Category: Current Affairs
My Conversation with Russ Roberts
The podcast master himself, here is the audio and transcript, here is the opening summary:
What are the virtues of forgiveness? Are we subject to being manipulated by data? Why do people struggle with prayer? What really motivates us? How has the volunteer army system changed the incentives for war? These are just some of the questions that keep Russ Roberts going as he constantly analyzes the world and revisits his own biases through thirteen years of conversations on EconTalk.
Russ made his way to the Mercatus studio to talk with Tyler about these ideas and more. The pair examines where classical liberalism has gone wrong, if dropping out of college is overrated, and what people are missing from the Bible. Tyler questions Russ on Hayek, behavioral economics, and his favorite EconTalk conversation. Ever the host, Russ also throws in a couple questions to Tyler.
Here is one excerpt:
COWEN: Here’s a reader question. “In which areas are you more pro-regulation than the average American?” They mean government regulation.
ROBERTS: Than the average American?
COWEN: Yes.
ROBERTS: I can’t think of any. Can you help me out there, Tyler?
COWEN: Well, I’m not sure I know all of your views.
ROBERTS: What would you guess? Give me some things to think about there. In general, I think government should be smaller and regulations should be smaller.
COWEN: I’ll give you–
ROBERTS: Let me give you a trick answer. Then I’ll let you feed me some.
COWEN: Sure.
ROBERTS: Many people believe that the financial crisis was caused by deregulation. I think that’s a misreading of the evidence. It’s true that some pieces of the financial sector were deregulated, but government intervention in the financial sector was quite significant in advance of the crisis. In particular, the bailouts that we did of past failed financial institutions, I think, encouraged lenders to be more careless with how they lent their money, mainly to other institutions, not so much to people out in the world like you and me.
Deregulation’s a little bit tricky, so I wanted to get that in. I’m not sure how that pertains to the question. It does, probably, in some way. So give me something I should be more regulatory about.
COWEN: Well, one answer —
ROBERTS: Baseball? Baseball, of course. [laughs]
COWEN: I would say animal welfare — government should have a larger role. But also what counts as a tax-exempt institution, I would prefer our government be stricter.
ROBERTS: Well, I’m with you there. Yeah, okay, kind of.
COWEN: Well, that’s more regulation, okay?
ROBERTS: I guess.
COWEN: Kind of.
ROBERTS: Yeah, kind of. It’s different standards.
COWEN: Higher capital requirements for banks.
ROBERTS: I’m okay with that. Yeah, that’s a good one. I’d prefer a laissez-faire world for banks, more or less. If we can’t credibly promise not to bail out banks — if that’s the case, we live in a world where banks get to keep their profits and put their losses on taxpayers — bad world. A more regulated world would be better than the world we live in; not as good as my ideal world, though. But there’s a case where I would be in favor — like you just said — more capital requirements.
You’re on a roll. See what else you can come up with for me.
COWEN: Spending more money for tax enforcement, especially on the wealthy.
ROBERTS: Not the worst thing in the world.
COWEN: You can spend a dollar and bring in several times that, it seems.
ROBERTS: I don’t think rich people cheat on their taxes. Do you? [laughs]
COWEN: “Cheat” is a tricky word, but I think we could spend more money.
ROBERTS: We could probably collect more effectively.
COWEN: And it would more than pay for itself.
ROBERTS: Yeah. That’s probably true.
COWEN: We’re actually big fans of government regulation today.
ROBERTS: Yeah, we’ve really expanded the tent here. [laughs]
Do read or listen to the whole thing.
Taiwan facts of the day
Taiwan may be small, but the island has emerged as a financial superpower thanks to the thriftiness of local savers and an eye-watering current account surplus of about 15 per cent of gross domestic product. The country now has the second-largest financial system in the world, relative to gross domestic product. And its life insurance industry is the biggest, with assets-to-GDP of 145 per cent, according to JPMorgan.
The local economy is not big enough to accommodate these enormous sums, so Taiwanese financial institutions have funnelled a whopping $1.2tn abroad.
…Taiwanese insurers hold about 4 per cent of the entire US investment-grade corporate bond market, and 14 per cent of longer-term corporate bonds, according to JPMorgan. Insurers’ holdings of US mortgage-backed securities have nearly doubled over the past five years, to $260bn. That makes Taiwan the second-biggest foreign owner of such securities.
Here is the FT piece by Robin Wigglesworth.
