyard where Solidarity was born, I asked about polls showing that half of young Americans have a positive view of socialism. What is his message for young people who have no living memory of communism? “Many young people are actually fooled to accept communism as an idea,” he said, speaking through an interpreter. “There are beautiful sentences talking about equality, about justice. … But as soon as you start putting that system into practice, all sorts of serious disasters come about. But young people quite often don’t know it. We have experience [with socialism], so we really know something about it. So, I strongly recommend rejecting it.”

*Travels with Tocqueville Beyond America*

by  Tyler Cowen in

Again, that is the new book by Jeremy Jennings, here is another excerpt:

These grave misgivings [about travel] have persisted.  “I have been reading books of travels all my life,” Jean-Jacques Rousseau wrote, “but I have never found two that gave me the same idea of the same nation.”  Those who “travel best,” he added, “travel least,” and, in Rousseau’s opinion, they travelled not by coach but on foot.  Others have agreed.  Writing at the end of the eighteenth century, Xavier de Maistre (brother to the more famous Joseph) resolved only to journey for forty-two days around his own room, “safe from the restless jealousy of men.”  “We will travel slowly,” he wrote, “laughing as we go at those travellers who have visited Rome and Paris.”  Heading north, Maistre discovered his bed.  On this view, one travelled best by moving hardly at all.  In the nineteenth century, John Stuart Mill displayed a similarly dismissive attitude.  “In travelling,” he wrote, “men usually see only what they already had in their own minds.”

From another segment of the book:

Gustave de Beaumont not only travelled to America with Tocqueville but accompanied him on trips to England and Ireland and to Algeria.  No one was better able to assess how Tocqueville travelled.  Tocqueville’s way of travelling, Beaumont wrote, was “peculiar.”  Everything was “a matter for observation.”  Each day Tocqueville framed in his head the questions he wanted to ask and resolve.  Every idea that came into his mind was noted down, without delay, and regardless of where he was.  For Tocqueville, Beaumont continued, travelling was never just a form of bodily exercise or simply an agreeable way to pass the time.  “Rest,” Beaumont wrote, “was foreign to his nature.”  Whether or not his body was actively employed, Tocqueville’s mind was always working.  Never could he undertake a walk as a simple distraction or engage in conversation as a form of relaxation.  The “most agreeable” discussion was the “most useful” discussion.  The worst day was “the day lost or ill-spent.”  Any loss of time was an inconvenience.  Consequently, Tocqueville travelled in a “constant state of tension,” never arriving in a place without knowing that he would be able to leave it.

Recommended, buy it here.

Saturday assorted links

by  Tyler Cowen

1. “The US suburban vacation – one of my favorite things about this business.”

2. Mark Skousen on gross output measures.  And founding engineer & founding designer for building a LLM-augmented digital reader (job ad).

3. Identified flying objects, not flying.

4. Air Genius Gary Leff blogs Beenie Man.

5. A closer look at political bias in ChatGPT.

6. James Buckley, RIP, at 100 years old.  He was the fourth of ten children.

Compensating Kidney Donors

by  Alex Tabarrok in

LA Times: Never in the field of public legislation has so much been lost by so many to one law, as Churchill might’ve put it. The National Organ Transplant Act of 1984 created the framework for the organ transplant system in the United States, and nearly 40 years later, the law is responsible for millions of needless deaths and trillions of wasted dollars. The Transplant Act requires modification, immediately.

We’ve got skin in this game. We both donated our kidneys to strangers. Ned donated to someone who turned out to be a young mother of two children in 2015, which started a chain that helped an additional two recipients. And Matt donated at Walter Reed in 2021, after which his kidney went to a Seattleite, kicking off a chain that helped seven more recipients, the last of whom was back at Walter Reed.

…The National Organ Transplant Act prohibits compensating kidney donors, which is strange in that in American society, it’s common to pay for plasma, bone marrow, hair, sperm, eggs and even surrogate pregnancies. We already pay to create and sustain life.

…Compensation models have been proposed in the past. A National Institutes of Health study listed some of the possibilities, including direct payment, indirect payment, “in kind” payment (free health insurance, for example) or expanded reimbursements. After much review, we come down strongly in support of indirect payment, specifically, a $100,000 refundable federal tax credit. The tax credit would be uniformly applied over a period of 10 years, in the amount of $10,000 a year for those who qualify and then become donors.

This kind of compensation is certainly not a quick-cash scheme that would incentivize an act of desperation. Nor does it commoditize human body parts. Going forward, kidney donation might become partly opportunistic rather than mostly altruistic, as it is now. But would it be exploitative? Not at all.

Long-time readers will know that I have argued for the greater use of incentives in organ donation both for live donors and cadaveric donors. Pecuniary compensation is one possibility but so are no-give, no-take laws that give those who previously signed their organ donor cards priority should they one day need an organ.