That was then, this is now…
Six days after Traphagen’s visit, U.S. Customs and Border Protection confirmed that work on the border wall that began under Trump is revving back up under Biden. In an online presentation Wednesday, CBP — the largest division of the Department of Homeland Security and home to the Border Patrol — detailed plans to address environmental damage brought on by the former president’s signature campaign promise and confirmed that the wall will remain a permanent fixture of the Southwest for generations to come.
Here is the full story, median voter theorem blah blah blah, via the wisdom of Garett Jones.
The economic policy that is Liz Truss
Liz Truss is facing her first cabinet row as she prepares to increase immigration to boost economic growth.
The prime minister is pushing for wide-ranging reform of Britain’s visa system to tackle acute labour shortages and attract the best talent from across the world.
In the coming weeks she intends to raise the cap on seasonal agricultural workers and make changes to the shortage occupations list, which will allow key sectors to recruit more overseas staff.
Truss has told colleagues that she is keen to recruit overseas broadband engineers to support the government’s pledge to make full-fibre broadband available to 85 per cent of UK homes by 2025. It has also been suggested that she could ease the English-language requirement in some sectors to enable more foreign workers to qualify for visas.
…Jacob Rees-Mogg, the business secretary, has told colleagues he would support the changes only if they were shown to increase GDP per capita.
Here is the Times of London (gated) article. Truss has a very definite plan to boost both high-skill immigration and building in Britain, perhaps the two best policies for boosting growth. And yet the silence from many of those who ought to approve has been deafening. To be clear, it remains an open question whether Truss will be able to push through the relevant policies — but at least she is trying!
*Indigenous Continent*
The author is Pekka Hämäläinen, and the subtitle is The Epic Contest for North America. Rich with insight on ever page, might it be the best history of Native Americans? At the very least, this is one of the two or three best non-fiction books this year. How is this for an excellent opening sentence:
Kelp was the key to America.
Here is another excerpt:
Spain had a momentous head start in the colonization of the Western Hemisphere, but North American Indians had brought Spanish expansion to a halt; in the late sixteenth century there were no significant Spanish settlements on the continent — only petty plunder regimes. North America was still essentially Indigenous. The contrast to the stunning Spanish successes in Middle and South America was striking: how could relatively small Native groups defy Spanish colonialism in the north when the formidable Aztec, Inca, and May Empires had fallen so easily? The answer was right in front of the Spanish — the decentralized, kinship-based, and egalitarian political regimes made poor targets for imperial entradas — but they kept missing it because the Indigenous nations were so different from Europe’s hierarchical societies. They also missed a fundamental fact about Indigenous warfare: fighting on their homelands, the Indians did not need to win battles and wars; they just needed not to lose them.
The general take is that pushing out the Native Americans took longer than you might think, and also was more contingent than you might think. The decentralized nature of North American Indian regimes was one reason why the Spaniards made more headway in Latin America than anyone made in North America.
To be clear, I am by no means on board with the main thesis, preferring the details of this book to its conceptual framework. Too often the author heralds the glories of a Native American tribe or group, and along the way lets it drop that they numbered only 30,000 individuals, as was the case for instance with the Iroquois. If you didn’t know the actual history of this world, and had read only this book, you would be shocked to learn that Anglo civilization was on the verge of subjugating one-quarter of the world. Or that England had learned how to “take care of Ireland” in the seventeenth century, and it was only a matter of time before similar techniques would be applied elsewhere. And it is not until p.450 that the author lets on how much technological progress the Westerners had been making throughout; somehow that part of the story is missing until the very end.
I cannot quite buy that “The Native Reservations were a sign of American weakness, not strength,” though I can see how they might be both (p.408).
Yet I think you can simply put all this aside and still get full value — and then some — from this book. Among its other virtues, it is an excellent treatise on the 17th century and its energetic, exploratory nature. Or for another example, I loved the p.152 discussion of whether Indians wanted the settlers to fence in their animals (the fences cut off travel paths for deer and other hunted animals, though the fences kept the settlers’ animals from destroying native crops). The discussions of equestrianism are consistently excellent.
In the first twenty years of the United States, fights with Indians absorbed 5/6 of overall federal expenditure (p.343).