No sweet spot for Singapore in US-China tensions
That is the title of the new and remarkable Bilahari Kausikan Op-Ed in The Straits Times. I will serve up some bits, and please note this is now the world we live in:
Evoking the Long March [by Xi] is intended to prepare the Chinese people for a prolonged struggle with the US. It was, in effect, a tacit admission of the CCP’s mistakes with the consequent need for a retreat, while holding out the promise of ultimate victory…
The Chinese have long memories. Despite our constant denials, they still consider Singapore a “Chinese country” and may feel entitled to our support and will not quickly forget if we are regarded as insufficiently helpful in their time of need.
Some in the Trump administration also seem inclined to view the issue in racial terms. As the only ethnic Chinese-origin majority sovereign state outside greater China, we may be subject to special scrutiny.
What Singaporeans need to understand better is that, under present circumstances, there may be no sweet spot we can occupy that will keep both the Chinese and the Americans simultaneously happy. There is no silver bullet, and it is a fool’s errand to look for one.
Neither can we just lie low and hope for the best. You may not look for trouble but trouble may come looking for you. And trouble is all the more likely to seek you out if either side thinks you are, or can be, intimidated.
We must have the courage to pursue our own national interests. Sometimes our national interests may lead us to tilt one way, sometimes the other. But it must always be our national interest that guides us and nothing else.
Both the Chinese and Americans may not be too happy with us for pursuing our own interests. But Singapore does not exist to give joy to American or Chinese hearts. So long as neither side is so unhappy that it dismisses us as unredeemable, we can live with their unhappiness and manage it…
Our more complex domestic politics is a complication. I see still faint but distinct signs that some section of our population – how large, I do not know – either for transactional economic reasons, or unthinking ethnic sympathies, or sheer chauvinism, is beginning to look at the current US-China tensions through a racial lens.
As US-China competition heats up, this tendency may be accentuated. This is the greatest danger to Singapore in this new phase of US-China competition. It is still at a nascent stage and must be checked, if necessary by the prophylactic exercise of the coercive powers that are the legitimate monopoly of the state, before external and internal forces act and react with each other in a vicious spiral downwards.
If we hold together, we can manage the external complications. If we do not, and the social compact which is the foundation on which modern Singapore was built is strained or broken, these internal stresses may make the external complications unmanageable.
Since this period of US-China tensions will be prolonged, this is not a challenge that lends itself to definitive solutions. Managing it requires continual vigilance and periodic decisive action. It is our own Long March.
Do read the whole thing, as I said above this is now the world we live in.
Cosmopolitanism vs. nationalism
That is the topic of my latest Bloomberg column. It is hard to excerpt, but here is the closing bit:
The best way for that to happen is to let practical nationalism reign, while at the margin seeking to soften it with moral cosmopolitanism. Both perspectives are valuable, and neither can be allowed to dominate. Each perspective, standing on its own, is intellectually vulnerable, yet the two outlooks together are not quite fully harmonious. It is this dynamic clash, however, that helps to account for the strength of each.
Try explaining all that, and its required background knowledge, in a 280-word tweet. Yet much of the world manages a pretty fruitful balance between moral cosmopolitanism and practical nationalism. There is a wisdom embodied in this lived experience which neither pundits nor philosophers can convey.
A tempered and centrist cosmopolitanism won’t always command the strongest loyalties, nor will practical nationalism always look so pretty. If we can accept that reality, then maybe we can stop throwing stones at each other.
Kevin Hassett to step down as CEA chair
Here are various links, Kevin we shall miss ye…it’s not your grandpa’s Trump administration anymore…
*The New Right: A Journey to the Fringe of American Politics*
That is the new book by Michael Malice, and I have to say it will go down as one of the more important albeit objectionable books of this year. Imagine an well-informed anthropological treatment of Gamergate, PUA, Ann Coulter, Mike Cernovich, Milo, and all the rest of “that stuff,” both its history and how it fits together.
Just to be clear, this book is not written from the perspective of a journalist trying to make these movements look weird, rather it is written from the perspective of an anarchist trying to make these movements look (relatively) normal. You might find that approach is not affiliated with the proper mood. I don’t get the sense that Malice is “one of them,” but his “objectivity” might not be the right kind of objectivity. I’m not going to try to resolve that meta-issue here, I’ll just say that a “normalizing” treatment of “the New Right” has some descriptive virtues, and you might end up more scared and more concerned than if you read a journalistic expose. That said, I am not sure the author really grasps the non-niceness of so much of this stuff, or the import of that non-niceness.
