Month: November 2024
Sunday assorted links
Against federal usury laws for credit cards
That is the topic of my latest Bloomberg column, here is one excerpt:
Given that background, simple economics would indicate that an interest rate cap of 10% would mean that only people with strong credit ratings would be able to borrow money on their cards. Those with lower net wealth, or poorer payment histories, would be blocked from using credit cards for credit, because they would no longer be profitable to serve. They would also find it harder to get the other services of credit cards, such as rewards or payment conveniences. Keep in mind that the average borrowing rate on credit cards today is more than 20%.
Then there are the secondary consequences. If someone cannot borrow against his or her credit card, maybe payday loans will be the next option. Are they so much better? The logic of the Sanders-Trump proposal, pursued consistently, would choke off borrowing for people with high credit risk. Should the government close all the pawn shops as well? In the limiting case, there are loan sharks and other more desperate measures. Why give those businesses greater opportunities to expand?
It is a legitimate question, of course, whether so much consumer borrowing is productive and beneficial. Many people borrow money to engage in sports gambling, for example, a negative-sum and sometimes addictive pursuit. Yet productive uses of borrowing are legion. What if you are a recent immigrant who just got your first job, and want to buy your kids some sports equipment so they can play after school? Should the federal government be making this more difficult for you?
The right to borrow money is inextricably linked with other liberties. Sanders, for instance, is pro-choice when it comes to abortion. So why would he support restricting a woman’s right to borrow money to finance that abortion, or to borrow money to travel across state lines? The question is all the more pressing in a post Roe v. Wade world, where the costs of obtaining an abortion have been rising.
Ultimately, freedom of choice is intertwined with the freedom not only to spend money, but also to borrow it. And since money is a general medium of exchange, there is no way to stop only the “bad uses” of borrowed money. Thus there arises a fundamental question: Who is more qualified to make the final decisions about how best to use their financial resources, US citizens or their government?
Recommended.
*Gray Matters*
The author is Theodore M. Schwartz and the subtitle of this excellent book is A Biography of Brain Surgery. Excerpt:
Whil there is no proven ideal age for a brain surgeon, let’s just say that during the first five years after residency, we are still getting our sea legs. Over time, as with any learned skill, a subtle transition occurs. Suddenly, surgeries seem to take less effort. Movements become second nature as wel enter what psychologist Mihaly Csikszentmihalyi called a “flow state,” where pursuit of a single goal creates a transcendental state of purposeful concentration the task.
…One well-known neurosurgeon was once asked how he became so good at his craft. His answer? “there’s a graveyard full of my mistakes behind the hospital.”
Definitely recommended, the book also offers considerable detailed information about how brain surgery is done, which maladies lie behind brain surgery, and much more.
Why more South Asian than East Asian CEOs?
Analyses revealed that East Asians faced less prejudice than South Asians and were equally motivated by work and leadership as South Asians. However, East Asians were lower in assertiveness, which consistently mediated the leadership attainment gap between East Asians and South Asians. These results suggest that East Asians hit the bamboo ceiling because their low assertiveness is incongruent with American norms concerning how leaders should communicate.
That is from a new piece by Jackson G. Lu, Richard E. Nibett, and Michael W. Morris, via the excellent Kevin Lewis.
Saturday assorted links
Milei and populism
Bryan Caplan and Daniel Klein both opine on Milei and populism, Dan being very enthusiastic, while Bryan praising Milei but more reserved in his praise of populism. I too am a big fan of Milei, and I think he is still on a good track. If his reforms do not succeed, likely it will not be his fault, but rather the result of soft commodity prices, pending credit lawsuits (predating him), and an impatient public. But so far things are holding up.
What neither Klein nor Caplan mentions — and it is very very important for this issue — is that Milei has hewed pretty closely to the IMF playbook for his most important reforms. He named a very serious and mainstream finance team to oversee his changes. And his plan is dependent on an IMF bailout. The more “populist” elements of the original promises, such as rapid dollarization, have been put on hold indefinitely. In other words, the actual policies, for the most part, are not populist at all.
It is fine to call Milei a populist in some very critical rhetorical regards. But the project is working because he has turned his back on a lot of populism and is mainly following the recommendations of expertise, as well as relying on the IMF.
Parents should believe in upward mobility
There is a new paper on this topic, with multiple authors by led by Rebecca Ryan. Here is the abstract:
Research in economics and psychology shows that individuals are sensitive to cues about economic conditions in ways that affect attitudes, beliefs, and behavior. We provide causal evidence that parents’ beliefs about economic mobility prospects shape parental investments of time and money in children. To do so we conduct an on-line information experiment with ~ 1,000 socioeconomically diverse parents of children ages 5-15. The information treatment aimed to manipulate parents’ beliefs in the possibility for future upward (downward) economic mobility in US society. The experimental results yield three conclusions. First, parents are highly sensitive to signals about future economic mobility prospects. Second, parents who are induced to believe in the likely possibility of future upward mobility increase their beliefs about the return on their own investments of time and money. Using a novel measure of time investment we developed, these parents also increase their time investments in the service of boosting children’s skill. Finally, they report being more willing to pay for resources that would boost their child’s skill development. Third, these patterns are true for economically advantaged and disadvantaged families alike. We discuss the implication of these results in terms of reports showing that Americans are losing faith in “The American Dream.”
