What I’ve been reading

1. Barnaby Phillips, Loot: Britain and the Benin Bronzes.  Among its other virtues, this book is an excellent “in passing” way to learn about British imperialism and also West African economic collapse.  One thing I learned from this book is that Nigeria already has one of the very best collection of these bronzes in the world.  It does not seem they are being stolen or ruined, but they are not deployed very effectively either.  Recommended.

2. Paul Atkinson, A Design History of the Electric Guitar. “Why is it that so many guitars produced today, not only by Gibson and Fender, but by competing companies, still hark back to the classic designs of the 1950s?  Why do so many manufacturers produce designs that are very clearly derivative forms of the Les Paul, the Telecaster, the Stratocaster, the Flying V and the Explorer?”  There is now a book on this question, and quite a good one.

3. Cass Sunstein, Sludge: What Stops Us from Getting Things Done and What to Do about It.  More people should write books about the most important topics.  Have you and your institution done a “sludge audit” lately?

4. Andras Schiff, Music Comes Out of Silence: A Memoir. A well-written and in fact gripping treatment of what makes classical music so wonderful, life as a touring concert pianist, and defecting from Hungary and later being disillusioned by a resurgent European populism.  Zoltan Kocsis was at first the more brilliant pianist, but Schiff was more persistent and ended up with a more successful career.

Alex Millmow’s The Gypsy Economist: The Life and Times of Colin Clark covers the now-neglected Australian pioneer of development economics and relative historical optimist.

There is also Kathleen Stock, Material Girls: Why Reality Matters for Feminism, controversial.

Stripe Atlas update

Five years ago, Marginal Revolution covered a new project, Stripe Atlas, to help founders incorporate their start-ups and thus make them successful realities.  There is a one-time fee of $500.  Here are the results:

In 2016, we launched Stripe Atlas to help founders turn their ideas into startups, and in turn, collectively grow the GDP of the internet. Since then, over 20,000 businesses have started with Atlas and have generated over $3 billion in revenue. We surveyed over 1,000 Atlas founders to get a snapshot of this generation of entrepreneurs and their needs…

Ninety-one percent of Atlas founders are not in Silicon Valley. In fact, outside of the US, some of the places where we’re seeing the fastest growth are Nigeria (400% year-over-year), United Arab Emirates (165%), and India (66%). Twenty-eight percent of founders told us that they identify as minorities in their country, and 24% are immigrants. Just 12% of founders identified as female. (This is slightly better when compared to the portfolios of major startup accelerators or venture capital firms.) Over time we hope to help more female founders start and scale. Forty-three percent of Atlas founders are building businesses for the first time—nearly 10,000 of them started in just the past year (an indication of an upward trend in entrepreneurship after nearly three decades of decline).

That is from Edwin Wee.  The core lesson, at the meta-level, is that business services for an internet age remain drastically underprovided.  But on the bright side, entrepreneurs are starting to remedy this…

Why are some recoveries short and others long?

Because of real factors, in a nutshell:

Using the recession recovery point equal to the month when private payrolls first exceeded their previous peak level, this paper argues that it was the negative secular trend in manufacturing jobs that was the most important determinant of the length and depth of the last three recessions/recoveries. This negative secular trend changed the layoff/recall pattern of jobs in manufacturing into permanent displacements, a malady that lengthened the recovery periods and that is not the explicit target of either traditional monetary policy or traditional fiscal policy. Using the ideas gathered from an examination of the US two-digit sectoral data for the US overall, attention turns to the recession/recoveries of the 50 US states in the last three national recession periods. Regressions that explain the lengths and depths of the recessions in 50 US states reveal the importance of construction jobs, but the most important predictor was manufacturing jobs: the greater the share of manufacturing jobs prior to the recession, the worse was the recession/recovery.

That is a new NBER working paper by Ed Leamer.  This of course bears on current monetary policy debates.  A very firmly held view on Twitter is that our post-2012 (or so) recovery could have been quicker, had the Fed been more aggressive, and thus we cannot afford to make the same mistake again.  Yet after a certain point it was real factors responsible for the recovery problems, and this new Leamer paper shows that (money still should be have been looser earlier on, in my view).  See also my previous coverage of papers by Marianna Kudylak (and co-authors), and Bob Hall directs my attention to this recent paper on why employment right now is recovering as fast as it is.  The evidence really is piling up very rapidly and decisively that mainly real factors are/were the problem after a certain point.

