The Odyssey
Worth seeing, and I enjoyed it — but a few observations I haven’t seen elsewhere.
For all the praise of IMAX and 70mm’s supposed clarity, several scenes are out of focus on the actor. Pulling focus is harder with a large-format negative. The problem is compounded by Nolan’s fondness for darkness: too many scenes are dark enough to squander much of what the format offers. The sound was earth-shaking in the way we have come to expect from Nolan but there is no song.
The “woke casting” controversy is a non-issue — barely noticeable in practice. The film is obviously conservative in temperament. Helen gets some of the best lines, and Nolan’s slight disfigurement of her traditional arc is exactly right. The Circe scene is the best in the film.
Tyler is entirely wrong about Calypso. Odysseus’s seven years with her were among his most enjoyable. I have no doubt about this.
The deeper flaws are structural. Nolan loves to play with time, and the resulting flashbacks and memories ironically shortchange the odyssey itself — making the journey feel shorter and less arduous than it should. This is very much in the mode of Interstellar: a sequence of set-piece locations strung together. One planet/one monster/one scene–on to the next. But Odysseus as a character on an odyssey never quite coheres.
We are told repeatedly that Odysseus is smart but we shouldn’t need to be reminded. Odysseus is both beloved and resented by gods, a man whose men will follow him to the ends of the earth and then betray him but Mat Damon just doesn’t bring it. Things happen to him; he responds stoically. What we needed was the equivalent of Kirk defeating the Kobayashi Maru — a moment that makes the audience understand, viscerally, that this man bends the rules and contends with the gods by the sheer force of his wit and will. Of courses the Trojan horse is this but Nolan treats this as something of which Odysseus is ashamed and the other clever bits are downplayed. Damon never gets his Kobayashi Meru. The odyssey is a slog, rather than an adventure. Could have used a bit more Sinbad, a bit less Dark Knight. The dialogue, as Tyler noted, is lame.
Not Nolan’s best film but still better than most films and for scale, ambition, and grand themes well worth the 3-hour investment.
Building luxury homes is good for the poor
Tej Parikh writing in the FT:
…high-end developments unlock long housing chains. As higher-income households move into newly built units, they free up older properties, raising supply and slashing prices for middle- and lower-end housing through a process known as filtering. Numerous international studies underscore this positive ripple effect.
One published last year tracked households that moved into a newly built 512-unit condominium tower in Honolulu, Hawaii. It found that the building created at least 557 vacancies in older and cheaper apartments across the city in just three years, with market-rate units more likely to release the largest chains.
Filtering can also be widespread. A 2021 study in Helsinki using geo-coded population data found that every 100 new market-rate units in the city centre led to around 60 units becoming available in the city’s bottom half of neighbourhoods by income. An analysis across all homes in Sweden over several decades concluded that “new homes, even those initially primarily inhabited by rich people, lead to substantial trickle-down effects that also benefit the poor”.
Other US studies highlight how market-rate developments benefit less well-to-do local residents by lowering housing costs. In San Francisco, a 2021 paper found new developments lowered the risk of eviction notices for residents in rent-stabilised housing. Even “luxury” developments in New York City — which Mamdani has criticised — have been shown to contribute to lower local rents and sales prices.
or David Attenborough:
Trial Lawyers Lobby Against Autonomous Vehicles
Roughly 37,000–40,000 Americans die in auto accidents every year. We now have large‑scale, real‑world evidence—from Waymo and a joint analysis with Swiss Re—that driverless operations can be substantially safer than matched human driving within their current operating domains. The latest data show that over 220 million miles driven, Waymo vehicles–in Los Angeles, San Francisco, Phoenix, Austin and Atlanta–have 94% fewer serious injuries, 82% fewer air bag deployments, and 93% fewer pedestrian injuries. The evidence is not fully independent, but it is unusually transparent, large‑scale evidence.
So with thousands of lives annually in the balance who is against autonomous vehicles (AVs)? Trial lawyers. Remarkably the trial lawyers saw the writing on the wall very early and the have been lobbying against AVs for nearly a decade! The American Association for Justice, the trial lawyers’ lobby, has been a prominent opponent to AV legislation (see also reports here). (They have been joined by Democrats worried about labor and demanding that heavy trucks be excluded).
