*The Bomber Mafia*
That is the new, forthcoming Malcolm Gladwell book, with the subtitle A Dream, a Temptation, and the Longest Night of the Second World War.
You can pre-order here. Here is further information, and a link to audiobook information. Via Michael Rosenwald.
Thursday assorted links
My Conversation with Benjamin Friedman
Here is the audio, transcript, and visual. Here is part of the CWT summary:
Benjamin Friedman has been a leading macroeconomist since the 1970s, whose accomplishments include writing 150 papers, producing more than dozen books, and teaching Tyler Cowen graduate macroeconomics at Harvard in 1985. In his latest book, Religion and the Rise of Capitalism, Ben argues that contrary to the popular belief that Western economic ideas are a secular product of the Enlightenment, instead they are the result of hotly debated theological questions within the English-speaking Protestant world of thinkers like Adam Smith and David Hume.
Ben joined Tyler to discuss the connection between religious belief and support for markets, what drives varying cultural commitments to capitalism, why the rate of growth is key to sustaining liberal values, why Paul Volcker is underrated, how coming from Kentucky influences his thinking, why annuities don’t work better, America’s debt and fiscal sustainability, his critiques of nominal GDP targeting, why he wouldn’t change the governance of the Fed, how he maintains his motivation to keep learning, his next big project on artificial intelligence, and more.
Here is one excerpt about religion:
COWEN: If we think of the most influential advocates for capitalism in the mid–20th century, there’s Hayek, I would say Keynes at most phases of his career — maybe not all, Milton Friedman. They seem to be largely secular rather than religious. If we look at theologians — while there’s a great diversity of views, on average, they seem to be left-leaning. So why is it the religious thinkers lean towards socialism, and the economists are quite secular?
FRIEDMAN: I think there’s a part of the story that you’re missing, and that has to do with the coming together at mid–20th century in America, of religious conservatism and economic conservatism. I think the catalyst that brought them together was the existential fear of world communism. Here we are — call it 70 years later, and it’s difficult to put ourselves back in the shoes of Americans in the 1950s, but that was a real fear.
Communism, at least as advocated at that time, had a unique feature of being simultaneously the existential enemy of lots of things that we hold dear. It was the enemy of Western-style political democracy, but it was also the enemy of Western-style market capitalism, and importantly for purposes of this line of argument, it was the enemy of Western-style religion.
I think the religious conservatives and the economic conservatives realized that they had an enemy in common, and they took the threat seriously, and this led them to come together.
And about macro:
COWEN: Pandemic aside, if, on average, G is greater than R, can’t we just grow our way out of the debt? As you mentioned, now borrowing rates are negative in real terms, right? Economic growth, on average, is positive, so just keep on plowing straight ahead. Let the clock tick.
FRIEDMAN: There are two parts of the sustainability question, and you hit one of them correctly. If your economy is growing in real terms faster than the debt, then you can grow your way out of any debt. But there’s another side of it, and that’s how rapidly are you taking on new debt?
Let’s take your question seriously and say we’re going to put the pandemic aside. In the year before the pandemic — we’re talking about the government’s fiscal year 2019, so ended September 30, 2019 — none of us had talked about pandemics yet. In that year, the US government spent $4.5 trillion, and it only took in, in revenues, $3.5 trillion.
That $1 trillion deficit, even at a time of a fully employed economy and, of course, before the pandemic hit, that was nearly 5 percent of our national income — even though our economy was growing nicely, more rapidly than the rate of interest that the government was paying on the debt, we were on the other side of the equation, adding new debt so rapidly that the debt-to-income ratio was going up instead of down.
So simply pointing to the so-called R-minus-G factor, I think, is a very incomplete way to look at the question of sustainability.
Recommended, and here is Ben’s new and very interesting book Religion and the Rise of Capitalism.
The culture that is Japan
A contentious requirement for Japan-specific trials has delayed the rollout of Covid-19 vaccines in Asia’s largest advanced economy and threatened the Tokyo Olympics.
Small clinical trials that demonstrate the vaccines generate a similar level of antibodies when used in Japan are the main outstanding condition for approval of the jabs from BioNTech/Pfizer and several other companies.
Japan’s demand for proof that safety and efficacy do not differ in the country means that it will not start vaccinations until the end of February — three months after the earliest rollouts and fewer than five months before the delayed Tokyo Olympics are due to start.
Here is the full FT article. Via the Approve AstraZeneca wisdom that is Garett Jones.
Wednesday assorted links
1. “In Iran, where Telegram usage takes up 60 percent of the country’s internet bandwidth…” (NYT).
