David Hume on signaling
Longterm Guy, a long-standing MR reader, sends me this:
A Treatise Of Human Nature, by David Hume, Volume Two
BOOK II OF THE PASSIONS
PART I OF PRIDE AND HUMILITY
SECT. XII OF THE PRIDE AND HUMILITY OF ANIMALSIt is plain, that almost in every species of creatures, but especially of the nobler kind, there are many evident marks of pride and humility. The very port and gait of a swan, or turkey, or peacock show the high idea he has entertained of himself, and his contempt of all others. This is the more remarkable, that in the two last species of animals, the pride always attends the beauty, and is discovered in the male only. The vanity and emulation of nightingales in singing have been commonly remarked; as likewise that of horses in swiftness, of hounds in sagacity and smell, of the bull and cock in strength, and of every other animal in his particular excellency. Add to this, that every species of creatures, which approach so often to man, as to familiarize themselves with him, show an evident pride in his approbation, and are pleased with his praises and caresses, independent of every other consideration. Nor are they the caresses of every one without distinction, which give them this vanity, but those principally of the persons they know and love; in the same manner as that passion is excited in mankind. All these are evident proofs, that pride and humility are not merely human passions, but extend themselves over the whole animal creation.
The Dave Weigel resignation
One summary of the details is here (I don't know whatever inside story there may be), but the bottom line is that he had to resign from The Washington Post because of negative comments he made about conservative figures on a supposedly private email list. Weigel's job for the Post was to cover the conservative movement and it seems the Post expected him to maintain a more objective stance, including in his private emails. Matt Yglesias has more extensive coverage of the episode and here is Ross Douthat. Here is Weigel's account and apology, which includes the postings which got him into trouble. And here is a detailed Politico article.
It is likely I prefer Weigel over his replacement, and if you're wondering I don't know Weigel well, even though he lives nearby.
At a more general level this is a tax on journalists, who now have a greater fear of being fired for past actions. It's also a tax on the moody, the volatile, the web-savvy, the non-mainstream, and a subsidy to in-control smooth talkers and careful writers.
The Washington Post wrote:
“But we’re living in an era when maybe we need to add a level” of inquiry, he [a WP web site managing editor] said. “It may be in our interests to ask potential reporters: ‘In private… have you expressed any opinions that would make it difficult for you to do your job.”
I'm not sure what kind of answers they expect to that question nor what they understand by the word "private" in that context.
Conceptually, the core problem is that the distinction between the private and public spheres is breaking down, but at different rates for individuals and mainstream institutions. The practical question is what an equilibrium would look like for the WP, given that the paper courts advertisers, relies on political contacts, and wishes to avoid becoming a target for right-wing (and left-wing) media. It's easy to imagine the targets of Weigel's criticisms citing them repeatedly against the Washington Post and questioning the Post's objectivity. "Oh, that was written by the guy who said that…"
One possible outcome is that the current public code of behavior becomes applied to writers' private lives and I suppose that is what we are seeing and it is also what a lot of "common knowledge" models would predict. That is, most of us know that many writers say such things in private, but that's tolerated as long as it doesn't become common knowledge about any particular writer.
Common knowledge mechanisms often lead to inefficient (and unfair) outcomes, in part by non-convexying returns with regard to the actions of the individual. Maybe we would like taxes to be linked to individual type, but common knowledge mechanisms tend to link the actual "tax" to how social forces process information about an individual. A polemicist who is secretly taped encounters a greatly different outcome.than a polemicist who is not taped.
One option is for public institutions to adopt a "statute of limitations" for private remarks and with a short time window. That would not help in this case, since Weigel's relevant postings do not predate his Post employment; still it might be a good reform. Another option is for public institutions to adopt different norms for their web writers. There are already different norms to some extent (web writings receive less editing, for instance), but it is hard to spread the different norm for the writing to become a different norm for the writer. Web traffic is already massive for newspapers, and most readers probably do not distinguish between different kinds of paper employees, such as web vs. non-web. Anyway, it's a fuzzy line if a writer has both web and non-web output.
A more radical change would move away from the manufactured image of the objective newspaper, but this is especially difficult for the Post, given that it relies on both conservative and liberal sources for its key political coverage.
Overall, we need more incentive-compatible, generalizable organizational reforms which will allow mainstream institutions to have more flexible relationships, and indeed sometimes more distanced relationships, with their writers. Yet reputational forces are often quite blunt, and grossly calculated, and mainstream institutions are not very far along on making such reforms work.
Assorted links
The second best sentence against narrativity I read today
There are deeply non-Narrative people and there are good ways to live that are deeply non-Narrative.
Here is much more and I thank Eric John Barker for the pointer. You will find similar themes in my The Age of the Infovore, the new title for the paperback version of Create Your Own Economy.