The trial lawyers earn a huge amount litigating ordinary auto accidents–Annual U.S. auto insurance payouts (liability + PIP/MedPay) are on the order of $180–220B and trial lawyers are very eager to retain the right to sue car manufacturers for product liability. In my view, product liability isn’t useful as a safety device in this field. Instead, the solution is simple. Every car should be required to be insured, regardless of driver. Indeed, Waymo vehicles are already insured at $5 million liability coverage per vehicle, far higher levels than most human drivers are covered.
The UK’s Automated and Electric Vehicles Act 2018 does basically this–a single insurer covers the vehicle whether the human or the automated system is driving; the victim is compensated directly by the insurer, no need to establish product defect; the insurer then subrogates against the manufacturer if the software was at fault. Victims get paid fast, manufacturers face the cost of their defects through recoveries and premiums, and the high-transaction costs (i.e. lawyer fees!) and messy manufacturer-versus-victim litigation is replaced by insurer-versus-manufacturer bargaining between repeat players who settle efficiently.
The great thing about this system is that insurance almost certainly deters better than tort: fleets generate data that makes experience rating precise, so insurers become continuous safety regulators, whereas litigation delivers a noisy, lagged, lottery like signal depending on safety-irrelevant factors of the jury and the locale.
We have the best data on Waymo, Tesla data is murkier but note how well this works with the insurance system. Let the insurers decide how much to charge Tesla robotaxis and FSD drivers–they will internalize the externality far better than tort lawyers. In short, insurance works great for accident victims but not for trial lawyers. Indeed, if the trial lawyers have their way accident victims will continue to be buried in an invisible graveyard.
Hat tip: Andy Hall and Jon Slotkin.
A Phone is a Cow
Philip Auerswald’s A Phone is a Cow is three books in one, it’s a history of the mobile phone, it’s a business biography of Iqbal Quadir, who brought the cell phone to Bangladesh at at time when that seemed quixotic and doomed to fail, and it’s a theory of economic growth. It succeeds on all three levels.
…relatively few technologies have managed to reach the majority of the world’s people. Fire. Writing. The cookpot. The portable radio. These all succeeded. Yet most people in the world have never flown in an airplane. Most do not own a car or a bicycle. And, until recently, most still did not have access to a safe, sanitary toilet in their home. The list goes on.
The mobile phone reached the global majority more rapidly than any technology that had come before. How did this happen?
The title, by the way, comes from Quadir’s insight that just as Grameen Bank lent to villagers so they could purchase productive assets like a cow, Grameenphone could lend villagers the money to buy a phone—which then became a revenue-generating asset in its own right.
Addendum: Auerswald on Econ Talk with Russ Roberts.
The Equal Pay Madness Just Got Madder
In my post Equality Act 2010 I discussed the UK’s absolutely insane wage policy:
In short, supply and demand have been replaced by judges and labor boards with the authority to deem which jobs are “equal” and therefore should be paid equally….No one is alleging that male and female warehouse workers were paid unequally or that male and female retail workers were paid unequally or that there was any direct or indirect discrimination. The only claim is that warehouse workers, who are less likely to be female than retail workers, earn more than retail workers. And since these jobs have been judged “equal,” the company has violated Equality Act 2010.
…The warehouse workers were almost 50% female (47.25%). So females were not barred from the higher paying jobs. The fact that 77.5% of the retail workers were female suggests that retail work has special appeal to females relative to males and thus that there are compensating differentials. Any of the three female plaintiffs could have taken jobs in the warehouse. If the jobs are equal and the warehouse jobs pay more this is, on the plaintiffs’ theory, “puzzling”. [Or, as Ayn Rand would say, blank out.]
In fact, the court case reveals that Next was struggling to fill the warehouse positions and offered any retail employee—including the plaintiffs—the opportunity to switch to warehouse work. On cross-examination, one of the plaintiffs admitted that, given the unpleasant conditions in the warehouse—described by the court as “the drone of machinery,…vibration, alarm sirens and the screeching of machinery, wheels and rollers, continuously present in all areas”—the warehouse job “did not seem particularly attractive” compared to the greater autonomy and more appealing environment of the retail job. The plaintiff added that she would only have considered the warehouse job if it paid “a lot more money.”