Thursday assorted links

1. Nine-minute podcast with NPR, beach reads for NPR readers.  And Kramnik vs. Anand no-castling match in the works.

2. Long Blanchard and Tirole report on the economic challenges facing France, and here in French.

3. The distillery tour culture that is Scottish (short video).

4. Davis Kedrosky on what was the Industrial Revolution.

5. Methane (life?) on Enceladus?

6. mRNA vaccines against the flu.

What should be taught more in the first-year graduate sequence in economics?

Or maybe just taught more period?  For microeconomics, I have two very definite picks:

1. Price discrimination.  They do it to you more and more!  Or perhaps you are striving to do it to others.  This is typically covered in a first-year sequence, but how many second-year students really have mastered when it is welfare-improving or not?  How it relates to product tying?  When it is sustainable against entry or not?

This seems like a highly relevant real world topic covered only in passing, noting that at the Principles level Cowen and Tabarrok give it full attention.

2. Tax incidence.  Covered thoroughly in public finance sequences, but usually only in passing in first-year sequences.  But just about everything is a problem in tax incidence!  Any change in relative prices gives rise to tax incidence issues, and aren’t relative price changes central to economics?

How can you analyze minimum wage economics, for instance, without a strong background in tax incidence theory (and empirics)?  What if someone says “that minimum wage hike — the associated gains are just captured by the landlords!”  Right or wrong?  Under what conditions?  Good luck!

Grad students these days aren’t learning enough micro theory.

And for macroeconomics?  I have a definite nomination:

3. Say’s Law.  Yes I have read Keynes, and furthermore John Stuart Mill understood as early as 1829 that Say’s Law doesn’t hold if there is a big increase in money hoardings.  But often there isn’t a big increase in money hoardings!  And then what people call “increases in aggregate demand” very often are more fundamentally “increases in aggregate supply.”  Long-, medium- and short-term considerations to be tossed in as further complexities.  Ngdp boosts can come through either nominal or real variables, etc.

There are still lots and lots of people — at all levels — who don’t have a firm handle on these matters.  And Twitter has made this worse.

Which topics do you think should be given additional coverage?

The economics of ransomware attacks

That is the topic of my latest Bloomberg column, here is one part:

In economic terms, the private value of internet security is often less than the public value. A ransomware attack that results in only a slight decrease in profits for a business could translate into a major social inconvenience.

One consolation is that hackers will almost certainly “overfish” the pool of victims. At some point there will be so many attacks that most institutions will have no choice but to respond with significant defensive measures. The hackers themselves will accelerate this process, because each will try to maximize their profits before the game is over. Curiously, this means that a successful attempt to “slow down” the hackers could just delay the necessary adjustments that businesses need to make, leaving everyone worse off.

There is much more at the link.

Wednesday assorted links

1. Minerva Schools, for those of you who haven’t heard of it.  And Woolf University.

2. “The implication of the birthday paper is that, at the height of the pandemic, there were not very big differences in private behavior according to party, even if public behavior was different.” Link here.

3. Wikipedia page for Zemmour.  I much prefer liberalism, but he might become globally known soon.  And political discrimination as civil rights struggle (an approach you will regret if you pursue it, mark my words).

4. Eli Dourado on enhanced geothermal energy.  And Austin Vernon on geothermal.

5. DARPA for biomedicine update.

6. The authoritarian (and doomed) management style of Lina Khan.

In which ways are Democratic economists Democrats? (or not)

In a series of tweets (try this one), Matt Yglesias has been arguing that academic economists are far more Democratic than the U.S. population as a whole, though less left-wing than most other academics.  I agree with his claims, which are backed by plenty of data, but I wish to add some further thoughts.

Very often political views follow our socioeconomic class and the peer groups we are trying to impress or join.  Thus those claims from Matt are true for American policies only.  If you took a leftish (but not Marxist radical) Democratic U.S. economist, and asked that person what Mexico should do to improve, I think the answers would include the following:

1. Build state capacity to win the drug war, legalize or decriminalize some drugs too.

2. Make it easier for firms in the informal sector to enter the formal, taxed sector, and thus make it easier for them to grow.

