Category: Current Affairs

Markets in everything those new (Japanese) service sector jobs

by  Tyler Cowen in

Certain tech bosses are notoriously temperamental – so much so that conflict-averse folks have been known to put in their notice while the execs are on leave. But some Japanese employees have taken this a step further – actually employing an agent to quit their job for them.

The idea is to extricate themselves from delicate scenarios where they feel bullied to stay on board or are otherwise unwilling to leave for fear of being accused of “betraying” the corporation.

In a country renowned for its ultra conservative culture and hierarchical structure, those in the workforce who jump between jobs can be perceived as quitters, with all the shameful connotations attached to that branding.

Step forward the taishoku daiko – or “job-leaving agents” – that emerged in recent times to aid those who simply cannot tell their boss they’re off to pastures new.

Here is the full article, via the excellent Samir Varma.

Stephen King on inflation targets

by  Tyler Cowen in

Inflation targets are not supposed to be mere fair weather friends. They serve at all times to reduce arbitrary and undemocratic redistributions of income and wealth and stealthy forms of “hidden” taxation, all of which monarchs, despots, autocrats and, yes, democratically elected governments have, via the printing press, exploited. While there’s nothing wrong with debating the correct target “number”, choosing to raise targets when inflation has persistently surprised on the upside smacks of no more than short-run political opportunism — precisely what central bank independence was supposed to avoid.

There is more, here is the full FT link.

Nigeria reform of the day (again)

by  Tyler Cowen in

President Bola Ahmed Tinubu signed the Electricity Bill 2023 into an Act (Electricity Act 2023) on June 10, 2023, to much frenzy and a bit of confusion – erstwhile president, Muhammadu Buhari, signed into law an amendment enabling states in the country to license, generate, transmit, and distribute electricity earlier in March 2023.

To begin, let’s distinguish between the recent assents by President Buhari and President Tinubu in relation to electricity. President Buhari’s amendment to the constitution marked a necessary initial step toward decentralizing the electricity sector, granting states greater control over generation, regulation, and distribution. However, it did not establish specific laws or regulations for the sector itself.

President Tinubu’s recently signed Electricity Act, on the other hand, constitutes the second phase of decentralization. This Act sets the stage for the electricity market by introducing rules governing generation, transmission, and distribution. Moreover, it empowers states to develop their own laws and regulations tailored to their unique circumstances.

In summary, President Buhari’s constitutional amendment laid the foundation for increased state autonomy, while President Tinubu’s Electricity Act provides the framework for implementing this autonomy.

Here is the full discussion from Basil Abia, who tells me his Substack will be covering Nigeriam reforms in more detail.

Happy July 4th!

by  Alex Tabarrok in

From a recent James Pethokoukis interview with me:

Every generation launches a new competitor to America and the people who don’t like capitalism and America’s individualist, free market economy trumpet that now the American way is being left in the dust. In the progressive era it was the Germans (how did that work out?), then it was the Russians (remember Sputnik?), then it was the Japanese (buying up Rockefeller center! the horror!), then it was the Chinese (look at those high speed rail lines!). My message to Americans is to double down on America. Double down on immigration, entrepreneurship, innovation, building for tomorrow, free markets, free speech and individualism and America will take all new competitors as it has taken all comers in the past. The world should be more like America not the other way around.

Nigeria reform of the day

by  Tyler Cowen in

Nigeria will save more than 21 trillion naira ($28 billion) in two years after scrapping gasoline subsidies and allowing its currency to weaken, according to the World Bank.

The savings will help President Bola Tinubu’s government cut its record fiscal deficit and a debt-service burden that surpassed revenue in 2022, the Washington-based lender said in a report. The budget shortfall will narrow to 3.9% of gross domestic product by 2025 from 5.1% this year, according to the report.

Scrapping the fuel cap will enable Nigeria’s state oil company to export crude instead of setting it aside to pay for the subsidies. Easing foreign-exchange controls will help the government convert overseas earnings at market prices rather than at “overvalued” rates, the bank said.

It forecast Africa’s biggest economy will expand 4% from 2024 should it implement urgently required reforms.

Here is more from Anthony Osae-Brown at Bloomberg.  And yes, Nigeria reform of the day is in fact on the verge of becoming a thing…

Canada is Poaching US Talent!

by  Alex Tabarrok in

Here is Noahpinion on Canada’s recent immigration policies and how Canada is poaching US talent!

[I]n recent years, the Canadian government has begun to set hard targets for immigration, such as last year’s target of 1.5 million more by 2025. And the country is deliberately encouraging more people to come, with one of the world’s most aggressive recruitment strategies.