No, researchers should not lie, but perhaps this gives some additional perspective on who exactly is harming the world. There can be a cost to publishing neurotic, untrue ideas.
Via the excellent Kevin Lewis.
Friday assorted links
Sunstein on DOGE
Good advice from Cass Sunstein, who did improve government efficiency as head of OIRA:
There is a major focus these days on the topic of government efficiency, spurred by the creation of what is being called a “Department of Government Efficiency.” I have had the good fortune of being involved in simplification of government, and reduction of paperwork and regulatory burdens, in various capacities, and here are six quick and general notations.
- The Administrative Procedure Act is central to the relevant project. It needs to be mastered. It offers opportunities and obstacles. No one (not even the president) can clap and eliminate regulations. It’s important to know the differences among IFRs, TFRs, NPRMs, FRs, and RFIs. (The best of the bunch, for making rules or eliminating rules: FRs. They are final rules.)
- The Paperwork Reduction Act needs to be mastered. There is far too much out there in the way of administrative barriers and burdens. The PRA is the route for eliminating them. There’s a process there.
- The Office of Information and Regulatory Affairs is, for many purposes, the key actor here. (I headed the office from 2009-2012.) A reduce-the-regulations effort probably has to go through that Office. Its civil servants have a ton of expertise. They could generate a bunch of ideas in a short time.
- It is important to distinguish between the flow of new burdens and regulations and the stock of old ones. They need different processes. The flow is a bit easier to handle than the stock.
- The law, as enacted by Congress, leaves the executive branch with a lot of flexibility, but also imposes a lot of constraints. Some of the stock is mandatory. Some of the flow of mandatory. It is essential to get clarity on the details there.
- The courts! It’s not right to say that recent Supreme Court decisions give the executive branch a blank check here. In some ways, they impose new obstacles. Any new administration needs a full understanding of Loper Bright, the major questions doctrine, Seila Law, and much more (jargon, I know, I know).
Best non-fiction of 2024
In the order I read them, more or less, noting that some very late 2023 titles start off the list. Usually there is my review behind the link, though occasionally just an Amazon connection. Here goes:
Richard Whatmore, The End of Enlightenment: Empire, Commerce, Crisis.
Anthony Kaldellis, The New Roman Empire: A History of Byzantium.
Philip Ball, How Life Works: A User’s Guide to the New Biology.
David van Reybrouck, Revolusi: Indonesia and the Birth of the Modern World.
Annie Jacobsen, Nuclear War: A Scenario.
Michael Cook, A History of the Muslim World: From its Origins to the Dawn of Modernity.
Kathleen Duval, Native Nation: A Millennium in North America.
Blake Butler, Molly. Or is that one fiction?
Olivier Roy, The Crisis of Culture: Identity Politics and the Empire of Norms.
Nick Lloyd, The Eastern Front: A History of the First World War.
Carlos Scarpa, The Complete Buildings.
Bryan Caplan, Self-Help is Like a Vaccine.
Harriet Baker, Rural Hours: The Country Lives of Virginia Woolf, Sylvia Townsend Warner, and Rosamond Lehmann. What is it like to be an unusual woman writer, with unusual proclivities, and have to build up or rebuild your work life in the countryside? There is now a whole book on this topic. Does it really mean you have to write down a complete inventory of all household possessions? (apparently) Beautifully written, very British, will frustrate those who seek generalization but recommended nonetheless.
Cormac Ó Gráda, Hidden Victims: Civilian Casualties of the Two World Wars.
Anil Ananthaswamy, Why Machines Learn: The Elegant Math Behind Modern AI.
Luke Stegemann, Madrid: A New Biography.
Alisa Lozhkina, The Art of Ukraine.
Padraig O’Malley, Perils and Prospects of a United Ireland.
Craig Brown, A Voyage Around the Queen.
Patchen Barss, The Impossible Man: Roger Penrose and the Cost of Genius.
Truly an outstanding list for this year. Although reading and “the book” are in decline, books are not. If I had to pick out two to top the list, perhaps they would be:
Annie Jacobsen, Nuclear War: A Scenario, and
Michael Cook, A History of the Muslim World: From its Origins to the Dawn of Modernity.
Also having a claim is Anil Ananthaswamy, Why Machines Learn: The Elegant Math Behind Modern AI, though for many readers the math will be too much.
I’ll give you all an update on what comes out between now and the end of the calendar year.
Bolivia update, uh-oh
With international reserves at about a tenth of their $15 billion peak in 2014, the government of President Luis Arce is safekeeping every dollar bill and gram of gold, depressing activity, sparking fuel shortages and stoking social unrest — all in the name of avoiding a devaluation of an untenable 6.9 boliviano-per-dollar peg…
Arce has been trying to contain the collapse by reversing the damaging decline in hydrocarbon output, granting incentives for foreign oil and gas companies and liberalizing the fuel market last week in an attempt to mitigate gasoline shortages. Even if these measures are on the right track, they are too little, too late: These imbalances have been brewing in Bolivia for years, the result of policy malpractice during the golden era of Evo Morales’s socialist rule between 2006 and 2019, when Arce was his economic czar. A government with a more sensible approach would have tamed spending and invested in making sure the country’s natural gas bonanza kept paying the bills for the next decades (for a detailed chronicle of what went wrong in Bolivia, read my colleagues Peter Millard and Sergio Mendoza here.)
