Category: Current Affairs

Labor supply still really matters

We also document a sharp decline in desired work hours during the pandemic that persists through the end of 2021 and is roughly double the drop in the labor force participation rate. Ignoring the decline in desired hours overstates the degree of underutilization by 2.5 percentage points (12.5%). Our findings suggest that, as of 2021Q4, the labor market is tighter than suggested by the unemployment rate and the adverse labor supply effect of the pandemic is more pronounced than implied by the labor force participation rate.

That is from a new NBER working paper by R. Jason Faberman, Andreas I. Mueller, and  Ayşegül Şahin.

Model this Afghanistan policy

But in both the sanctions and the seizures, you can see an almost Kafka-esque madness in the American position. They are expending all this effort to ameliorate the consequences of a sanctions regime they are implementing. They are desperately brokering deals to preserve foreign reserves that they are freezing. When I ask why they continue to impose these policies at all, the administration says that the Taliban has American prisoners, that it is a brutal regime that murders opponents and represses women, that it has links to terrorists, and that our sanctions grant us much-needed leverage.

Here is more from Ezra Klein (NYT) on the debacle of starvation unfolding in Afghanistan.

Woke, feminized CIA sentences to ponder

From River Page:

The CIA, likewise, has been most successful in its own kind of culture war, whether it be through the CCF, anti-Soviet propaganda, or the lead-up to the Iraq War. Regardless of their failures, both the CIA and the professional class use their adeptness at culture war as a means of self-justification. The CIA utilizes the new dialect of power because it grants the agency legitimacy within the ruling elite; the Left and its professional-class van­guards cry foul because they do not want to admit their own involvement in the credentialing and reproduction of this elite.

Right-wing critics acknowledge the power of wokeness but, like leftists, mistakenly believe that it is a bona fide political project capable of changing institutions rather than merely reifying them. The conservative commentator Sohrab Ahmari’s dystopian fantasy about a future Kamala Harris presidency, in which America is in danger because, among other things, “the vast majority of our spooks spend their days analyzing their identities along intersectional lines of race, gender and sexuality,” presupposes a level of competence in the pre-woke CIA that is far beyond what it deserves given the historical record—the pre-woke spooks hardly kept America safe from danger. There is, however, an illuminating portion of Ahmari’s hypothetical that reveals an essential truth about “wokeness.” In the future imagined by Ahmari, the Ameri­can military is ill-prepared to execute its mission, having been busy naming and renaming bases. When discussing Guantanamo Bay—now appropriately called Naval Base Mumia Abu Jamal—a staffer passively notes that the mission of the base hasn’t changed. This suggests that even the most aggressive right-wing critics of “wokeness” question its ability to change anything beneath the surface of American politics; it can change appearances, not purposes.

And this:

As the public face and self-understanding of the CIA has changed, sympathetic popular culture depictions of the organization have relied on similar themes of feminism, wokeness, and self-actualization to por­tray the agency’s work as morally complicated but necessary.

Here is the full piece, and for the pointer I thank a loyal MR reader.

Metaculus should restart its Lab Leak prediction aggregator

Here is the site.  The forecast never went above twenty percent, and then fell consistently, with the aggregator being discontinued in May and resolved as ambiguous.  I think the chance is below fifty percent, but still I would like to see this reopened, as the question does not seem to be going away.  Metaculus, how about it?

Tabarrok on the Ezra Klein Podcast

Late last year I responded to an excellent tweet storm from Ezra Klein by in effect saying he should read Mancur Olson’s The Rise and Decline of Nations. And you know what? He did! Ezra then kindly invited me on to his New York Times podcast to discuss public choice, liberalism, and the rise and decline of nations.

A few good quotes from me:

Japan has caught up to us in slowing down.

And

Let me put it in a way that progressives can understand, there is an inequality of voice and that inequality of voice also goes to the rich and the powerful and the people who can hire lawyers and the people who can use these so-called equitable institutions to their advantage—even the people in the marginalized communities have not benefited.

Ezra asked challenging questions and had lots of interesting things to say. I was especially struck by his argument that people want to tell heroic stories about themselves and so rent seeking comes to be redefined as something heroic. I think that’s an important insight which public choice scholars are likely to overlook–it becomes harder and harder to break out of a rent-seeking equilibrium not just because of transitional gains traps and the like but because the equilibrium comes to be seen as virtuous.

