USA NBA fact of the day
Overall, I estimate that the average white player in the N.B.A. has a fan base that is 56.7 percent white and 22.7 percent black. The average black player has a fan base that is 46.7 percent white and 32 percent black, a significant difference…
If a white and a black player are similar on paper, it is the black player who will have more fans.
Among black Americans, black players are roughly twice as popular as comparable white players. But black players get a slight boost from fans of every racial group. Compared with white players who are similar to them in all ways I could think to measure, black players have more fans among white Americans, Hispanic Americans and Asian-Americans.
Honestly, I was blown away by the overall size of this advantage. Roughly speaking, I estimate that a white player would have to score 10 more points per game to have as big a fan base on Facebook as he would have if he were black.
That is from Seth Stephens-Davidowitz at the NYT, there is much more discussion at the link, though no mention of The Incandescent Rex. In other words, if the styles of the black players are in some way more dynamic and thus more popular (Rex being an exception, Pete Maravich another), and if we could adjust for that variable, how much of the race effect would go away?
Where do sheepskin effects come from?
From a loyal MR reader:
I’m very curious about the macroeconomics of the sheepskin effects. Traditional productivity forecast research tends to assume the wage premium is entirely human capital. Eg, Bosler/Daly/Fernald/Hobijn use a mincer equation with five education dummies http://www.frbsf.org/economic-research/files/wp2016-14.pdf Jorgensen’s approach dividing workers into types also assumes this is not an issue.
If sheepskin effects are purely relative status effects, then the impact on total output and income should be zero, right? This implies increasing educational attainment will have a much smaller impact on productivity and output than typical productivity forecasts imply.
But it seems to me like showing you are “high ability”, if that’s all it does, makes you able to be slotted into higher ability jobs, and that this won’t simply give you a leg up on other workers but increase the number of higher ability jobs filled.
Anyway, I’m sort of thinking out loud but would be curious to read a blog of your thoughts on this, so consider this a bleg!
In the simplest Spence signaling model, the output goes to workers, and if one more worker sends the signal and boosts his or her wage, the non-signaling workers will receive an equal amount less. That is an equilibrium condition, but it makes less sense as an account of dynamics. As a practical matter, it’s not clear why the employers should revise their opinion downwards for the marginal products of these less educated workers. You could say that competition makes them do it, but it’s tough to have good intuitions about an equilibrium that is hovering between/shifting across a varying degree of pooling and separating.
As a more general extension of Spence, a richer model will have market power and payments to capital and labor. If one more worker finishes school, that worker is paid more and the higher wage serves as a tax on production. Yet it is a tax the boss does not perceive directly. The boss thinks he is getting a better worker for the higher wage, but in the counterfactual with more weight on the pooling solution, the boss would have hired that same person, with the same marginal product, at a lower wage. The “whole act of production” will be and will feel more costly, including at the margin, but the boss won’t know how to allocate those costs to specific factors. By construction of the example, the boss however will think that the newly educated laborer is the one factor not to be blamed. So he’ll cut back on some of the other factors, such as labor and land. Labor in the company will be relatively more plentiful, and the marginal product of labor in that company will fall. So the incidence of a boost in the sheepskin effect falls on the land and capital that have to move elsewhere, plus to some extent the declining marginal products and thus wages for the remaining workers in the firm under consideration. Note that outside firms are receiving some influx of capital and land, and so in those firms the marginal product of labor and thus its wage will go up somewhat.
Or so it seems to me. The trick is to find some assumptions where the hovering between/moving across a varying degree of pooling vs. separation is not too confusing.
Friday assorted links
1. The pharma industry does not seem to want a less restrictive FDA (model this).
2. Irving Fisher and life extension.
3. How and why did sportswriting become more left-wing?
4. Judge rules snuggies are blankets, not robes or priestly vestments. Lower tariffs.
North Korean tragedy markets in everything
The Indonesian woman arrested for suspected involvement in the killing of the North Korean leader’s half brother in Malaysia was duped into thinking she was part of a comedy show prank, Indonesia’s national police chief said Friday, citing information received from Malaysian authorities.
Tito Karnavian told reporters in Indonesia’s Aceh province that Siti Aisyah, 25, was paid to be involved in “Just For Laughs” style pranks, a reference to a popular hidden camera show.
He said she and another woman performed stunts which involved convincing men to close their eyes and then spraying them with water.
Here is the story, via Ray Lopez.