Every page of this book is interesting, and so I am going to recommend it. Here is a Kirkus Review, otherwise MSM doesn’t seem to be touching this one at all. Here is the Amazon link, 79 reviews and an average of five stars. The reviews themselves are not entirely reassuring.
I thank an MR reader for the pointer.
UK Tory fact of the day
In the UK, Conservative party membership has been dwindling for decades. At its peak, in the early 50s, it was 2.8 million. Last year, it was 124,000 and the party received twice as much money from dead members, through wills, as from the living.
That is from a longer Andy Bennett piece on the deepening crisis in conservatism.
Alec Stapp on GDPR
Here is just one segment of an excellent piece:
Compliance costs are astronomical
- Prior to GDPR going into effect, it was estimated that total GDPR compliance costs for US firms with more than 500 employees “could reach $150 billion.” (Fortune)
- Another estimate from the same time said 75,000 Data Protection Officers would need to be hired for compliance. (IAPP)
- As of March 20, 2019, 1,129 US news sites are still unavailable in the EU due to GDPR. (Joseph O’Connor)
- Microsoft had 1,600 engineers working on compliance. (Microsoft)
- During a Senate hearing, Keith Enright, Google’s chief privacy officer, estimated that the company spent “hundreds of years of human time” to comply with the new privacy rules. (Quartz)
- However, French authorities ultimately decided Google’s compliance efforts were insufficient: “France fines Google nearly $57 million for first major violation of new European privacy regime” (The Washington Post)
- “About 220,000 name tags will be removed in Vienna by the end of [2018], the city’s housing authority said. Officials fear that they could otherwise be fined up to $23 million, or about $1,150 per name.” (The Washington Post)
And another part:
Unseen costs of foregone investment & research
- Startups: One study estimated that venture capital invested in EU startups fell by as much as 50 percent due to GDPR implementation. (NBER)
- Mergers and acquisitions: “55% of respondents said they had worked on deals that fell apart because of concerns about a target company’s data protection policies and compliance with GDPR” (WSJ)
- Scientific research: “[B]iomedical researchers fear that the EU’s new General Data Protection Regulation (GDPR) will make it harder to share information across borders or outside their original research context.” (POLITICO)
Do read the whole thing.
The real losers from the U.S.-China trade war
The countries caught in the middle, as I argue in my latest Bloomberg column. Excerpt:
n this setting, many Pakistani businesspeople work with both China and the U.S. Now President Donald Trump is essentially telling them to choose sides. Will they do business with Huawei or not? Will they work to open up the Chinese economy or not? And so on.
If you’re Pakistan, on the actual matters under consideration, you will side with China. Pakistan is not going to ban Huawei or push China to open its markets to major U.S. tech companies. China will get its way on those issues, and win some very public victories in the Pakistani public arena. Pakistani leaders and businesspeople who sided with the U.S., or expressed strong American loyalties, will feel burned. Their side just lost a very big debate, centered on a conflict that did Pakistan no good in the first place and was at least in the proximate sense started by Trump.
In other words, the U.S. is making it harder for many foreigners to be on its side, even partially. Over time, it is limiting its own soft power in the countries caught between America and China — and soft power is the one area in which America still has (or is it, already, had?) a big advantage over China.
There is much more at the link, including coverage of Singapore and South Korea.
Venezuelan comovement now includes violent crime too
The feared street gangster El Negrito sleeps with a pistol under his pillow and says he’s lost track of his murder count. But despite his hardened demeanor, he’s quick to gripe about how Venezuela’s failing economy is cutting into his profits.
Firing a gun has become a luxury. Bullets are expensive at $1 each. And with less cash circulating on the street, he says robberies just don’t pay like they used to.
For the 24-year-old, that has all given way to a simple fact: Even for Venezuelan criminals it’s become harder to get by.
“If you empty your clip, you’re shooting off $15,” said El Negrito, who spoke to The Associated Press on the condition he be identified only by his street name and photographed wearing a hoodie and face mask to avoid attracting unwelcomed attention. “You lose your pistol or the police take it and you’re throwing away $800.”
In something of an unexpected silver lining to the country’s all-consuming economic crunch, experts say armed assaults and killings are plummeting in one of the world’s most violent nations. At the Venezuelan Observatory of Violence, a Caracas-based nonprofit group, researchers estimate homicides have plunged up to 20% over the last three years based on tallies from media clippings and sources at local morgues.