You also get to hear me rant about new hiring procedures at GMU and my HOA.

Ezra asks a good question about why developer interest groups don’t dominate the planning process.

We also talk about crypto and decentralized consensus as well as other topics.

Whether you call it state capacity libertarianism, creating the innovation nation, or supply side progressivism, I think this movement, which Ezra is leading from the left, is one of the most important movements today.

Podcast: Apple, Spotify, Google or wherever you get your podcasts. Transcript here.

Wokeism has peaked

Virginia has gone Republican (temporarily, because of school-related issues), San Francisco recalled its school board by a decisive margin, Joe Rogan wasn’t cancelled, and there may be a significant war in Ukraine.  That is the theme of my latest Bloomberg column.  Excerpt:

The turning point for the fortunes of the woke may be this week’s school board election in San Francisco, where three members were recalled by a margin of more than 70%. Voters were upset that the school board spent time trying to rename some schools in a more politically correct manner, rather than focusing on reopening all the schools. There was also considerable opposition to the board’s introduction of a lottery admissions system for a prestigious high school, in lieu of the previous use of grades and exam scores.

And:

Another trend is how relatively few immigrants are woke. Latinos in particular seem more open to the Republican Party, or at least don’t seem to have strong partisan attachments. More generally, immigrant political views are more diverse than many people think, even within the Democratic Party.

And:

Wokeism is likely to evolve into a subculture that is highly educated, highly White and fairly feminine. That is still a large mass of people, but not enough to run the country or all its major institutions. In the San Francisco school board recall, for instance, the role of Asian Americans was especially prominent.

In addition:

The woke also are likely to achieve an even greater hold over American universities. Due to the tenure system, personnel turnover is low, and currently newer and younger faculty are more left-wing than are older faculty, including in my field of economics. The simple march of retirements is going to make universities even more left-wing — and even more out of touch with mainstream America.

I hereby inscribe this prediction in The Book of Tetlock.

A simple model of Putin and the Ukraine crisis

I think the correct model here is “Putin has put down so many chips, he can’t walk away with nothing. He wants to wreck Ukraine (more than taking territory per se).  He will do the minimum amount he can that leaves him with a strong probability of having wrecked Ukraine, and no more.”

That still leaves a broad range of possible outcomes, but at the moment that is my mental model for updating with new information.

Running economies hot lowers real wages

It doesn’t raise them, as you might have been taught on Twitter over the last 10-15 years.  Here is the report from the UK:

British households are facing the biggest fall in real incomes in 30 years as inflation gallops ahead of wage growth, a stark illustration of the challenge facing central banks as they try to tame prices without snuffing out recoveries from the pandemic.

The Bank of England forecasts that average incomes in Britain after accounting for wage growth, inflation, tax increases and benefit changes will fall by 2% this year—the steepest decline since comparable records began in 1990. The pinch is expected to hold back the broader economy just when it needs all engines firing to propel itself clear of the slump caused by the pandemic.

Here is more from the WSJ.

What are the costs of the megadrought in the Southwest?

Here are the basics:

The extreme heat and dry conditions of the past few years pushed what was already an epic, decades-long drought in the American West into a historic disaster that bears the unmistakable fingerprints of climate change. The long-running drought, which has persisted since 2000, can now be considered the driest 22-year period of the past 1,200 years, according to a study published Monday in the journal Nature Climate Change.

Previous work by some of the same authors of the new study had identified the period of 2000 through 2018 as the second-worst megadrought since the year 800 — exceeded only by an especially severe and prolonged drought in the 1500s. But with the past three scorching years added to the picture, the Southwest’s megadrought stands out in the record as the “worst” or driest in more than a millennium.

Here is the WaPo story.  I now have three questions, none meant sarcastically, I really want to know:

1. How much has gdp in these regions been damaged over this time period?

2. How much have real estate prices been danaged?

3. How much has migration into these states declined, relative to what would have been the baseline?

Now this is by no means the only set of costs from global warming and climate change.  But if we are just trying to calculate the costs of climate change on the Southwest, and other dry but rich areas, which inferences should we draw?  You might think “the real problems haven’t come yet,” and maybe so, but shouldn’t that show up in the asset prices and migration patterns?