The U.S. Soccer President, Sunil Gulati
Gulati graduated Magna Cum Laude from Bucknell University and earned his M.A. and M. Phil. in Economics at Columbia University. He served on the Columbia Economics Faculty from 1986 to1990 before joining the World Bank through its Young Professionals Program in 1991 and serving as country economist for the emerging country of Moldova.
The full story is here, hat tip Yoram Bauman. Is he still a Lecturer there? This interesting Jonah Lehrer article, via Michelle Dawson, covers the U.S. goalie:
He [Howard] refuses to take medication for [Tourette's] for fear it will make him "zombielike" and impair his motor skills. "I'm very adrenaline-filled, and I wouldn't want to suppress that," Howard said. "I like the way I am. If I woke up tomorrow without Tourette's, I wouldn't know what to do with myself."
How to eat well in Berlin
Paris has dozens of restaurants which are better than any in Berlin, and then hundreds more better than the rest. Yet it may be the case that you have, overall, a better food life in Berlin than in Paris.
Berlin has a weak reputation among foodies, but culinary life in the city is much improved. Here are my tips for a good eating life in Berlin:
1. Find a steady source of innovative rolls, buns, and dark breads. These are the glories of Berlin and in many parts of town there will be at least one such source per residential block. The more irregular the colors, seeds, and topologies of the breads, the more enthusiastically you should buy them. Do not treat this as the French bread buying experience.
2. Find a source for good spreads, such as cherry, raspberry, etc. and stock up. Repeatedly apply the spreads to the breads, until death of the researcher intervenes. This procedure is the basis for everything else you will do. It ensures that all of your food days will be good ones.
3. Seek out mid-level German restaurants, of the kind promoted in the Time Out Guide; Renger-Patzsch is a good example. The vegetables in such places will be consistently excellent.
4. The speed and service quality of most meals will be much better if you arrive before 7 p.m.
5. Don't obsess over German food. It's underrated, but still a lot of it isn't that good. In Berlin, and many other parts of Germany, you have first-class delicatessens or stores with foodstuffs from France, Italy, and many other parts of the world. Use them. Berlin offers one of the best overall selections in this regard, better than New York City or Paris, for instance, in terms of real access. You can eat first-rate French cheese every day.
6. When it comes to Berlin German food, don't eat anything in a sauce. It will be either boring or disgusting. Sorry.
7. The sausage spread at the KaDeWe (make sure you live near that place) is probably the best in the entire world. Go there regularly. They also have first-rate sausages from France, Spain, and other countries, as well as an unparalleled selection of sausages from the different regions of Germany, organized one region per case. This food source, like #1, insures that each of your food days will be a splendid one.
8. Go to Berlin's numerous and varied ethnic restaurants, especially in the slightly lower rent districts. If the food is supposed to be spicy, you must repeat the following incantation several times: "Ich will es essen, genau wie Sie es zu Hause essen. Ich bin kein deutscher." [I want to eat it exactly as you eat it at home. I am not a German."] Repeat especially that last part: "Ich bin kein deutscher." Repeat it even if you are a German. This will usually work and typically your Chinese or Thai or Indian server will smile and laugh in response. If they view you as a German, you are screwed no matter what. Simply asking for the food to be "spicy" or even "very spicy" is laughable. It is showing yourself to be a fool and a sucker.
9. Food here is much cheaper than in Paris, and it is much easier to get into virtually any restaurant. Take advantage of both features.
10. Italian food here is almost always reasonably good, and reasonably cheap, but it is rarely great. Lots of cream sauces. It's a good enough fall back and you find it virtually everywhere. A quite good pasta for $6 or even less is a common experience. Sometimes it's actually German food in disguise, or not in disguise, such as when you get Carpaccio with Pfifferlinge.
11. For ethnic food, I recommend the following: Tian Fu in Wilmersdorf (very good Sichuan), Suriya-Kanthi (Sri Lankan in Prenzlauer Berg), Genazvale (Georgian food in Charlottenburg), Degirman is one good Turkish place of many, a slew of authentic Mexican restaurants (more than in Virginia), DAO restaurant in Charlottenburg (Thai food, best papaya salad I've had, all-around excellent), and Schneeweiss has first-rate Wiener Schnitzel.
Overall Sri Lankan and Nepalese and East bloc cuisines are better here, or more available, than in the USA.
If you visit for one day, you won't be so impressed with culinary life in Berlin. If you stay for a month, you won't want to go back to what you had before.
How is trade affecting wages?