Here is a good NYT story about the book and its reception. I would say that a Finnish white guy even tried to pull this off is a positive signal about its quality, at least these days.
As recently as 2019, his epic Lakota America: A New History of Indigenous Power was an MR “best book of the year.” You don’t have to buy the whole story, and so I conclude that Pekka Hämäläinen is one of the more important writers of our time.
Saturday assorted links
1. Sam Bowman on UK fiscal choices.
2. Big prizes to counter fears of AI risk. Very big. Are AI programs eligible?
3. Female central bank heads are scarcest in countries with high inflation.
4. Can we breed happier chickens?
The Truss economic plan
On Friday [as indeed it happened], Ms. Truss’ government is expected to announce a series of tax cuts, including cutting taxes for new home purchases as well as reversing planned hikes in the corporate tax and cutting a recent increase in payroll taxes. It will also abolish limits on bonuses for bankers and allow fracking for shale gas across the U.K.
The measures come in addition to a big government spending plan to cap household and corporate energy bills this winter that could cost the U.K. government roughly £100 billion, equivalent to about $113 billion, over the next two years.
The goal is to spur growth in an economy facing weak growth and high inflation, partly brought on by an energy price shock from higher natural-gas prices from the war in Ukraine, as well as a U.S.-style labor shortage. Absent the government bailouts, economists warned that many Britons would be unable to pay their energy bills this coming winter and thousands of companies would go broke…
The government is also planning a deregulation drive, in particular in the finance sector, to try to bolster London’s role as a business hub.
Taken together, the Truss plan is a bold but risky gamble that the payoff from higher growth will more than offset the risks from a big expansion in the government’s deficit and debt at a time of high inflation and rising interest rates, which will increase the cost of servicing the debt and could shake investors’ confidence in the U.K. economy and its currency.
Here is more from the WSJ. Elsewhere Ryan Bourne covers the tax changes in more detail:
-
- the recent 1.25 percent employer and employee national insurance tax rises have been reversed;
- the basic rate of income tax would be cut from 20 percent to 19 percent;
- the highest 45 percent marginal income tax rate would be abolished entirely, making 40 percent the top official marginal rate band;
- stamp duty (the property transactions tax) on all transactions up to home values of £250,000 and £425,000 for first-time buyers has been scrapped;
- the planned increase in the corporate profits tax has been abandoned (so maintaining it at 19 percent);
- full and immediate expensing in the corporate tax code for the first £1 million invested in plant and machinery would be made permanent;
- new investment zones would be introduced, in which there would be a 100 percent first year enhanced capital allowance relief for plant and machinery and building and structures relief of 20 percent per year.
And on regulation:
- new investment zones would encompass streamlining existing planning applications (and these are potentially big zones, if the councils and authorities in discussions are any guide – the Greater London Authority, for example);
- environmental reviews would be shortened and reformed;
- childcare deregulation proposals (probably on staffing and occupational licensing) are forthcoming;
- new planning reforms for housing are forthcoming;
- the onshore wind generator ban will be lifted;
- the fracking moratorium has been lifted;
- the cap on bankers’ bonuses will be abandoned;
- agricultural regulation will be reformed;
- the sugar tax and lots of other anti-obesity regulations will be abandoned;
- the arduous tax rules on contractors known as IR35 will be scrapped;
- all future tax policy will be reviewed through this prism of simplification;
-
there will be an expansion of the number of welfare claimants who must submit to more intensive work coaching with the aim of increasing their hours
The FT details the negative reaction from UK bond, equity, and currency markets. Furman and Buiter are very negative, Summers too. In my view, these are mostly good policies, but how will all that borrowing go over? And is the Bank of England up to doing the appropriate offsets? I will cover these policies as they unfold…
What should I ask Ken Burns?
I will be doing a Conversation with him, here is the beginning of his rather formidable Wikipedia entry:
Kenneth Lauren Burns (born July 29, 1953) is an American filmmaker known for his documentary films and television series, many of which chronicle American history and culture. His work is often produced in association with WETA-TV and/or the National Endowment for the Humanities and distributed by PBS.