A blow to Canadian rule of law

Canada’s prime minister Justin Trudeau has invoked emergency powers in an attempt to quell protests against mandatory Covid-19 vaccinations that continue to grip the nation’s capital, drawing the ire of some provincial leaders.

Trudeau pledged at a press conference on Monday that use of the powers under the Emergencies Act — which gives the federal government broad authority, including the ability to prohibit public assembly and travel — “will be time-limited, geographically targeted, as well as reasonable and proportionate to the threats they are meant to address”. He also said the military would not be called in to deal with blockades.

Chrystia Freeland, finance minister, said Canadian banks and other financial service providers will be able to immediately freeze or suspend accounts without a court order if they are being used to fund blockades. She also warned companies that authorities will freeze their corporate accounts and suspend insurance if their trucks are being used in the protests.

Here is more from the FT.  Should not the Canadian police be able to solve this issue on their own?

The Puzzle of Falling US Birth Rates since the Great Recession

That is a new JEP piece by Melissa S. Kearney, Phillip B. Levine, and Luke Pardue.  The piece, while not easily summarized, is interesting throughout.  Here is one bit:

The decline in birth rates has been widespread across the country. Birth rates fell in every state over this period, except for North Dakota. One possible explanation for the increase in North Dakota birth rates is the fracking boom that occurred in this state over those years, which has been shown in other research to increase the birth rate (Kearney and Wilson 2018). But as can be readily seen in the map, there is substantial variation in the extent of the decline across places.

Births fell the most in the South, in the West, and in the Southwestern and Mountain states. However, the set of states that experienced larger declines is varied, also including some Midwestern and New England states, notably Connecticut, Illinois, and Massachusetts. Births fell the most in the Southwestern and Western states. The sizable Hispanic population in much of this region is consistent with the particularly large decline in births among Hispanic women, driven by a decline in births among both native and foreign-born Mexicans. The fact that other states with smaller shares of Hispanic residents (like Georgia and Oregon) also experienced large declines, though, further clarifies the broad-based nature of the decline.

And this:

The percentage of sexually active women who report using long-acting reversible contraception (LARC) increased from 5.5 percent in 2004 to 10.7 in 2017 and could have contributed to declining birth rates. The simple correlation, though, between the percentage point change in LARC usage in a state and the change in birth rates is wrong-signed (that is, positive), albeit close to zero. This suggests that take-up of LARCs has likely not played an important role in explaining the decline in the aggregate birth rate over this period.

Overall it is interesting how many factors do not seem to matter much.

From the comments, on Putin and Russia

I shall continue with my bad news from my Russian source. Apparently media in Russia are continuing to spout the brazen lie that US troops are in Ukraine (a few advisers are). I have also heard that apparently he is also ticked at Xi Jinping, apparently having not been met by any Chinese when he landed in Beijing, only the Russian ambassador. David Ignatius reports that Xi is “skeptical of Putin’s overbearing manner and disdain for rules” may be a two-way street.

What worries me is his isolation and egomania. While Xi is rational, Ignatius reports that Putin seems to have some delusions. The worst apparently is the one W. Bush had about iraq before going in, that he will be welcomed as a liberator, at least by the native Russian-speaking minority. it is now pretty clear that even in relatively pro-Russia places like Kharkiv, they do not want him coming in at all. He also has gotten the idea that taking Ukraine is a “sacred” cause, ugh.

I had long been thinking he would not invade, partly following the views of my friends in Kyiv on this, where even now they are probably more complacent than many others. But this latest stuff from Putin has me more seriously worried. I think Xi has him so he will not go while the Winter Olympics are on, but around Feb. 20 looks like a dangerous moment, the end of those and also the supposed end of the war games in Belarus. Officially his troops there are supposed to go home. But they could easily decide to do otherwise about then.

It is a combination of his delusions, isolation, and clearly mounting egomania on the part of Putin that have me the most worried now, and I am.

That is from J. Barkley Rosser, who has longstanding connections with Russia and the USSR.

What does the Truckers Convoy want?

Freedom?  Well, it depends what you mean by that concept.  Here is one relevant bit from from The National Post, hardly a left-wing rag:

“Freedom convoy” supporters convinced that the Governor General can dissolve Parliament on a whim have “absolutely inundated” Rideau Hall with calls over the past week, National Post has learned…

The callers are participants and supporters of the so-called “freedom convoy” that has been occupying the streets around Parliament for a week, demanding that the Trudeau government put an end to all public heath measures (even though the majority of them are under the provincial government’s purview.)