Edward Luce reviews *The Complacent Class*
That is in the FT, here is the closing paragraph:
In most other ways, Cowen’s thesis is deeply troubling. Democracy requires growth to survive. It must also give space to society’s eccentrics and misfits. When Alexis de Tocqueville warned about the tyranny of the majority, it was not kingly despotism that he feared but conformism. America would turn into a place where people “wear themselves out in trivial, lonely, futile activity”, the Frenchman predicted. This modern tyranny would “degrade men rather than torment them”. Cowen does a marvellous job of turning his Tocquevillian eye to today’s America. His book is captivating precisely because it roves beyond the confines of his discipline. In Cowen’s world, the future is not what it used to be. Let us hope he is wrong. The less complacent we are, the likelier we are to disprove him.
The review very well captures the spirit and content of the book. Here is Barnes&Noble, here is Amazon. Here are signed first editions, here is Apple.
The State Department plays “Telefon”
Senior state department officials who would normally be called to the White House for their views on key policy issues, are not being asked their opinion. They have resorted to asking foreign diplomats, who now have better access to President Trump’s immediate circle of advisers, what new decisions are imminent.
…“My nagging suspicion is that the White House is very happy to have a vacuum in the under-secretary and assistant secretary levels, not only at state but across government agencies, because it relieves them of even feeling an obligation to consult with experts before they take a new direction.”
Here is the article, solve for the equilibrium…
Who should own the robots?
There’s two versions of this.
1. One or a small group of entrepreneurs owns the robots.
2. The government owns the robots.
I see how we get from where we are now to 1. How would we get to 2, and is 2 better than 1?
That is a comment and request from Mark Thorson. It’s embedded in a longer thread, but I suspect you can guess the context.
I would focus on a prior question: what is government in a world where everything is done by the robots? Say that most government jobs are performed by robots, except for a few leaders (NB: Isaac Asimov had even the President as a robot). It no longer makes sense to define government in terms of “the people who work for government” or even as a set of political norms (my preferred definition). In this setting, government is almost entirely people-empty. Yes, there is the Weberian definition of government as having a monopoly on force, but then it seems the robots are the government. I’ll come back to that.
You might ask who are the residual claimants on output. Say there are fifty people in the government, and they allocate the federal budget subject to electoral constraints. Even a very small percentage of skim makes them fantastically wealthy, and gives them all sorts of screwy incentives to hold on to power. If they can, they’ will manipulate robot software toward that end. That said, I am torn between thinking this group has too much power — such small numbers can coordinate and tyrannize without checks and balances — and thinking they don’t have enough power, because if one man can’t make a pencil fifty together might not do better than a few crayons.
Alternatively, say that ten different private companies own varying shares of various robots, with each company having a small number of employees, and millions of shareholders just as there are millions of voters. The government also regulates these companies, so in essence the companies produce the robots that then regulate them (what current law does that remind you of?). That’s a funny and unaccustomed set of incentives too, but at least you have more distinct points of human interaction/control/manipulation with respect to the robots.
I feel better about the latter scenario, as it’s closer to a polycentric order and I suspect it reduces risk for that reason. Nonetheless it still seems people don’t have much direct influence over robots. Most of the decisions are in effect made “outside of government” by software, and the humans are just trying to run in place and in some manner pretend they are in charge. Perhaps either way, the robots themselves have become the government and in effect they own themselves.
Or is this how it already is, albeit with much of the “software” being a set of social norms?
Replacing social norms by self-modifying software –how big of a difference will it make for how many things?
Deutsche Bank speculation about the next Fed chair
Here are some names that could fit the bill according to the folks at DB:
Kevin Warsh – currently a visiting fellow at the Hoover Institution, he served on the Board of Governors from 2006 until 2011. The report described him as “an experienced private financial market practitioner with strong Republican credentials”.
Jerome Powell – a current Fed governor “viewed as having conventional/centrist views about the economy and markets with slightly hawkish leanings”.
John Taylor – an economics professor at Stanford whose views “would fit with Republican views for a more rules-based Fed.” But, the report added, “his policy leanings — more aggressive rate increases and the stronger dollar that would result — would work against Trump’s pro-growth agenda.”
John Cochrane – another professor, from the University of Chicago with conservative leanings, whose “recent research has delved into more unorthodox topics, such as whether Fed policy rates and inflation could be positively related, i.e., that low policy rates may lead to low inflation and vice versa.”