3. Invest more in education for underprivileged Mexican youth.

4. End the state monopolies in industrial products.

5. Do something about corruption (but what?).

6. Diversify the economy away from Pemex and fossil fuels.

7. Maintain NAFTA and try to maintain and indeed rebuild the health of the earlier democratization.

Now, that is pretty much the same as my list!  To be sure, the rhetoric on some of these proposals, such as #2 and #3, would be different coming from this imaginary leftish Democratic economist.  (Lots more talk about “inequality” on #2 and more about the benefits of regulation on #3, for instance, whereas I would stress the benefits of firm growth.)  But I don’t think the substance of the proposals would be all that different.

Whether you wish to say the leftish economist has a right-wing perspective on Mexico, or vice versa, is a moot point.  Or are we all centrists on Mexico?  There is in any case a reasonable coincidence of policy recommendations once you remove people from their immediate socioeconomic environment.  And surely that makes the Democratic economists just a little suspicious to the non-economist intellectual Democrats, as you can see from the Twitter fury directed at Matt Y. for what were purely factual claims.

There is a reason why they call it “the Washington Consensus.”  I can assure you that the World Bank and IMF economists are not a bunch of Republican wanna-bees.  But the Washington Consensus works, at least on average.

If you asked a non-economist Democratic voter what Mexico should do, I am not sure what answers you would get.  But it is hardly obvious you would get the above list (I’d love to see this done as a study and compared to the Republican answers).  Maybe the non-economist would talk about foreign aid more?  Immigration more?  I really don’t know.  But they probably are not very aware of the dismal productivity performance of Mexican SMEs and what a problem that is, and probably not very aware of the various state monopolies.  They probably would mention corruption, however, and also public safety and winning the fight against the drug gangs.

When it comes to U.S. disputes, the Democratic economist probably would be more “off the rails” than the typical Democratic voter (sorry, you’ll have to find your own links here, there are plenty), if only because that person is more aware of the socioeconomic conflicts and more aware of what one is supposed to believe.  The more symbolic the dispute, the further from the median voter the Democratic economist is likely to be.  But that is the education doing the work, not the economics background.

If you want to get a Democratic economist making sense, just get that person talking about some other country, follow most of the policy advice, and remove the word “inequality” and a few other catch phrases.

Interestingly, there is a subset of Republican economists who don’t talk sense no matter what the country under consideration.  For instance, they might think that “income tax cuts for Mexico” would do a lot of good.  In this sense they are the more consistent “cosmopolitan ideologues,” taking that phrase as a truly joint concept.  Since most economists are Democrats, perhaps examining “the remnant Republicans” is selecting for excessively consistent ideology.  The remnant Republicans are less likely to insist that “every country is different,” a’ la Dani Rodrik.  If they were so flexible, they probably wouldn’t still be Republicans.

As a final note, I fear we are entering a world so “well-informed” about affective polarization, and with Woke concepts so globalized, that at some point the majority of the Democratic economists won’t talk sense on Mexico any more either.  But we are not yet there — maybe in five to ten years?  Maybe never?  And where will the Republican remnant end up?

Scientists discover spiders are eating snakes all over the world

“They can outfight snakes 10 to 30 times their size,” says the University of Basel in Switzerland.

According to a new meta-analysis study, perhaps snakes should be fearful of spiders. It seems arachnids like to chow down on the reptiles, all over the world.

The study, published in The Journal of Arachnology, has the straightforward title Spiders (Arachnida: Araneae) Feeding on Snakes (Reptilia: Squamata). The researchers looked at 319 reports of spiders feeding on snakes from every continent except Antarctica. Most of the events occurred in the US and Australia.

The data showed that spiders representing 11 different families have been observed eating snakes. “That so many different groups of spiders sometimes eat snakes is a completely novel finding,” lead author and arachnologist Martin Nyffeler said in a Monday news release from Switzerland’s University of Basel. Guess we can add the discovery to our Surprising Insect Dining Habits file, alongside praying mantises eating hummingbird brains.

Here is the full story, via Shaffin.

Tuesday assorted links

1. Taiwan and TSMC dependence.

2. Claims about necks.

3. Replicable mask results.

4. Rigged for thee but not for me?

5. Can individual investors beat the market?

6. “With low level of infections, vaccines may (depending on testing strategy, but especially with universal or random testing) appear ineffective simply because of randomness due to false positives that would constitute most of the positive outcomes” Link here.