There is a very good new paper by Lawrence Edwards and Robert Z. Lawrence. In this case the conclusion is clearer than the abstract:
…the fear of rising US wage inequality from developing-country imports in recent years are unwarranted. While conventional trade theory makes such expectations plausible our investigation reveals they are far off the mark. At the most disaggregated level for which comprehensive skills are available we have found that the US industries competing with developing country imports are not particularly intensive in unskilled labor. Moreover, the relative effective prices of the US industries that are unskilled labor-intensive have actually increased rather than decreased since the early 1990s. Changes in effective US prices form whatever cause have not mandated changes in relative ages. Neither have changes that can be ascribed to import prices mandated increases in wage inequality.
The most likely explanation for the data is:
The goods exported by developing countries are highly imperfect substitutes for those produced by developed countries. This means that for the most part, unskilled US workers are not competing head to head with their counterparts in developing countries.
You can find ungated copies here, though in some browsers they seem to create problems.
Very good headlines
John Isner beats Nicolas Mahut 6-4, 3-6, 6-7, 7-6, 70-68 in Wimbledon epic
Markets in everything
Be among the first to own a part of history with volcanic ash from Eyjafjallajökull
This ash has been filtered and dried and is free of all chemicals.
(Pronounced “Eye-a-fyat-la-jo-kutl”)
That is from The Nordic Store. There is more information here and I thank Laco for the pointer.
How sticky are wages today anyway?
Keep in mind that unemployment rates today are disproportionately concentrated in low-income and low-education workers. Haven't we been told, for years, that these same individuals are seeing some mix of stagnant and eroding wages? That they are experiencing downward mobility? That the real value of health care benefits has been falling and that more and more jobs don't offer health care benefits at all?
Doesn't that mean…um…their wages aren't so sticky downwards? And thus Keynesian economics is not the final story?
Or take illegal immigrant Mexican construction workers, a group which lost jobs in large numbers following the crash. Are they — who often came from $1 a day environments – also supposed to have sticky wages? They are out of work in massive numbers. A lot of them went back home, which is a sign they are willing to make major adjustments. It simply may be they were no longer employable in the United States at any plausible wage.
The alternative model is that many low-education workers are not employable through marginal changes in current conditions. It may require a big upward Schwung for the entire chain of labor, so that desperate employers at the bottom of the ladder, unable to find anyone else, grudgingly hire these not-so-productive individuals because there is no other way of expanding. In other words, it requires conditions which raise the marginal value product of these workers to the private sector, keeping in mind that the fixed costs of hiring a worker mostly have been going up due to the greater bureaucratization of society.
Under this hypothesis, the stimulus that works in the short-run is direct government employment of low-skilled labor, not funneling money through private contracting, and hoping the unemployed get picked up.
What should the government do with these workers? Does their direct employment conflict with the Davis-Bacon Act or other regulations? What wage should we pay to make sure we don't drain off workers from private sector jobs? How much longer does it take such forms of stimulus to result in sustainable, private sector jobs?
As you'll see in my Principles text with Alex, we both believe that wage stickiness (both nominal and real) is a genuine issue in market settings, even in the absence of government intervention. Still, I'm not convinced stickiness is the major problem today, at least not in a simple, direct manner.
If there is going to be more U.S. stimulus, it's exact nature should be thought through very carefully. It's an additional question whether our politics is up to that.
Assorted links
1. The Germans criticize Krugman, and vice versa.
2. Austrian (China, Scott Sumner, big house for farmers, etc.).
3. My older MR posts on Nazi fiscal policy, here, and here.
4. A sculpture of Jesus, completed by 40,000 bees.
5. The economics of Fahrenheit 451.
6. Catholic financial scandals in Germany.
7. From back home: Tysons Corner plans are coming along only slowly.
8. Scenarios for Franco-German cooperation, or lack thereof.
What I’ve been reading
I've been trying not to read too much during my stay in Berlin, as an experiment in information processing and to see how it changes my thoughts. Still, I've been reading a bit and here are a few of the books:
1. Weimar Germany: Promise and Tragedy, by Eric D. Weitz. A bit stolid, but a good general overview of an era I very much would like to be able to visit. That said, deflation and fascist political movements make for an obviously nasty combination.
2. My Name is Charles Saatchi and I am an Artoholic, an interview with Charles Saatchi. Entertaining throughout, plus you can read it in a few minutes time. This is the sort of book Felix Salmon would blog. Saatchi claims that Pollock, Warhol, Judd, and Hirst are the four artists from recent times who will pass into history as the immortals. The others will be swept away.
3. The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention, by William Rosen. This is a popular treatment of some of the themes in Jack Goldstone's excellent work on engineering culture in England. I don't think this book has anything fundamentally new, but about half of it I found to be worthwhile reading. The other half is OK summaries of various economic theories.