His widely known documentary series include The Civil War (1990), Baseball (1994), Jazz (2001), The War (2007), The National Parks: America’s Best Idea (2009), Prohibition (2011), The Roosevelts (2014), The Vietnam War (2017), and Country Music (2019). He was also executive producer of both The West (1996), and Cancer: The Emperor of All Maladies (2015). Burns’s documentaries have earned two Academy Award nominations (for 1981’s Brooklyn Bridge and 1985’s The Statue of Liberty) and have won several Emmy Awards, among other honors.
His forthcoming book is the lovely Our America: A Photographic History. So what should I ask?
Friday assorted links
1. The world’s longest immersed tunnel will connect Germany and Denmark.
2. How Tolkien inspires Italy’s potential new leader (NYT).
3. The godwit’s amazing journey (NYT).
5. Caruana podcast, lays out what is going on in #chessdrama.
India fact of the day
Not even 200 of the approximate 10,000 students from the Indian Institutes of Technology took up positions outside India last year. Fifty students, who make up the largest contingent, will be leaving from IIT-Bombay, followed by 40 from Delhi, 25 from Kharagpur, 19 from Kanpur, 13 from Madras, 17 from Roorkee and five from Guwahati. In 2012, 84 IIT-B candidates had accepted international job offers.
“Compared to 20 years ago, a very small percentage of students go abroad today. This is contrary to the general perception ,” says IIT-Delhi director V Ramgopal Rao. “Twenty years ago, 80% of the BTech class used to go abroad. Now these numbers are insignificant.”
Here is the full story, from 2017, via Elad Gil.
From the comments, on single payer
Thursday assorted links
1. Why stamp duty is a bad idea.
2. Thread on morale and Russian mobilization.
3. Thread on Russian training.
4. Straussian Magnus. And on Dlugy.
5. The very good Johns Hopkins Agora Institute is advertising a position in political economy.
6. Caplan responds on feminism. I am struck by how Bryan’s response appropriates the “relative grievance” approach of the left egalitarians, rather than the “let’s look at the absolute merits of how things are going and then try to improve them” approach more commonly found amongst classical liberals.
7. And two more links I don’t agree with: David Wallace-Wells on learning loss during the pandemic (NYT), and John Mark McDonald on why nuclear weapons are maybe not such a big deal, a tiny scroll down may be needed.
One reason why the Seoul dining scene still has so many nooks and crannies
There are so many places with dishes you’ve never tried before. And they are deep into alleyways, or on the second or third floors of retail establishments. In these places I never see people take out their cameras and photograph the food. The establishments are not “very on-line,” as they say.
More likely than not, a large troupe(s) of middle-aged and older men suddenly come out of nowhere, and descend upon these eateries for dining and intense bouts of conversation. The men don’t seem to want too many other people to know about their special hangouts. English-language menus are hard to come by, so use the outdoor food photographs if you can, or otherwise just point. “I would like your specialty,” translated into Korean on the iPad, works too.
Korea is an especially sexually segregated society, all the more relative to its high per capita income. And so these restaurants are boys’ clubs of a sort, as much private as public. Might that be one reason why the small restaurant food scene here has stayed so undercover?
How much is it the presence of women that drives the “Instagram this” trend in dining?
The Quantity Theory of Money is underrated
That is the theme of my latest Bloomberg column. Here is one short bit:
Consider the recent spurt of 8% to 9% inflation in the US. The simple fact is that M2 — one broad measure of the money supply — went up about 40% between February 2020 and February 2022. In the quantity theory approach, that would be reason to expect additional inflation, and of course that is exactly what happened.
The quantity theory has never held exactly, one reason being that the velocity (or rate of turnover) of money can vary as well. Early on in the pandemic, spending on many services was difficult or even dangerous, and so savings skyrocketed. Yet those days did not last, and when the new money supply increase was unleashed on the US economy, there were inflationary consequences.
I do think there are plenty of indeterminacies in macro, but letting M2 rise at such a pace is not one of them!
My Conversation with Byron Auguste
Here is the audio, video, and transcript. Here is my introduction:
TYLER COWEN: Today I am here…with Byron Auguste, who is president and co-founder of Opportunity@Work, a civic enterprise which aims to improve the US labor market. Byron served for two years in the White House as deputy assistant to the president for economic policy and deputy director to the National Economic Council. Until 2013, he was senior partner at McKinsey and worked there for many years. He has also been an economist at LMC International, Oxford University, and the African Development Bank.