Well, here is the update. The outgoing Keir Starmer government is trying to massively expand these laws. The “equal value” framework previously applied only to sex discrimination; under the proposed law, employees could also bring equal-value claims based on race and disability. Remember, these laws have nothing to do with discrimination—they are about demanding, at the point of a gun, that apples and oranges sell for the same price because they’re both fruit.
The new law would also establish an Equal Pay Regulation and Enforcement Unit. As I said, Orwellian.
See also my post, How Britain Become as Poor as Mississippi.
Occupational Licensing Around the World
Hartley and Kleiner have a new Fed Minneapolis working paper surveying workers around the world to measure occupational licensing by country. In the United States, occupational licensing has increased substantially over time, so one might expect licensing to rise with income. Their headline result is the opposite: occupational licensing is negatively correlated with GDP per capita. Many developing countries such as India, South Africa, and the Philippines have a lot of occupational licensing while Denmark, Sweden and France have relatively little. Similarly, countries which rate poorly in measures of government quality, such as regulatory quality, political stability, the rule of law, and corruption have more occupational licensing.
I do have some concerns, however. The figure for India of 42% of workers requiring a government license seems too high. Admittedly this is the home of the License Raj but I worry about the survey results. In order to mark a surveyed worker as requiring an occupational license HK require that the worker say that a) they have a license and b) a license is required to work in their profession. But in India there are many workers who do not have a license and a license is required to work in their profession–HK, however, consider these workers confused and drop them from the analysis. That is appropriate for a developed country where there aren’t many illegal unlicensed workers but, as the authors later discuss, informality is very high in India so working illegally is not uncommon.
Including these workers would make the true India figure even higher than HK report but I think with such a high degree of informality we also have to wonder whether survey responders in India really are responding the same way as in Germany. Perhaps they are reporting a license isn’t really required since very few workers have one. In India, for example, some 60% of “licensed” drivers have an fake or invalid license and many have no license at all so maybe workers are just reporting the facts on the ground.
Within the United States, professions are regulated in some states but not others—Louisiana, for instance, requires florists to be licensed. (Do license-holding Louisiana florists produce better, safer arrangements? I don’t think so.) Given this variation even within a single country, we’d expect considerable variation across countries too. Multiple independent surveys—not just HK—confirm that Denmark, Sweden, and even France have less occupational licensing than the United States. Since these countries have high state capacity, we can rule out the hypothesis that licensing exists for safety or quality. The implication is clear: occupational licensing is often about rent-seeking, not quality assurance.
Addendum: See also my review of Allensworth’s The Licensing Racket which finds that licensing board spend most of their time and effort on regulating entry rather than quality and my paper on the surprise delicensing of occupational licensing in the funeral industry in Colorado.
The Trump Administration’s Threat to Scientific Research
In The Nationalization of American Science I warned that the Trump administration’s rewriting of the seemingly mundane Regulation for Federal Financial Assistance was a tremendous threat to America’s historically successful decentralized system of science funding. Many others are now sounding the alarm.
It’s not surprising that organizations like the AAAS oppose the rule, albeit with unusually strongly worded dissents:
This latest move is a brazen power grab by the Director of the Office of Management and Budget to buck the will of Congress and the American people and will make future discoveries less likely. If this rule becomes final, Americans’ hopes for future cures, national security and economic strength will rely on the scientific sensibilities of the nation’s chief bureaucrat. Alzheimer’s disease will not be cured by a budget analyst from either political party.
But we are now seeing strong pushback from independent thinkers such as:
Grayson Logue writing at The Dispatch:
A sweeping new rule proposed by the Trump administration could remake how that money is awarded and give the president and his political appointees discretion to cancel funding or target recipients for virtually any reason—with little opportunity for recourse.