Officials of President Nicolás Maduro’s socialist administration have drawn criticism for not releasing robust crime statistics, but the government on Tuesday gave the AP figures showing a 39 percent drop in homicides over the same three-year period, with 10,598 killings in 2018. Officials also report a fall in kidnappings.
The decline has a direct link to the economic tailspin that has helped spark a political battle for control of the once-wealthy oil nation.
Here is more from Scott Smith, via the excellent Kevin Lewis.
Maciej Cegłowski on gdpr
The plain language of the GDPR is so plainly at odds with the business model of surveillance advertising that contorting the real-time ad brokerages into something resembling compliance has required acrobatics that have left essentially everybody unhappy.
The leading ad networks in the European Union have chosen to respond to the GDPR by stitching together a sort of Frankenstein’s monster of consent,a mechanism whereby a user wishing to visit, say, a weather forecast page 4 is first prompted to agree to share data with a consortium of 119 entities, including the aptly named “A Million Ads”network. The user can scroll through this list of intermediaries one by one, or give or withhold consent en bloc, but either way she must wait a further two minutes for the consent collection process to terminate before she is allowed to find out whether or it is going to rain.
This majestically baroque consent mechanism also hinders Europeans from using the privacy preserving features built into their web browsers, or from turning off invasive tracking technologies like third-party cookies,since the mechanism depends on their being present.
For the average EU citizen,therefore, the immediate effect of the GDPR has been to add friction to their internet browsing experience along the lines of the infamous 2011 EU Privacy Directive (“EU cookie law”) that added consent dialogs to nearly every site on the internet.
The GDPR roll out has also demonstrated to what extent the European ad market depends on Google, who has assumed the role of de facto technical regulatory authority due to its overwhelming market share. Google waited until the night before the regulation went into effect to announce its intentions, leaving ad networks scrambling.
It is significant that Google and Facebook also took advantage of the US-EU privacy shield to move 1.5billion non-EU user records out of EU jurisdiction to servers in the United States. Overall, the GDPR has significantly strengthened Facebook and Google at the expense of smaller players in the surveillance economy.
The data protection provisions of the GDPR, particularly the right to erase, imposed significant compliance costs on internet companies. In some cases,these compliance costs just show the legislation working as intended. Companies who were not keeping adequate track of personal data were forced to retrofit costly controls, and that date is now safer for it.
But in other cases, companies with a strong commitment to privacy also found themselves expending significant resources on retooling. Personally identifying information has a way of seeping into odd corners of computer systems (for example, users will sometimes accidentally paste their password into a search box), and tracking down all of these special cases can be challenging in a complex system.The requirements around erasure, particularly as they interact with backups, also impose a special burden, as most computer systems are designed with a bias to never losing data,rather than making it easy to expunge.
Here is the full Senate testimony, there are many interesting points in the piece. I thank an MR reader for the pointer.
Shipping the good economists out?
How many of you even get that reference these days? Here is the latest from DOA, from Liz Crampton at Politico:
The Agriculture Department is moving nearly all its researchers into the economic effects of climate change, trade policy and food stamps – subjects of controversial Trump administration initiatives – outside of Washington, part of what employees claim is a political crackdown on economists whose assessments have raised questions about the president’s policies.
Since last year, employees in the department’s Economic Research Service have awaited news of which members of their agency would be forced to relocate, after Agriculture Secretary Sonny Perdue stunned them by declaring he was moving most of the agency to a location outside the capital. The announcement sparked claims that Perdue was trying to pressure economists into leaving the agency rather than move their families.
On March 5, the department began notifying people who were allowed to stay in Washington, but didn’t provide a comprehensive list, only telling employees in person if they made the cut.
But current and former employees compiled one anyway, covering all 279 people on staff, 76 of whom are being allowed to stay in Washington…
A USDA spokesman declined to directly address the employees’ allegation of political bias, but provided a written statement from Perdue saying that the moves were not prompted by the work being done by ERS.
In general I am reluctant to post this kind of report, because I find it difficult to know what is truly going on here, so do read this with an open mind. Still, it seemed newsworthy.
I thank John Chamberlin for the pointer.
State and local policy is the real immigration policy
That is the central claim of my latest Bloomberg column, here is one excerpt:
State and local governments are making immigration policy all the time, mostly for the worse, and often Democrats are more restrictionist than Republicans.