First, let’s just take a look at the results Canada is achieving. The country’s population has just passed 40 million — a 14% increase from when Doug Saunders published Maximum Canada. The national statistics agency loudly celebrated the achievement. And the country’s population growth rate has just shot up to over 3.5%, which is among the world’s fastest:
This isn’t quite Maximum Canada yet, but it’s clearly headed in that direction.

…And Canada’s zeal for greater population inflows is matched by its determination to recruit the best and the brightest en masse. The country’s points-based immigration system, the Federal Skilled Worker Program, is well-known, as is the Provincial Nominee Program that allows individual Canadian provinces to recruit immigrant workers to specific locations. But the country keeps adding more programs for grabbing talent. Its latest idea includes an offer of permanent residency to people working in the United States on H-1B visas — basically, poaching America’s own skilled immigrants!

Happy Canada Day!

Hat tip: Carl Close.

My excellent Conversation with Reid Hoffman

by  Tyler Cowen in

Here is the audio, video, and transcript.  Here is the episode summary:

In his second appearance, Reid Hoffman joined Tyler to talk everything AI: the optimal liability regime for LLMs, whether there’ll be autonomous money-making bots, which agency should regulate AI, how AI will affect the media ecosystem and the communication of ideas, what percentage of the American population will eschew it, how gaming will evolve, whether AI’s future will be open-source or proprietary, the binding constraint preventing the next big step in AI, which philosopher has risen in importance thanks to AI, what he’d ask a dolphin, what LLMs have taught him about friendship, how higher education will change, and more. They also discuss Sam Altman’s overlooked skill, the biggest cultural problem in America, the most underrated tech scene, and what he’ll do next.

Here is one excerpt:

COWEN: Given GPT models, which philosopher has most risen in importance in your eyes? Some people say Wittgenstein. I don’t think it’s obvious.

HOFFMAN: I think I said Wittgenstein earlier. In Fireside Chatbots, I brought in Wittgenstein in language games.

COWEN: Peirce maybe. Who else?

HOFFMAN: Peirce is good. Now I happen to have read Wittgenstein at Oxford, so I can comment in some depth. The question about language and language games and forms of life and how these large language models might mirror human forms of life because they’re trained on human language is a super interesting question, like Wittgenstein.

Other good language philosophers, I think, are interesting. That doesn’t necessarily mean philosophy-of-language philosophers à la analytic philosophy. Gareth Evans, theories of reference as applied to how you’re thinking about this kind of stuff, is super interesting. Christopher Peacocke’s concept work is, I think, interesting.

Anyway, there’s a whole range of stuff. Then also the philosophy, all the neuroscience stuff applied with the large language models, I think, is very interesting as well.

COWEN: What in science fiction do you feel has risen the most in status for you?

HOFFMAN: Oh, for me.

COWEN: Not in the world. We don’t know yet.

HOFFMAN: Yes. We don’t know yet.

COWEN: You think, “Oh, this was really important.” Vernor Vinge or . . .

HOFFMAN: Well, this is going to seem maybe like a strange answer to you, but I’ve been rereading David Brin’s Uplift series very carefully because the theory of, “How should we create other kinds of intelligences, and what should that theory be, and what should be our shepherding and governance function and symbiosis?” is a question that we have to think about over time. He went straight at this in a biological sense, but it’s the same thing, just a different substrate with the Uplift series. I’ve recently reread the entire Uplift series.

Self-recommending!

The Harried Leisure Class

by  Alex Tabarrok in

How easy is it for a male breadwinner to raise a family? Oren Cass argues that the cost of “thriving,” is increasing. That’s false. When you do the numbers correctly, Winship and Horpedahl show that the cost of thriving is falling. It’s falling more slowly than we would like–but it’s still the case that current generations are, on the whole, better off than previous generations. 

Still, Winship and Horpedahl face an upward battle because while they are right on the numbers many people feel that they are wrong. Almost every generation harbors a nostalgic belief that circumstances were more favorable during their youth. Moreover, even though people are better off today, social media may have magnified invidious comparisons so everyone feels they are worse off than someone else.

I offer a third reason: the Linder Theorem. Real GDP per capita has doubled since the early 1980s but there are still only 24 hours in a day. How do consumers  respond to all that increased wealth and no additional time? By focusing consumption on goods that are cheap to consume in time. We consume “fast food,” we choose to watch television or movies “on demand,” rather than read books or go to plays or live music performances. We consume multiple goods at the same time as when we eat and watch, talk and drive, and exercise and listen. And we manage, schedule and control our time more carefully with time planners, “to do” lists and calendaring. A search at Amazon for “time management,” for example, leads to over 10,000 hits.