White House officials argue the new rule is necessary to assert more accountability over federal grantmaking, but observers fear the shift will expand opportunities for politicization, abuse, and even corruption for an administration that has already demonstrated a penchant for using the levers of the federal government to punish partisan enemies and reward ideological allies.
if I was trying to ruin American leadership in scientific research this is pretty much the kind of rule I would write…One of the genuine difficulties with observing the second Trump term is that the assault on state capacity and impartiality has been so multipronged that it is difficult to keep track of everything going on. But these proposed rule changes are monumental and catastrophic.
and Noah Smith:
MAGA’s attack on science is even worse than it looks…despite science’s overwhelming popularity and public trust, Trump and his administration are launching an unprecedented and devastating attack on American science — cutting funding, and forcing science projects to undergo ideological review by government commissars.
It may be that the Trump administration has pushed too far, but my real worry is that we are losing an equilibrium. Science was never completely independent of politics, of course, but even at the worst of times, funding was decentralized and the culture-war material that dominated the headlines was never more than a tiny fraction of the whole. Like an independent judiciary, independent science has been an American virtue. COVID policy, gender policy, and now the Trump administration’s weaponization of these mistakes may have destroyed that equilibrium.
As I wrote in my original post, we are adopting the loser policies of authoritarian nations but those policies are the norm elsewhere for a reason. Centralized control of science is the default because it serves the people in power of whatever party. Decentralization is the fragile exception—a historically unusual achievement that is easier to destroy than rebuild.
Addendum: And here is Andrew Gelman.
Land Reclamation!
“Buy land,” they said, “they aren’t making any more.” But in fact, we used to make a lot of land. Half the land area of Boston, a quarter of Manhattan, and 15% of San Francisco were raised from the sea before 1970. Tyler has already pointed to Zigmund Forrest and Max Tabarrok’s piece on land reclamation in Works in Progress. Check it out, it’s an excellent piece.
But also don’t miss Connor Tabarrok’s historical overview of land reclamation featuring the ancient Iraqi city of Ur, Alexander the Great’s siege of Tyre, and the amazing flood tanks built under the city of Tokyo! Connor, a civil engineer by trade, points out that most land reclamation isn’t done to build cities with land fill but rather to create farmland through drainage:
In the lower 48 states, the US Fish and Wildlife Service estimates that wetlands covered 221 million acres in the 1780s and 104 million by the 1980s. That is roughly 117 million acres drained in two centuries, a loss rate the report puts at 60 acres an hour, sustained for 200 years. For comparison, the total urban footprint of the United States is around 70 million acres. America has drained substantially more wetland than it has built city, and nearly all of that drained land became farmland.
… The Dutch invented the modern polder and have spent eight centuries pushing back the North Sea, and the result is one of the densest, richest countries in Europe. Yet around two-thirds of the country’s dry land is farmland. Flevoland, the newest province, is 1,410 square kilometers reclaimed from the Zuiderzee in the 1950s and 60s, and it was laid out as an agricultural basin, not a city. The country with the most reclaimed land per person uses it to grow potatoes, graze dairy cattle, and ranks as the world’s second-largest agricultural exporter.
The other reason that we drained land historically was to get rid of mosquito-driven malaria and to improve sewage.
In the mid-1800s the land south and west of the Washington Monument was the Potomac Flats, a tidal marsh that collected the city’s sewage and exposed it to the sun twice a day. The stench reached the White House. In 1882 Congress appropriated $400,000 and the Army Corps of Engineers, under Major Peter Hains, began dredging the river’s shipping channels and pumping the mud onto the flats. The work created more than 600 acres of new ground and a Tidal Basin engineered to flush the Washington Channel with each tide. The Lincoln and Jefferson Memorials stand on that fill. So do the cherry trees, planted in 1912 on land that had been open water within living memory.
Much more of interest at the whole thing.
What to Watch and Not
Spider Noir (Prime): I’ve had enough of the Marvel multiverse so I was worried about Spider-Noir. The writers, however, have written an excellent noir in the style of Raymond Chandler with Nicholas Cage channeling Humphrey Bogart. The Spiderman stuff is all there but it is appropriately embedded. There are some excellent lines. Most notably an inversion of the Spiderman motto that I won’t give here but you will know it when you hear it. Also many sharp one-liners:
- Reilly: I don’t like surprises.