4. William Voegeli, Never Enough: America's Limitless Welfare State. Voegeli has a good basic point, namely that a) the welfare state is here to stay, and b) we need to set limits to it. At some point the book runs into diminishing returns. Arnold Kling wrote a good review of the book, plus he had lunch with the author.
5. Herta Müller, assorted. When she won the Nobel Prize last year, I was skeptical. In Berlin I've been reading her work, much of which is set in Berlin, and I like it. It helps if you have a connection to those who have left formerly communist countries. In English, I suggest The Land of Green Plums as a starting point.
6. Salman Rushdie, The Satanic Verses. This one is a re-read, as I will teach it next spring in Law and Literature and I am studying it well in advance. This is Rushdie's most significant achievement and one of the truly excellent novels of the last thirty years. It's not an easy read, but worth the commitment if you haven't already done so. Sadly, this book seems to have fallen into a commercial black hole; you can't even get it on Kindle.
Paul Einzig, from 1932
It is often argued that Governments are in a position to inflate by carrying out ambitious schemes of public works. Undoubtedly during the earlier stages of the crisis such measures might have produced the desired effect. At present, however, they could hardly be adopted on any large scale. Practically every Government has a huge budgetary deficit, which makes it difficult, if not impossible, to raise loans for meeting the extraordinary expenditure of such public works. Any attempt to borrow for such purposes would inevitably lead to a further accentuation of distrust, which must be avoided at all costs.
No matter what your point of view on fiscal policy, you can find that quotation to be scary. That is from this book, p.103, and I thank Michael Reddell for the pointer.
Assorted links
1. More evidence on the labor market in this recession.
2. What happens when you don't have curb rights.
3. Chinatown markets in everything, shoplifter edition.
4. iPad verboten in the Bundestag? (in German)
5. Interview with Victor Niederhoffer.
6. Proof that humans are special (some think it is not totally safe for work).
Interview with Tyler Cowen, pay-as-you-wish restaurants
To find out if the pay-what-you-can model could work for a restaurant, Salon spoke with Tyler Cowen, a professor of economics at George Mason University (and food writer), from Berlin, Germany.
Do you think this pay-what-you-can model could actually work for restaurants?
You can have a small number of restaurants that use it, but if every restaurant were like that, it would never work. It gets people talking. It's like Radiohead — for the first group that does it, it's a good idea, but is it a good model for the industry? Not really. Imagine McDonald's at Times Square working on this principle. If you kept on going or eating they would discourage you from coming.
Do you think it could work on a small scale — two or three restaurants in a city?
I'm not even sure it can in the long run. I'm not sure if these places will still be going in three years' time. Part of the problem is if you're a customer and what you pay is voluntary, you're under pressure to pay a lot of money. You do it once to prove to yourself and others how charitable you are, but how many people go back 17 times? I would find it a burden — my reputation is on the line. What if I only pay $ 27 instead of $ 34? What does my date think? What does my wife think? You end up wanting to feel liberated and just paying a listed cash price. I think there's no way to solve that problem.
But Radiohead's experiment was fairly succesful. What's the difference between it and a restaurant?
With Radiohead, there's a focal price of about $10, which is pretty cheap. If you download an album and send in $10, you feel you've done your bit, and it's not a question of repeat business. You download the album once. Radiohead makes most of its income by touring, so even if they lose money on the album, but get more popular, they can just go on tour. A restaurant has no other way to get that money back. They count on the people to pay for their food.
Is there anything that these restaurants can do to encourage people to pay more?
You have to feel like you're being watched. You have to feel that other people are paying. You have to feel like you're part of a cool experiment. Even with Radiohead. it's wrong to call them neighborly, but their fans pretend they're a tight-knit pool of cool people. That's an illusion, but you're still relying on a peer effect. It's a way to feel you're better — that you're so committed to the band you paid for something out of your own pocket.
Are some sectors of the economy better suited to this kind of pay-what-you-can model?
It depends on what you mean by giving things away for free. There's plenty of stuff that gets given away for free, like NPR. But once NPR's content is produced, it doesn't cost them extra to have additional listeners. With restaurants, if somebody eats another plate of veal, it costs them money. It'll keep this strategy limited. There may be some niche on a small level for these kinds of restaurants, but it's hard to imagine people saying that they've been to six of these restaurant and they're about to go to their seventh.
Why are these restaurants popping up now?
I'm actually not surprised you see them in down economic times. You let some people pay less that can't pay more — it's part of the charm. But these days there's a restaurant for every possible cuisine, and so many marketing tricks. Restaurateurs are exploring every last possible idea. If you were opening a restaurant in 1957, you could do almost anything beyond steak and potatoes and be considered new, but if it's 2010 and you're across the street from the Malaysian place with roller skates, it makes some sense.