Last week, organizers also published a manifesto billed a “memorandum of understanding” demanding that the Governor General and the Senate unite to force all levels of government to end any COVID-19 measures and vaccine passports, and re-instate all workers laid off due to vaccine requirements.

That has seemingly pushed protesters and their supporters to flood Rideau Hall’s phone and email lines demanding that Mary Simon act, going as far as demanding that she dissolve government and remove Prime Minister Justin Trudeau from power…

It’s useless for protesters to be “calling Rideau Hall or pressuring senators to do something, that’s not how things work,” he added. “It’s a democratic system, and neither the senate nor the Governor General are elected, so they don’t have the democratic legitimacy” to dissolve government.

Originally those memorandum demands came from a group called Canada Unity, a major force behind the Convoy.  Canada Unity has since withdrawn their proposals for a non-democratic transfer of power.  Good for them!  Still, “we withdraw the demands for an anti-democratic coup d’etat that we were promoting a few days ago” is hardly a reason for enthusiastic affiliation.

By the way, here are the responsibilities of the Canadian Governor General.

I’m not suggesting that all of the Convoy members have this particular political vision (though 320,000 signatures on the memorandum were reported), or even that those promoting this idea necessarily “mean it.”  Maybe for many of them it is just a way to stir up trouble.  Still, you can take this as another sign of “incipient knuckleheadism” in the movement.

By the way, I am myself opposed to the idea of governmental mandates for Covid-19 vaccines.  (In part because I feared exactly this kind of backlash, but for liberty reasons too.)  But it is very far from the worst governmental mandate the Canadians have!

Do you know what those people in the trucks actually should do?  Go get vaccinated.

A related group for a while shut down the Ambassador Bridge, which carries 30% of the U.S.-Canada trade.  The Convoy and associated movements are doing a great deal to restrict the free movement of goods and of people, hardly my idea of freedom either.

So I am happy to double down on my previous post.

You want to have strong analytical abilities on your side

No, you don’t always have to agree with the majority of the educated people, but I would say this.  For whatever set of views you think is justified, try to stick to the versions of those views held by well-educated, reasonable, analytically-inclined people.  You will end up smarter over time, and in better places.  Peer effects are strong, including across your ideological partners.

When I hear that a particular group defends liberty, such as the Ottawa truckers’ convoy, while this is partially true it makes me nervous.  As a whole, they also seem to believe a lot of nonsense and to be, in procedural terms, not exactly where I would want them on scientific method and the like.  Fair numbers of them seem to hold offensive beliefs as well.  Whine about The Guardian if you like, but I haven’t seen any rebuttal of this portrait of the views of their leaders.  Ugh.

I recall taking a lot of heat for my 2007 critique of Ron Paul and his movement, but that example illustrates my points perfectly.  Those people did defend liberty in a variety of relevant ways, but so many of them have ended up in worse spaces.  And that is exactly what I predicted way back when.

Look for strong analytical abilities, and if you don’t see it, run the other way.

Here is a defense of the Freedom Convoy.  You can read it for yourself, but it doesn’t change my mind.  Here is I think a wiser account.  I’ll say it again: “Look for strong analytical abilities, and if you don’t see it, run the other way.”  I’m running.

The emergency is over. It’s time to pivot to preparedness

Jonathan Rauch has an excellent column in Persuasion, The emergency is over. It’s time to pivot to preparedness. One bit from yours truly:

A useful suggestion comes from Alex Tabarrok, an economist at George Mason University who has been saying smart things about the pandemic since it began. “When vaccines were coming, it made a lot of sense to put off a lot of other good things in life—to do what economists call intertemporal substitution,” he said in a recent interview. “Once vaccines are available and widespread, you can’t intertemporally substitute anymore because there’s no more cavalry coming. This is it. Before vaccines, costly actions can delay your getting COVID until after you’re vaccinated, which is highly valuable. But the corollary is that once you move to the permanent scenario and are vaccinated, costly actions that mostly delay when you get COVID have much less value.”

…That being the case, Tabarrok proposes a rule of thumb: “Whatever we do, we should be thinking about, ‘Do we make this permanent or not?’” If measures are not candidates for permanence, “We might as well stop them now or soon.”

Read the whole thing.