2. Update on on-line Oklahoma charter schools.
3. Facts about Indian farmer rebellions (you may not agree with all of the analysis).
4. Peeps marshmallow hot tamale fierce cinnamon markets in everything.
5. James Flynn obituary (NYT).
6. The cancellation of monkey slavery coconut milk?
7. What is up with GameStop? And this comment seems to be true.
What I’ve been reading
1. Danielle Dreilinger, The Secret History of Home Economics: How Trailblazing Women Harnessed the Power of Home and Changed the Way We Live. A pathbreaking book that unearths and presents part of the “hidden” history of economics, in this case as practiced largely by women, and often black women at that. Think of it as the science and craft of Beckerian household production but with a managerial emphasis. If you like books on paths not taken, this one is for you.
2. David M. Carballo, Collision of Worlds: A Deep History of the Fall of Aztec Mexico and the Forging of New Spain. I never tire of books on this topic, but that should tell you something about the topic, right? This one is written by an archaeologist, and you can think of it as unearthing the different layers of Aztec culture more effectively than most competitor books.
3. Avi Loeb, Extraterrestrial: The First Sign of Intelligent Life Beyond Earth. The Oumuamua book, by the former chair of the Harvard astronomy department. I am not able to judge the scientific claims about comets, light refraction, travel spin, and the like, but too much of the book felt like “argument from elimination” to me. “Well it can’t be this, and can’t be that, and thus it is likely to be…” That works well for phenomena we understand! But it can lead you into dangerous traps when you apply it to mysteries. I get nervous when I read sentences like “Shmuel and I went down a logical path.” The book is well-written and plenty clear, and can be usefully supplemented with this podcast with the author. In any case, I find alien origin unlikely, but still see a one percent chance as more than sufficient to justify this entire line of inquiry.
4. Bryn Rosenfeld, The Autocratic Middle Class: How State Dependency Reduces the Demand for Democracy. When is it the middle class that contributes to the resilience of autocracy, rather than its breakdown? A very interesting book, highly relevant to China among other places.
Why U.S. Immigration Barriers Matter for the Global Advancement of Science
From Ruchir Agarwal, Ina Ganguli, Patrick Gaule, and Geoff Smith:
This paper studies the impact of U.S. immigration barriers on global knowledge production. We present four key findings. First, among Nobel Prize winners and Fields Medalists, migrants to the U.S. play a central role in the global knowledge network— representing 20-33% of the frontier knowledge producers. Second, using novel survey data and hand-curated life-histories of International Math Olympiad (IMO) medalists, we show that migrants to the U.S. are up to six times more productive than migrants to other countries—even after accounting for talent during one’s teenage years. Third, financing costs are a key factor preventing foreign talent from migrating abroad to pursue their dream careers, particularly talent from developing countries. Fourth, certain ‘push’ incentives that reduce immigration barriers – by addressing financing constraints for top foreign talent – could increase the global scientific output of future cohorts by 42% percent. We conclude by discussing policy options for the U.S. and the global scientific community.
Via the excellent Kevin Lewis.
Tuesday assorted links
Our Virginia regulatory state is failing us
As of tomorrow, hospitals in Virginia will no longer be able to administer COVID-19 vaccines. Thousands of elderly people are having their vaccine appointments canceled. From now on, all COVID-19 vaccines will go to the local health departments and none directly to hospitals.
Virginia Hospital Center had been running clinics all day every day to give people the vaccine. Appointments there for all 1st dose vaccines have been canceled because the hospital will no longer be able to get the vaccines.
Northam’s health department has also forbidden people from crossing county lines to get the vaccine. If the county next to you has an abundance of the vaccine, you can’t get it. Only residents of that county may get their vaccine.
These new rules will result in many people either having their vaccination appointment canceled or delayed for months. Currently, 7.5 million people in Virginia, Maryland, and DC qualify to get the vaccine, if only they had access to it. The new rules limit the options citizens have for getting the shot. Everyone MUST go through their local health department to be vaccinated. That means in a county such as Loudoun, with a population of over 420,000, and two health department locations to receive the vaccine, will continue to inoculate 400 to 900 people a day. There are no other options. The Loudoun health department has said they are trying to open a third location for vaccinations (possibly at Dulles Town Center) but that could take months. If Loudoun continues at its current pace it will take well over a year for the local health department to inoculate all those who want vaccines. If Loudoun hospitals were allowed to open clinics for vaccines, many more people could be inoculated every day but the Northam administration will not permit it.
Here is the link, via Hans. In general, Virginia is a fairly well-run state, but as of late it has not been cracking the top 40 for vaccine distribution.
What does the minimum wage literature really tell us?
Let me turn over the microphone to David Neumark and Peter Shirley:
The disagreement among studies of the employment effects of minimum wages in the United States is well known. What is less well known, and more puzzling, is the absence of agreement on what the research literature says – that is, how economists even summarize the body of evidence on the employment effects of minimum wages. Summaries range from “it is now well-established that higher minimum wages do not reduce employment,” to “the evidence is very mixed with effects centered on zero so there is no basis for a strong conclusion one way or the other,” to “most evidence points to adverse employment effects.” We explore the question of what conclusions can be drawn from the literature, focusing on the evidence using subnational minimum wage variation within the United States that has dominated the research landscape since the early 1990s. To accomplish this, we assembled the entire set of published studies in this literature and identified the core estimates that support the conclusions from each study, in most cases relying on responses from the researchers who wrote these papers.