Time management is a cognitively strenuous task, leaving us feeling harried. As the opportunity cost of time increases, our concern about “wasting” our precious hours grows more acute. On balance, we are better off, but the blessing of high-value time can overwhelm some individuals, just as can the ready availability of high-calorie food.

So, whose time has seen an especially remarkable appreciation in the past few decades? Women’s time has experienced a surge in value. As more women have pursued higher education and stepped into professional roles, their time’s value has more than doubled, incentivizing a substantial reorganization of daily life with consequent transaction costs.

It’s expensive for highly educated women to be homemakers but that means substituting the wife’s time for a host of market services, day care, house cleaning, transportation and so forth. Juggling all of these tasks is difficult. Women’s time has become more valuable but also more constrained and requiring more strategic allocation and optimization for both spouses. In previous eras, a spouse who stayed at home served as a reserve pool of time, providing a buffer to manage unexpected disruptions such as a sick child or a car breakdown with greater ease. Today, the same disruption require a cascade of rescheduling and negotiations to manage the situation effectively. It feels hard.

By the way, the same theory also explains why life often appears to unfold at a slower, more serene pace in developing nations. It’s not just an illusion of being on holiday. In places where time is less economically valuable, meals stretch more leisurely, conversations delve deeper, and time itself seems to trudge rather than race. In contrast, with economic development comes an increased pace of life–characterized by a proliferation of fast food, accelerated conversation, and even brisker walking (Levine & Norenzayan, 1999).

Linder’s theorem, as you may have correctly surmised, is related to Baumol’s theorem. In fact, Baumol (1973, p. 630) explained Linder’s theorem succinctly, “rising productivity decreases the demand for commodities whose consumption is expensive in time.” In essence, Baumol’s theorem is about the cost of production while Linder’s theorem is about the cost of consumption. I discuss Baumol and Linder at greater length here (ungated).

If the value of time fell, we might find ourselves eating more leisurely meals and taking more time to appreciate the simple pleasures in life. But, contrary to popular belief, neither Baumol nor Linder effects reduce our well-being; instead, they are a byproduct of economic growth and greater wealth. Rather than lamenting the rise in relative prices, we should recognize and appreciate our ability to afford them, and even acknowledge that on certain occasions, they are worth paying.

Is “Lab Leak” now proven?

by  Tyler Cowen in

The WSJ ran a widely discussed article a few days ago, and many people have concluded that the Lab Leak hypothesis is now confirmed.  I’ve now read the piece, and I don’t see relevant new information in there.  The New York Times ran a rebuttal of sorts, with this as one key paragraph:

Recent news reports have unearthed new information about researchers from the Wuhan Institute of Virology who became sick in 2019. The news reports suggested that one of them could be patient zero. The information about the sick workers was first discovered at the end of the Trump administration. By August 2022, however, intelligence analysts had dismissed the evidence, saying it was not relevant. Intelligence officials determined that the sick workers could not tell them anything about whether a lab leak or natural transmission was more likely. Intelligence agencies view the information about the cases neutrally, arguing that they do not buttress the case for the lab leak or for natural transmission, according to officials briefed on the intelligence.

I read the London Times report, and didn’t see fundamentally new information in there either.

To be clear, I think the chance of Lab Leak being true is reasonably high, due to the accumulation of a lot of circumstantial evidence.  But I don’t think the new accounts are anything close to a slam-dunk, nor do they show that any of the researchers were “Patient Zero.”  That may well change as further information comes out, but so far it is a mistake to conclude that Lab Leak has been demonstrated to be true.

Addendum: As a side note, I am a little worried by how many people seem to be happy that Lab Leak hypothesis is (supposedly) confirmed.  I suppose it would mean you could feel vindicated in a certain kind of contempt for elites, both American and Chinese.  But under most normal views, the world where Lab Leak is true is a worse world than the world where Lab Leak is false.  So you should instead feel sad and upset if you think it is true, rather than happy or gleeful.  If you feel vindicated, it is a sign of a partial cognitive and emotive defect.

Second Addendum: This new national intelligence report doesn’t seem to confirm the Lab Leak take (though it doesn’t refute it either).  It pretty definitely downplays the import of the scientists getting sick.  Again, it is fine to not trust this report, but still a likely mistake to think new information has been coming out.  Here is a good WaPo look at where things stand.  Here are comments from Scott Sumner.

Does Britain Have High or Low State Capacity?

by  Alex Tabarrok in

Tim Harford writing at the FT covers the question “Is it even possible to prepare for a pandemic?” drawing on my paper with Tucker Omberg.