He is author of a 1995 book called The Economics of International Payments Unions and Clearing Houses. He has a doctorate of philosophy and economics from Oxford University, an undergraduate econ degree from Yale, and has been a Marshall Scholar. Welcome.
Here is one excerpt:
COWEN: As you know, more and more top universities are moving away from requiring standardized testing for people applying. Is this good or bad from your point of view?
AUGUSTE: I think it’s really too early to tell because the question is —
COWEN: But you want alternative markers, not just what kind of family you came from, what kind of prep you had. If you’re just smart, why shouldn’t we let you standardize test?
AUGUSTE: I think alternative markers are key. This is actually a pretty complicated issue, and I’ve talked to university administrators and admissions people, and it’s interesting, the variety of different ways they’re trying to work on this.
But I will say this. If you think about something like the SAT, when it first started — I’m talking about in the 1930s essentially — it was an alternative route into a college. It started with the Ivies. It was started with James Conant and Harvard and the Ivies and the Seven Sisters and the rest, and then it gradually moved out.
The problem they were trying to solve back in the ’30s was that up until that point, the way you got into, say, Dartmouth is the headmaster of Choate would write to Dartmouth and say, “Here’s our 15 candidates for Dartmouth.” Dartmouth would mostly take them because Choate knew what Dartmouth wanted. Then you had the high school movement in the US, where between 1909 and 1939, you went from 9 percent of American teenagers going to high school to 79 percent going to high school.
Now, suddenly, you had high school students applying to college. They were at Dubuque Normal School in Iowa. How does Dartmouth know whether this person was . . . The people from Choate didn’t start taking the SATs, but the SAT — even though it was a pretty terrible test at the time, it was better than nothing. It was a way that someone who was out there — not in the normal feeder schools — could distinguish themselves.
I think that is a very valuable role to play. As you know, Tyler, the SAT does, to some extent, still play that role. But also, because now that everybody has had to use it, it also is something that can be gamed more — test prep and all the rest of it.
COWEN: But it tracks IQ pretty closely. And a lot of Asian schools way overemphasize standard testing, I would say, and they’ve risen to very high levels of quality very quickly. It just seems like a good thing to do.
Most of all we cover jobs, training/retraining, and education. Interesting throughout.
Introducing Whisper
The Martha’s Vineyard saga
I take slaps at both sides, in my latest Bloomberg column, and here is one of the salvos:
Vineyard residents were certainly very kind and hospitable to the new arrivals before they were moved to the mainland. But altruism can only go so far. A true commitment to egalitarianism would mean constructing more affordable housing, for example, making it possible for not just immigrants but lower-income people to live and work there.
Even before the modest number of Venezuelan arrivals, the island was known for its extreme income inequality. Wages there are below the Massachusetts average, and living expenses prohibitively expensive. Those realities stem from decisions about land use made by the island’s population.
And this:
The larger point, of course, is that the US has too many arrivals living in “immigration limbo.” They can cross the border with an asylum claim and then live in the country while they wait for a slow and somewhat arbitrary judicial system to hear their claim. The US would do better with a system of more ex ante immigration approvals, and fewer hanging cases ex post.
I have never been to Martha’s Vineyard — maybe someday!
That is from “Sure.”
TC again: There is a natural tendency on the internet to think that all universal coverage systems are single payer, but they are not. There is also a natural tendency to contrast single payer systems with freer market alternatives, but that is also an option not a necessity. You also can contrast single payer systems with mixed systems where both the government and the private sector have a major role, such as in Switzerland.
I’ll say it again: single payer systems just don’t have the resources or the capitalization to do well in the future, or for that matter the present. Populations are aging, Covid-related costs (including burdens on labor supply) have been a problem, income inequality pulls away medical personnel from government jobs, and health care costs have been rising around the world. Citizens will tolerate only so much taxation, plus mobility issues may bite. So the single payer systems just don’t have enough money to get the job done. That stance is conceptually distinct from thinking health care should be put on a much bigger market footing. But at the very least it will require a larger private sector role for the financing.