- Cat: I’ll remember that when your birthday rolls around.
Nicholas Cage does some Nicholas Cagey spidery things which I enjoyed. Watch it in black and white.
Project Hail Mary (Prime): I waited until this was streaming and I’m glad I did because it was disappointing.
The core problem is Ryan Gosling. He plays Ryland Grace, the genius scientist-hero but genius is something we are told, never shown. Indeed, the character with the best ideas in the film is Carl, Grace’s bodyguard/minder (played by Lionel Boyce)—they should have sent him to save the planet. Gosling has no intensity, and every choice he makes is to lighten and humorize. It’s a small thing, but it annoyed me to watch a scientist toss his instruments disdainfully. Andy Weir is a master at showing smart people grinding through hard problems—in the novel, Grace spends months learning to communicate with an alien. In the movie, Gosling dances.
This isn’t just miscasting. The whole adaptation is built to soften the book. The film cuts the desperation of the world, undercuts the ruthlessness of Stratt and instead adds a karaoke number and a trip to Home Depot (ha, ha, duct tape can solve everything!) Every change is away from high stakes intensity and toward charm and humor, a Disneyfied version of Weir. I have nothing against Gosling but we have lots of charming movies and I would like some competence porn.
The main virtue of PHM, in the end, is that it shows what a miracle The Martian was. Matt Damon knows how to play smart and intense, and he brought both to what I called the most Ayn Rand film in decades. There’s an old story—probably apocryphal—that Chuck Yeager was once asked what he’d do if his engine flamed out and he had sixty seconds before hitting the ground. He replied, “I’d spend the first fifty-nine seconds working on the engine.” Chuck Yeager had the right stuff. Matt Damon in The Martian has the right stuff. Ryan Gosling does not have the right stuff.
The Sheep Detectives (Prime): A delightful surprise! A flock of sheep solve a murder-mystery in a quaint English town; featuring Hugh Jackman and voices from Julia-Louis Dreyfus, Bryan Cranston, Patrick Stewart and others. Babe meets Knives Out. A family film but, as the best family films are, with some deep themes.
From Prediction Markets to Decision Markets and Beyond!
Arin Dube points to a great illustration of the power of prediction markets. Yesterday due to a new scandal the probability that Graham Platner would drop out of the Maine Democratic primary exploded from 9% to 96% (+87 percentage points). At the same time, the probability that the Democrats would win the election jumped by about 9 percentage points, from 54% to 63%. What does this tell you?
The market is signaling that Platner reduces the Democrats’ chances of victory. We can be more precise. If an 87-point increase in the probability of dropping out gets you 9 points of winning, then a 100% chance of dropping out implies a gain of 9/0.87 ≈ 10.3 percentage points.
Thus the market’s best estimate is that Platner is reducing the Democrats’ chance of winning by about 10 percentage points (compared to an unknown replacement). That’s a pretty big number! Democrats should surely use this information to make better decisions.
Now, I have been a bit loose. We have implicitly assumed that the news mainly moved the probability of Platner dropping out, rather than independently changing the Democrats’ general-election prospects. The issue is we are trying to reverse engineer two conditional prices, P(win|drop) and P(win|stay), from one unconditional price, P(win), and its comovement with P(drop). It works pretty well here as an illustration but Robin Hanson’s idea is that we can do better yet by trading the conditionals instead of inferring them.
Hanson’s decision markets would run contracts of the form “pays $1 if Democrats win, conditional on Platner dropping out — bet refunded if he stays.” Plus the mirror contract conditioned on staying. The refund provision makes the price a conditional probability: a trader pricing the first contract doesn’t need any view on whether Platner drops out, only on how the race goes if he does. With this structure we would get cleaner estimates of the conditional probabilities–in this case whether the Democrats do better with Platner in or out–which is exactly what a decision maker needs.
We were able to plausibly reverse engineer our estimate because the market happened to move 87 points in a single day. But a decision market would have posted the number continuously, no scandal required. In other words, with decision markets in play, not just prediction markets, we could have seen how much Platner was costing the Democrats before the latest scandal hit—which is precisely when the information would have been most useful.