[I]n an unsettling study published late last year, the economists Robert Tucker Omberg and Alex Tabarrok took a more sophisticated look at this question and found that “almost no form of pandemic preparedness helped to ameliorate or shorten the pandemic”. This was true whether one looked at indicators of medical preparedness, or softer cultural factors such as levels of individualism or trust. Some countries responded much more effectively than others, of course — but there was no foretelling which ones would rise to the challenge by looking at indicators published in 2019. One response to this counter-intuitive finding is that the GHS Index doesn’t do a good job of measuring preparedness. Yet it seemed plausible at the time and it still looks reasonable now.

…perhaps we need to take the Omberg/Tabarrok study seriously: maybe conventional preparations really won’t help much. What follows? One conclusion is that we should prepare, but in a different way….Preparing a nimble system of testing and of compensating self-isolating people would not have figured in many 2019 pandemic plans. It will now. Another form of preparation which might yet pay off is sewage monitoring, which can cost-effectively spot the resurgence of old pathogens and the appearance of new ones, and may give enough warning to stop some future pandemics before they start. And, says Tabarrok, “Vaccines, vaccines, vaccines”. The faster our systems for making, testing and producing vaccines, the better our chances; all these things can be prepared.

One thing that did seem to matter, as Tim notes, was state capacity. In other words, it’s not so much being prepared as being prepared to act. And here I have a mild disagreement with Tim. He writes:

In an ill-prepared world, the UK is often thought to have been more ill-prepared than most, perhaps because of the strains caused by austerity and the distractions of the Brexit process.

My view is that the UK got three very important things right. The UK was the first stringent authority to approve a COVID vaccine. The UK switched to first doses first and the UK produced and ran the most important therapeutics trial, the Recovery trial. Each of these decisions and programs saved the lives of tens of thousands of Britons. The Recovery trial may have saved millions of lives worldwide.

I don’t claim that Britain did everything right, or that they did all that they could have done, but these three decisions were important, bold and correct. The coexistence of both high and low state capacity within the same nation can be surprising. The United States, for example, achieved an impressive feat with Operation Warp Speed, yet simultaneously, the Centers for Disease Control and Prevention (CDC) flailed and failed. Likewise, India maintains a commendable space program and an efficient electoral system, even while struggling with tasks that seem comparatively simpler, like issuing driver’s licenses.

Instead of painting countries with a broad brush of ‘high’ or ‘low’ state capacity, we should recognize multi-dimensionality and divergence. How do political will, resources, institutional robustness, culture, and history explain capacity divergence? If we understood the reasons for capacity divergence we might be able to improve state capacity more generally. Or we might better be able to assign tasks to state or market with perhaps very different assignments depending on the country.

Will Kenya take the lead in carbon removal?

by  Tyler Cowen in

Because the earth’s crust is thinner than usual along the rift, it has vast geothermal potential. The American government reckons Kenya alone could generate 10,000mw of geothermal power, more than ten times the amount it currently produces. A by-product of such power stations is plenty of waste steam, which can then be used to heat dac machines. Moreover, since close to 90% of Kenya’s power is renewable, the electricity these machines consume does not contribute to more global warming.

Capturing carbon dioxide is just part of the process. Next it has to be safely locked away. The rift’s geology is particularly good for this, too. It has bands of porous basalt (a volcanic rock) that stretch across thousands of square kilometres. This makes the region “ideal” for carbon capture and storage, according to a paper published in 2021 by George Otieno Okoko and Lydia Olaka, both of the University of Nairobi. After carbon dioxide has been sucked from the air it is dissolved in water (in the same way one would make sparkling water). This slightly acidic and bubbly liquid is then injected into the rock. There it reacts with the basalt to form carbon-rich minerals—in essence, rocks—which means the gas will not leak back into the atmosphere…

Martin Freimüller, the founder of Octavia Carbon, a Kenyan startup, is working to build the world’s second-biggest dac plant in the Rift Valley. He hopes it will be able to sequester carbon dioxide far more cheaply than Climeworks can, in part thanks to cheap renewable electricity and geothermal steam, and in part because hiring skilled engineers and chemists costs less in Kenya than in the rich world.

Octavia’s pilot plant, scheduled for completion next year, is forecast to have costs of well below $500 a tonne. Mr Freimüller aims to cut this to below $100 within five years. That is far cheaper than industry-wide forecasts of $300-400 by bcg, a consulting firm.

Here is more from The Economist.  Kenya is insufficiently known as a green energy pioneer.