That is from Jessica Dye at the FT, expect the list of names to evolve with time.
*Exception Taken: How France Defied Hollywood’s New World Order*
That is the new and excellent book by Jonathan Buchsbaum, offering the first comprehensive history of the debates over free trade and the “cultural exception,” as it has been called. It is thorough, readable, and goes well beyond the other sources on this topic.
To be sure, I disagree with Buchsbaum’s basic stance. He views “advertising dollars” as something attached to Hollywood movies like glue, giving them an unassailable competitive advantage, rather than an endogenous response to what viewers might wish to watch. The notion that French or other movie-makers could possibly thrive by innovating and exploring new quality dimensions seems too far from his thought. And he writes sentences such as: “France sought quickly to regulate multiplex development,” yet without wincing.
Perhaps his best sentence is the uncharacteristic: “Other commentators during the 1980s observed wryly that the only real European films were U.S. films, for only U.S. films succeeded in crossing borders in Europe.”
He spends a fair amount of time criticizing me, usually a positive feature in a book. Furthermore, he delivers very strongly on the basic history and narrative, and draws upon a wide variety of sources. So this one is definitely recommended to anyone with an interest in these topics.
Comparing current automation to the Industrial Revolution isn’t actually so comforting
That is the theme of my latest Bloomberg column, here is the opening bit:
“Why should it be different this time?” That’s the most common response I hear when I raise concerns about automation and the future of jobs, and it’s a pretty simple rejoinder. The Western world managed the shift out of agricultural jobs into industry, and continued to see economic growth. So will not the jobs being displaced now by automation and artificial intelligence lead to new jobs elsewhere in a broadly similar and beneficial manner?
And:
Consider, for instance, the history of wages during the Industrial Revolution. Estimates vary, but it is common to treat the Industrial Revolution as starting around 1760, at least in Britain. If we consider estimates for private per capita consumption, from 1760 to 1831, that variable rose only by about 22 percent. That’s not much for a 71-year period. A lot of new wealth was being created, but economic turmoil and adjustment costs and war kept down the returns to labor. (If you’re wondering, “Don’t fight a major war” is the big policy lesson from this period, but also note that the setting for labor market adjustments is never ideal.)
By the estimates of Gregory Clark, economic historian at the University of California at Davis, English real wages may have fallen about 10 percent from 1770 to 1810, a 40-year period. Clark also estimates that it took 60 to 70 years of transition, after the onset of industrialization, for English workers to see sustained real wage gains at all.
From that turmoil, we also received Marxism and agricultural subsidies for generations! Do read the whole thing…
Thursday assorted links
1. The joys of Yiddish and economics, with reference to Leo Rosten.
2. Profit shifting of U.S. multinationals with respect to taxes is non-linear.
3. New Philip Pullman book coming out in October.
4. Chinese hedge funds now have their own private village.
5. Track how much your Congressperson is spending. And the political economy of reallocating and reducing Medicaid spending by first increasing it.
China penalty of the day
China has banned almost 7m people from taking flights and high-speed trains over the past four years as a penalty for not repaying their debts, the country’s Supreme Court has announced.
The penalty system is part of efforts to build a nationwide “social credit” system that will eventually rate every Chinese citizen by collecting big data on financial, legal or social misdeeds. The debtors’ travel ban has been touted as an important first step for building the structural links needed to implement such a comprehensive monitoring programme.
“We have signed a memorandum . . . [with over] 44 government departments in order to limit ‘discredited’ people on multiple levels,” Meng Xiang, head of the executive department of the Supreme Court, told state media on Wednesday.
…In addition to not paying debts on time, one can also be blacklisted for lying in court, hiding one’s assets and a host of other crimes. The Supreme Court said on Tuesday it was working on adding new forms of penalties.
Here is the FT story by Yuan Yang. Keep in mind that the country does not have a real personal bankruptcy law, nor well-developed credit institution penalties, so this is viewed as one of the few options available.
My Conversation with Rabbi David Wolpe
One of my favorites, David was great, here is the link to the podcast, video, and transcript. Here is the opening summary of the chat:
Named one of the most influential Jewish thinkers of our time, Rabbi David Wolpe joins Tyler in a conversation on flawed leaders, Jewish identity in the modern world, the many portrayals of David, what’s missing in rabbinical training, playing chess on the Sabbath, Srugim, Hasidic philosophy, living in Israel and of course, the durability of creation.