It’s been fun to see prediction markets catch on with the public but the world is still decades behind Hanson’s decision markets—let alone futarchy!
Capital Gains Can Be Labor Income
Zwick and Zidar argue that a substantial share of the decline in labor share can be accounted for by changing forms of pay, including pass-throughs and equtiy compensation. In particular, if an employee is paid in stock and that stock increases in value then the tax rules tend to count some of that as capital income (depending on when the capital gains occur) rather than as labor income. Zwick and Zidar point us to Human Capitalists for the details:
Human capitalists are corporate employees who receive significant equity-based compensation such as equity grants and stock options. These employees are partial owners of US firms, and in return for their human capital input, human capitalists accrue a share of firm profits through firm dividends and capital gains in addition to earning wages. We document the stylized facts describing the evolution of human capitalists’ income over time and across industries within the US manufacturing sector.1 Human capitalists have become an increasingly important class of corporate income earners. Due to measurement challenges, prior work has underestimated the importance of equity pay below the C-suite. Correctly measuring the total income of human capitalists substantially alters conclusions about changes in factor shares and technological complementarity.
Equity-based compensation represents 36% of compensation to human capitalists from 2010 to 2019 and constitutes a 7% share of value added in the manufacturing sector in 2019. Correctly accounting for the total income earned by high-skilled workers has a substantial effect on measured changes in labor shares over the modern era. The addition of equity pay to cash wages reduces the decline implied by the wage-only income share of value added in manufacturing since the 1980s by 32%. Without including equity pay, high-skilled labor’s share decreased from 17% in the 1980s to 11% in the most recent decade. The inclusion of equity-based compensation almost eliminates this decline. The high-skilled share of total labor income increases from one-third at the beginning of the 1960s to two-thirds in the 2010s when equity-based compensation is included.
See also my previous post The Labor Share Fell. So What?
How Britain Became as Poor as Mississippi
How Britain Became as Poor as Mississippi is a good piece in the Atlantic by Idrees Kahloon filled with colorful anecdotes of a nation in decline:
The health service now has to spend more money settling maternity-malpractice claims than it does on actually providing maternity care. Many Brits can neither obtain an appointment with a publicly funded dentist nor afford a private one; in a 2023 survey, one in 10 reported doing DIY dental work, in extreme cases extracting their own teeth or gluing broken crowns back together.
Incomes can be shockingly low: Junior doctors recently went on strike for the 15th time in three years over their salaries, which start at just £38,800; the median salary for British civil servants is £35,680. In April, amid the Iran conflict, the Daily Mail pounced on Prime Minister Keir Starmer for vacationing in Valencia, Spain, at what the tabloid described as a luxury hotel, costing £200 a night.
Americans are likely to come away a bit smug, especially as Independence Day approaches and Europeans are enjoying our giant stadiums and central air conditioning. Look deeper, however, and Britain’s story becomes more uncomfortable. Does this sound familiar?
Recent plans to transform the country have rested in no small part on High Speed 2, a superfast rail line intended to connect London with Birmingham, Leeds, and Manchester. But since HS2 was proposed, in 2009, its costs have tripled, to more than £100 billion. It is the most expensive rail line in the world. (A special structure to protect a rare bat species near the rail line in Buckinghamshire required 8,000 permits and was built at a cost of £216 million.) The most important sections of the proposed route have been lopped off. The rump line—going from Birmingham, Britain’s second-largest city, to not-quite-central London—may be finished by 2040…. HS2 has been delayed for so long that two swiftly built towers near the terminus now themselves look derelict and in need of demolition.
…Building infrastructure, or much of anything else, has become all but impossible in the United Kingdom. In addition to having the world’s most expensive (not yet built) train line, Britain also hosts the world’s most expensive (not yet built) nuclear-power plant, Hinkley Point C. Its environmental-impact assessment ran 31,401 pages; the plant will feature a £700 million “fish disco,” which will pulse sounds underwater to deter animals from its intake pipes.