Thursday assorted links
1. How good are American roads?
2. Civil War death toll higher than had been thought (NYT).
3. The reason a minimum wage struggles to deliver efficiency gains is that with realistic firm productivity dispersion, a minimum wage that
eliminates monopsony power at one firm causes severe rationing at another.”
Human Challenge Trials Aren’t Riskier than RCTs
Nature: Keller Scholl got out of quarantine 13 days ago, and he’s still not feeling 100%. The itchiness — far and away the worst symptom, he says — is mostly gone, and now the graduate student just feels exhausted. “I’m trying to get enough sleep,” he says.
Scholl’s symptoms might be uncomfortable, but they are also of his own making. That’s because he signed up to be a volunteer in the first human ‘challenge trial’ involving Zika virus, a mosquito-borne pathogen that can cause fever, pain and, in some cases, a brain-development problem in infants. In standard infectious-disease trials, researchers test drugs or vaccines on people who already have, or might catch, a disease. But in challenge trials, healthy people agree to become infected with a pathogen so that scientists can gather preliminary data on possible drugs and vaccines before bigger trials take place. “Accelerating a Zika vaccine by a month, a few days, that does a lot of good in the world,” says Scholl, who studies at Pardee RAND Graduate School in Santa Monica, California.
Keller spent time here at GMU working with Robin Hanson and hanging out with the lunch gang. Way to go Keller! Thank you!
The rest of the article uncritically repeats the usual claims from so-called “bioethicists” that human challenge trials (HCTs) are unethical because they involve risks. Of course, HCTs carry risks—so what? Randomized controlled trials (RCTs) also require that participants are exposed to risk. Indeed, for participants in the placebo arm of an RCT, the risks are identical. Furthermore, since RCTs require more participants to achieve statistical validity than HCTs, they must expose more people to harm and, as a result, it’s even possible that more participants are harmed in an RCT than an HCT. Thus, HCTs are not necessarily more risky to participants than RCTs and, of course, to the extent that they speed up results, they can save many lives and greatly reduce risk to everyone else in the the larger society.
In my talk, The Economic Way of Thinking in a Pandemic (starting around 10:52, though the entire presentation is worthwhile), I explain the real reason why bioethicists and physicians hesitate over human challenge trials: they fear feeling personally responsible if a participant is harmed. “We exposed this person to risk, and they died.” Well, yes. But my response is, it’s not about you! Set aside personal emotions and focus on what saves the most lives.
Hat tip: Alexander Berger who pointed to this story that I had missed earlier.
How DOGE is really going to work
In the last few days, Vivek has issued a series of tweets showing he understands how the regulatory process works. That is good, but in turn it means DOGE ambitions end up scaled down. Now there is a WSJ piece by Vivek and Elon. Here is what I take to be the critical passage:
DOGE will work with legal experts embedded in government agencies, aided by advanced technology, to apply these rulings to federal regulations enacted by such agencies. DOGE will present this list of regulations to President Trump, who can, by executive action, immediately pause the enforcement of those regulations and initiate the process for review and rescission.
I’m all for this (and more), but take a look at what we are getting here. Paused enforcement is better than nothing, but the rule doesn’t go away. In the meantime, private companies probably will continue to act as if the rule may continue, given limited time horizons in politics and indeed for DOGE itself. The process for “review and rescission” of course is extremely time-consuming and labor-intensive. Again, bring it on but just do not expect too much from this. Note further that “right-leaning regulatory troops” are quite thin on the ground, most of all in these agencies.
The column has numerous further points of interest, which perhaps I will take up in the future. Here is a very good indeed essential piece by Stuart Buck on government efficiency, Here again is my earlier Bloomberg column on priorities for DOGE. James Broughel has a sunset suggestion for regulations.
Bike lanes are not about bikes
The city [WDC] has built about 20 miles of bike lanes in the past five years, but despite that, the portion of D.C. residents who bike to work peaked in 2017 and has decreased each year since, falling from 5 percent to 3 percent. So who are these lanes for?
And:
Across town, on South Dakota Avenue NE, the fight is ongoing, and, as The Post’s Rachel Weiner reported, this squabble reveals an essential truth about bike lanes as weapons of civic planning: They are often installed not to satisfy the barely measurable trickle of residents who pedal to work but mainly to make car traffic worse enough that people will be discouraged from driving.
Here is the full piece by Marc Fisher. A rare sane take on an ultra-mood-affiliated topic. You may recall my earlier and unfulfilled request for a good cost-benefit analysis on bike lanes for American cities. Houston fortunately is moving away from this idea, and no “I love the Netherlands” is not an effective counter to the issues at stake here.