Abolishing tenure is the least of my proposals

In my latest Bloomberg column I attempt to design an ideal university from scratch.  The point is not that all schools should be this way, rather this is the experiment I would like to see at the margin:

I would start with what I expect students to know. They should be able to write very well, have  a basic understanding of economics and public policy, and a decent working knowledge of statistical reasoning. I would give a degree to students who demonstrated “B-grade” competence in all of these areas; what now goes for passing C-minus work wouldn’t cut it.

Most important, the people who write and grade the students’ tests would not be their instructors. So students would have to acquire a genuine general knowledge base, not just memorize what is supposed to be on the exam.

Next, each student would have the equivalent of a GitHub certification page. If you learned three programming languages, for example, or won a prize in a science fair, that would go on your page as a credential. But it would not count as a credit toward graduation. Some students could finish their degrees in a year or two even if their pages were not adorned with many accomplishments, while others might fill their pages but get no degree.

My imaginary school would not have many assistant deans, student affairs staff or sports teams. The focus would be on paying more money to the better instructors.


Instructors would not have tenure, but would have to compete for students — by offering them classes and services that would help them graduate and improve the quality of their certification pages. Teachers would be compensated on the basis of how many students they could attract, in a manner suggested long ago by Adam Smith, who himself lived under such a system in 18th-century Scotland.

The very best instructors could earn $300,000 to $400,000 a year…

The school would hire online instructors too, many of them from poorer countries and working at lower wages. So you might take French from a tutor in Senegal, or have a high school teacher from Tamil Nadu read your essays and offer writing tips. I am a big believer in face-to-face instruction, but in my school it would have to compete with online instruction. For this reason, I think my school would have a much more diverse faculty and instructional base than any other institution of higher education. None of the instructors would be required to have any undergraduate or advanced degrees.

The goal is to introduce competition across as many different margins as possible.  There would be an “all on-line” option as well, offered to anyone in the world, though of course the on-line degree might be worth less as judged in the market place.

One issue I did not have time to get into is how the school would “shadow price” its different services to students.  Access to different services has to be priced somehow, so should the school hand out total vouchers to each student for use within the school?  Should the on-line and also face-to-face classes be priced at marginal cost (plus mark-up)?  Or do positive externalities from class cohesion mean that the face-to-face classes should be priced at some additional discount?  To what extent should factors other than this shadow price system be used to allocate access to classes?

Wyoming fact of the day

Wyoming—the first US state to grant a charter to a crypto bank—has approved legal status for a decentralized autonomous organization (DAO), the American CryptoFed DAO, according to an announcement on Sunday. The organization, which has a mission to introduce a new monetary system, now becomes the first legally recognized DAO in the U.S.

It comes after Wyoming lawmakers voted in March to pass a bill allowing DAOs to be officially registered in the state. The law affords these entities—which are governed by smart contracts and dispense with the hierarchical control structure seen in traditional companies—the same rights as a limited liability company. The bill came into effect on July 1, 2021.

Just think — limited liability for “a company managed by nobody”!  And:

The DAO law also solidifies Wyoming’s reputation as the most crypto-friendly U.S. state. Last year, it was the first in the US to issue a state charter for crypto banks and has already licensed two: Kraken and Avanti.

Here is the full story, via Shaffin Shariff.

Which media have proven sticky as pandemic has diminished?

The single biggest new media habit to be formed during the pandemic appears to be gaming. The extra hour per week that people spent gaming last year represented the largest percentage increase of any media category. And unlike other lockdown hobbies, it is showing no sign of falling away as life gets back to normal. It has become “a sticky habit”, says Craig Chapple of Sensor Tower. He finds that last year people installed 56.2bn gaming apps, a third more than in 2019 (and three times the rate of increase the previous year). The easing of lockdowns is not denting the habit: the first quarter of 2021 saw more installations than any quarter of 2020. Roblox, a sprawling platform on which people make and share their own basic games, reported that in the first quarter of this year players spent nearly 10bn hours on the platform, nearly twice as much time as they spent in the same period in 2020.


…whereas all other generations of Americans named television and films as their favourite form of home entertainment, Generation Z ranked them last, after video games, music, web browsing and social media.

Here is more from The Economist.