Upon closer inspection, the United States looks a lot less like a shining city on a hill and a lot more like a declining Great Britain, appendaged with one or two dynamic sectors, most notably AI. The similarities are especially obvious in the retrograde solutions Britain has lumbered into, namely attacking immigrants and trade—Brexit being the equivalent of a high tariff regime. Nations in decline, like people, tend to lash out at others rather than deal with their real problems. Needless to say, neither immigrants nor trade explain Britain’s—or California’s—inability to build high-speed rail or other infrastructure.
It is discomforting to watch the birthplace of the Industrial Revolution, individual rights, and free speech—the nation that once built the railways, the steam engines, the factories that remade the world—lose the capacity to build much of anything, or even to tolerate people speaking their minds. In parallel, instead of dealing with our real problems—almost all of our creation—the right gets literally hysterical over symbolic culture-war questions like birthright citizenship, while the left nominates candidates with Marxist-Leninist sympathies. The abundance and progress movements are some of the few shining lights. It’s not too late. But Great Britain is a warning.
Rent Control: The Ceiling Trap
Rent control is in the news again. Check out my new website, Rent Control: The Ceiling Trap. Here is just one bit:
Norway abolished its rent control in 1982, and the economist Are Oust realized the newspapers had been quietly recording the whole experiment. He collected housing classifieds from Oslo’s Aftenposten from 1970 to 2008 and watched the market turn inside out.
Under rent control, Oslo’s listings pages looked nothing like a housing market. It was tenants who advertised, pleading their qualities to landlords — “housing wanted” ads outnumbered “housing for rent.” Ten to fifteen percent of those ads were placed by the tenant’s employer, vouching for them the way a bank vouches for a borrower. Tenants offered babysitting, gardening, snow-shoveling, and janitorial work on the side to sweeten the deal. Landlords, for their part, could demand a tenant of a particular gender, age, occupation, region of origin — some ads specified “strong Christian beliefs.” Deposits commonly ran to 50 or 60 months’ rent, occasionally 100 or more: tenants effectively lent the landlord the equity of the flat, interest free. And only about 20 percent of “for rent” ads dared print the rent, much of which would have been illegal.
Then the ceiling lifted. Within a few years the page flipped: landlords advertised to tenants, roughly 80 percent of listings printed an asking rent, the mega-deposits vanished, and the demands for snow-shoveling Christians of specified gender dwindled to nothing. The price went back to doing the rationing — so nothing else had to.
Check out the whole thing–it’s fabulous.
Politically Incorrect Paper of the Day: The US Racial Wealth Gap
Writing in the QJE, Derenoncourt, Kim, Kuhn, & Schularick argue that today’s black-white wealth gap can be explained by differences in initial conditions from over a hundred and fifty years ago, i.e. slavery. But there is an important, and glaring objection: in the age of immigration (1850–1924) millions of whites immigrated to the United States with essentially no wealth and yet they caught up to the “heritage” whites quite quickly and indeed today are richer than heritage whites.
Brian Marein collects and carefully analyzes the data:
Persistent racial wealth inequality in the United States is often attributed to the intergenerational transmission of historical wealth disparities. However, inferring the determinants of long-run inequality from group-level data is complicated by the arrival of 30 million Europeans during the Age of Mass Migration (1850–1924), who are by construction included in average white wealth despite having no direct claim to the wealth accumulated by earlier Americans. This paper accounts for this compositional change in the white population by documenting wealth dynamics among European immigrants and their descendants. Cash-on-arrival data show that immigrants began with substantial wealth deficits relative to the native-born. Yet by the late twentieth century, these deficits had closed, as indicated by comparisons between the descendants of later-arriving Southern and Eastern Europeans and those of longer-established Northwestern Europeans. This pattern implies rapid intraracial wealth convergence, in contrast to the slower convergence observed across racial groups. A stylized model shows that these differences can be largely accounted for by income. These findings demonstrate that large wealth disparities do not mechanically persist when groups have access to comparable economic opportunities.
If initial conditions don’t explain the wealth gap then the most likely explanation is an income and/or savings gaps. I am reminded of an earlier politically incorrect paper of the year by Nathaniel Hilger and see also my review of his book The Parent Trap.
Chloe vs. History
Excellent use of AI to create relatively accurate and realistic tours through history. Chloe is an engaging and personable guide–a fact of some importance.
Hat tip: Kevin Bryan.