Obviously the law can deter potential illegal migrants from entering the U.S. But so can the high cost of living. Even though there are much higher wages in the U.S. than in its neighbors to the South, a lot of those higher wages are eaten up by much higher rents — especially if the immigrant moves to a major city, as is often the case. I once wrote a book based on fieldwork in rural Mexico, and I found that, for those who had migrated temporarily to the U.S., high rent was typically their biggest complaint. It therefore follows that policies which raise rents tend to discourage immigrants, particularly poorer immigrants.
And:
The minimum wage is another tool of anti-immigration policy, at least for less skilled immigrants. Say a city sets a minimum wage of $15 an hour. That means a potential migrant whose work is worth only $12 an hour won’t be able to get a legal job in that city. That will deter migration, both legal and illegal. Furthermore, a worker in, say, Honduras may not find it possible to improve his or her skills to be worth $15 an hour, at least not without arriving in the U.S.
Incentives matter, installment #1437
A US jury has found that a former Uber driver living in Virginia committed acts of torture during Somalia’s civil war in the late 1980s.
Somali citizen Farhan Tani Warfaa testified last week in the Washington DC suburbs that ex-Somali colonel Yusuf Abdi Ali shot and tortured him.
Ali was a commander in the national army and supporter of dictator Mohamed Siad Barre, say court documents.
Until this month, Ali drove for Uber, with a high 4.89 rating.
Here is the full story by Holly Honderich, via Ian Bremmer.
My Conversation with Ezekiel Emanuel
Very much a fun one, here is the audio and transcript, here is part of the opening summary:
Do we overrate the importance of doctors? What’s the importance of IQ versus EQ in the practice of medicine? What are the prospect for venture capital in biotech? How should medical training be changed? Why does he think the conventional wisdom about a problem tends to be wrong? Would immortality be boring? What would happen if we let parents genetically engineer their kids?
Tyler questions Emanuel on these topics and more, including the smartest thing his parents did while raising him, whether we have right to medical self-defense, healthcare in low- versus high-trust institutions, and much more.
Here is one excerpt:
COWEN: How can we improve medical education?
EMANUEL: Cut it down. Make it shorter.
COWEN: Cut it down? Why does that make it better? Or does it just make it cheaper?
EMANUEL: No, I think it will make it better. So, we have a lot of memorization, a lot of . . . So, let’s go back to the start. The four years of medical school: two years of preclinical in the classroom learning about biochemistry, genetics, anatomy, microbiology; and the two years of clinical time in the hospital, on the wards.
That dates from 1910. We haven’t really updated it much, except in this one way: we’ve cut down the preclinical time because — less of it — and it changes so fast, by the time you learn it in medical school, get out as a doctor, it’s out of date, A; and B, it’s more or less irrelevant to managing most patients…
And then, by the way, in med school, spending your time in a hospital is not the future. The future of American medicine is out of the hospital. So we need more rotations, more experiences for students out of the hospital.
No med school has made that big shift, and those are the shifts that are going to have to happen over the next 15 or so years.
And:
COWEN: Is there a right to medical self-defense that should override FDA bans on drugs and medical devices? I want to try something that’s not approved —
EMANUEL: No. I don’t like that.
COWEN: I’m saying it’s my body. But why don’t you like it?
EMANUEL: No, no, no, no, no, no, no, no, no, Tyler.
Finally:
COWEN: Now, you’ve written a much-misunderstood article about how hard you would try yourself to live past the age of 75. Would not the suspense of world and national history always keep you wanting a bit more extra time?
So, say I’m 75. I’ve decided I agree with you, but the NBA Finals aren’t over yet. I want to see game seven. I want the Mueller report to come out. Isn’t there always something?
And then, it’s kind of intransitivity of indifference. Every day there’s something, and you just keep on hanging on, even if one accepts your arguments in the abstract. Can you talk me out of that?
EMANUEL: No, no, Tyler, I think you’re exactly right. That’s why people do hang on. It’s because . . . you know, so I talked to my father, who — he says, “Zeke, you’re absolutely right. I’ve become slower, physically slower, mentally slower. My life” . . . what ends up happening is your life cones down, and you begin to overvalue certain small things. Like the NBA Finals. Like what’s in the Mueller report.
We all know, from any cosmic standpoint — even not a cosmic standpoint, just a 2,000-foot standpoint — most of those things are not irrelevant. It’s really cool to know.
You often ask — and this happens to me all the time. I teach undergraduates. Pretty smart undergraduates. Very smart undergraduates. MBA students, nurses, doctors, right? They have no understanding of history. So, whoever finishes in the NBA Finals, in five years, people have forgotten.
Recommended, interesting throughout.