Our key conclusions are: (i) there is a clear preponderance of negative estimates in the literature; (ii) this evidence is stronger for teens and young adults as well as the less-educated; (iii) the evidence from studies of directly-affected workers points even more strongly to negative employment effects; and (iv) the evidence from studies of low-wage industries is less one-sided.
Here is the full NBER paper.
How should we regulate crypto?
Not too much, as I argue in my latest Bloomberg column. Here is one excerpt:
In September 2020, Kraken, one of the leading crypto exchanges, obtained a banking license from the state of Wyoming, thereby giving it access to the federal payments infrastructure. Part of the deal is that Kraken has to hold 100% reserves for its crypto assets, in essence treating them as a parking garage is supposed to manage cars. It is easy to imagine federal regulators forcing crypto exchanges into the banking system on a larger scale, and perhaps banks buying up or merging with crypto houses, again with stringent reserve requirements.
It is unclear what such regulation would accomplish. Crypto exchanges would become more bureaucratic and less innovative, as they would have a greater stake in the financial status quo. Non-U.S.-based crypto exchanges, and anonymized systems, could still be used to transfer funds secretly or illegally. Still, banks are something the federal government has a lot of experience regulating, and U.S. regulators would achieve a certain illusion of control.
And:
A more general principle is that the platforms easiest to regulate also tend to be the most legitimate and the least likely to engage in or encourage wrongdoing. Again, the net effect will be to make crypto, at the global level, harder to monitor and control.
The better strategy would be to encourage the ascendancy of American-based crypto firms, and slowly allow them to evolve into a more traditional part of financial markets.
There is a plausible argument that, eventually, crypto exchanges should be regulated as financial clearinghouses. But the crypto platforms are currently small and are not sources of systemic macroeconomic risk. It remains to be seen how they ought to evolve or which functions they ought to serve, or indeed if they will succeed at all.
Recommended, I cite Hayek at the very end.
Monday assorted links
Is Germany still our ally?
Armin Laschet, the newly elected leader of Germany’s Christian Democrats, is coming under mounting scrutiny over statements he has made in the past defending Russian president Vladimir Putin and the Assad regime in Syria. Mr Laschet, prime minister of North Rhine-Westphalia, beat rival Friedrich Merz in a digital leadership election on Saturday. He is seen as representing continuity with Angela Merkel’s moderate policies. But in the past Mr Laschet, who has strong chances of succeeding Ms Merkel as chancellor after September’s Bundestag elections, has expressed views on Russia and Syria that put him outside the CDU mainstream and which have now come back to haunt him…
Mr Laschet in a Twitter message [had] said there was a lack of evidence to prove that Russia was behind the novichok attack on Sergei Skripal and his daughter Yulia in Salisbury in 2018.
Here is more from the FT. And:
CDU Baden-Württemberg lists Huawei as top sponsor of this weekend’s party congress
This will be a tough one for Biden.
What was it that Stanley Fischer said?
Voters in the North would like to see a referendum on a United Ireland sometime in the next five years, while voters in the UK believe Scotland is likely to become independent within the next decade, according to a series of polls.
The Sunday Times commissioned a series of surveys across the UK gauge attitudes towards the Union.
The findings highlight some of the difficulties facing Boris Johnson and the UK government as he struggles to keep the country together following its departure from the European Union.
In Northern Ireland, 47% still want to remain in the UK, with 42% in favour of a United Ireland and a significant proportion – 11% – undecided.
However, asked if they supported a referendum on a United Ireland within the next five years, 51% said yes compared to 44% who were against.
In Scotland, the poll found 49% backed independence compared to 44% against – a margin of 52% to 48% if the undecideds are excluded.
The Irish result seems to be a more rapid shift than the Scottish one. Here is the full article.
The canine culture that is Miami
The Miami Heat are bringing back some fans, with help from some dogs.
The Heat will use coronavirus-sniffing dogs at AmericanAirlines Arena to screen fans who want to attend their games. They’ve been working on the plan for months, and the highly trained dogs have been in place for some games this season in which the team has allowed a handful of guests — mostly friends and family of players and staff.
Starting this week, a limited number of ticket holders will be in the seats as well, provided they get past the dogs first.
“If you think about it, detection dogs are not new,” said Matthew Jafarian, the Heat’s executive vice president for business strategy. “You’ve seen them in airports, they’ve been used in mission-critical situations by the police and the military. We’ve used them at the arena for years to detect explosives.”
Here is the full story, the first game under this regime is Thursday.