Here are a few bits:
WOLPE: So as my friend Joseph Telushkin says, “Polygamy does exist in the Bible, it’s just never successful.” David does have many wives, and very strained and interesting and complex relationships with women. David has the most complicated and most described relationships with women of any character in the Hebrew Bible.
Those qualities that can be negative, in David are to some extent positive. One of the things that draws David out of the charge of simple narcissism is that he really listens, he pays attention — he pays attention to women over and over again. He listens to what they say and changes himself because of it. And that’s not a characteristic of men in the ancient world or the modern one that you can rely on.
And:
COWEN: So again, I’m an outsider in this dialogue, but say I were thinking of converting to Judaism and I were asking you about Hasidic philosophy. Now in terms of some social connections, I probably would fit better into your congregation than into a Hasidic congregation. But if I ask you, on theological grounds alone, is there a reason why I should be hesitant about Hasidic philosophy? From the point of view of theology, what do you think is the greatest weakness there, or your biggest difference with it, given how much you like Heschel?
And:
COWEN: How would you alter or improve rabbinical training?
WOLPE: I’ve given this a lot of thought. Let me just mention one area. When I speak to rabbinical students, I tell them all the time that the single most valuable commodity you have as a rabbi . . . you can answer that yourself, and then I’ll tell you what I think: your voice. Most people are going to come in contact with you when you speak to them. Not all of them, but most. There’ll be more people who come to your services than the number of people at whose bedside you will sit as they die.
And yet, most rabbis — most people — don’t know how to speak.
There is much more at the link, including about Israeli TV, where to visit in Israel, whether King David parallels Trump, the future of biblical commentary in a world of context-less social media, whether Canadian Jews are more likely to stick with the faith, whether Los Angeles is underrated, what is beautiful and significant in Islam, and the Iran nuclear deal and the settlements, among other topics. Self-recommending…
And again, here is David Wolpe’s most recent book David: The Divided Heart, which was the centerpiece for the first part of the discussion.
What is the most multicultural city in the world?
Max Méndez Beck phrased it this way:
what do you think is the most multicultural (minimal segregation while having great ethnic diversity) city in the world?
Toronto springs to mind as a candidate, but it is increasingly expensive and perhaps more ethnically segregated than it used to be or at least more segregated by income and class. Montreal is gaining on it by this metric. Sydney is likely in the top ten, but too many parts are posh to be #1. Sao Paulo has so many ethnicities, but when you get right down to it they are all Brazilians. Don’t laugh, but Geneva might be in the running, both because of immigrants crowded near the center and the city’s international organizations. But perhaps I will settle on Brooklyn, which if it were its own city would be the fourth largest in the United States. (I love Queens, but have a harder time calling it a city.) Brooklyn has recent arrivals from almost the entire world, and even the very nicest of neighborhoods are usually not so far from the poorer areas. Still, if you refuse to count Brooklyn, it is striking that Montreal has a real chance of topping this list: wealthy enough to bring in foreigners, not so wealthy as to price them away.
Reading Julius Evola
Yes, the survey of “works of reaction” will continue, at what speed I am not sure. I picked up Julius Evola, in particular his Revolt Against the Modern World, because of a recent NYT article claiming Evola’s influence over Steve Bannon. I don’t consider the cited evidence for a connection as anything other than tenuous, but still the book was only a click away and Evola was a well-known Italian fascist and I’ve been reading in that area anyway (read in areas clusters!). I read about 70-80 pages of it, and pawed some of the rest. I was frustrated. Upon revisiting the book, here is the passage I opened up to at random:
If on the one hand the original synthesis of the two powers is reestablished in the person of the consecrated king, on the other hand, the nature of the hierarchical relationships existing in every normal social order between royalty and priestly case (or church), which is merely the mediator of supernatural influences, is very clearly defined: regality enjoys primacy over the priesthood, just as, symbolically speaking, the sun has primacy over the moon and the man over the woman.
He then went on about sacrifices and “the priestly regality of Melchizedek.” In later life, Evola sported a monocle over his left eye, and if you are wondering he did have a reputation as an anti-feminist theorist. Oh give me the clarity of Mosley and Dugin!
I’ve been pawing through de Maistre and de Bonald as well, I’ll let you know if I find anything interesting there. In the meantime, someone needs to write an Atlantic article about the much-neglected connection between Alt Right and mystical ideas.