Category: Current Affairs

My Conversation with John Nye

John is one of the smartest people I know, and one of my favorite people to talk to, here is the transcript and audio.  Here is the opening summary:

Raised in the Philippines and taught to be a well-rounded Catholic gentleman, John Nye learned the importance of a rigorous education from a young age. Indeed, according to Tyler he may very well be the best educated among his colleagues, having studying physics and literature as an undergraduate before earning a master’s and PhD in economics. And his education continues, as he’s now hard at work mastering his fourth language.

On this episode of Conversations with Tyler, Nye explains why it took longer for the French to urbanize than the British, the origins of the myth of free-trade Britain, why Vertigo is one of the greatest movies of all time, why John Stuart Mill is overrated, raising kids in a bilingual household, and much more.

Here is one bit:

NYE: In fact, one of the things I do know about the 19th century is that there’s no evidence that either unilateral free trade or multilateral did very much.

Almost all the free trade in Europe in the 19th century was a product of, initially, the bilateral trade agreement between Britain and France, sometimes known as the Anglo-French Treaty of Commerce of 1860, in which they each agreed to much more liberalized trade on a most-favored-nation basis. Once they accepted this, then what happened is, anyone who signed on to either Britain or France on the most-favored-nation basis then bought into, in some sense, this system.

Here is another:

COWEN: Particular mistakes aside, what were the systemic mistakes the Western world was making in, say, 1910, 1912?

NYE: I think the systemic mistake really boils down to how do you deal with the problem of power? How do you deal with the problem of different groups, different cultures wanting their place at the table? It’s clear that, if you look, a lot of the fight of imperialism was great-power competition.

If you look in the Far East, for example, some people may know that the United States took the Philippines from Spain at the end of the period of Spanish control of the Philippines in 1898, and partly this was due to Perry’s decision to sail into Manila Bay.

One of the things that’s not discussed — most people are unaware of — is that the German and British fleets were waiting in Hong Kong. They were waiting to see what the Americans did. And it’s quite likely that, had the Americans not steamed into Manila Bay, that the Germans or British would have intervened in the Philippines once the Spanish collapsed.

And:

COWEN: And if there’s an underlying political subtext or import of Hitchcock, what do you think that would be? Not what he necessarily intended as his politics, but what’s in the movies in terms of human nature and political man?

NYE: Well, I think there’s this question of suspicion and the tendency to not appreciate how much is going on under the surface. I think people tend to see these things narrowly in terms of Cold War paranoia. But Hitchcock was a political conservative, and he was much more of the very old British conservative view that one should be wary in times of —

COWEN: Suspicion is metaphysical, right?

Definitely recommended, I am very honored to have had the chance to do this with John.

Coleman Hughes reviews *Stubborn Attachments*

Excellent review, in Quillette, here is part of the closing sequence:

Ultimately, absorbing the thesis of Stubborn Attachments would entail a radical loss of purpose for the politically-minded among us. The small, short-term policy fights that energize us most are precisely the ones from which, on Cowen’s account, we should abstain entirely. Even the smartest among us don’t know what net effect small policies will have; plus very little well-being turns on such policies to begin with. Growth maximization, on Cowen’s view, becomes a moral black hole from which no partisan skirmish, no matter how seemingly important, can escape.

In a cultural landscape where partisan skirmishes regularly induce something approaching bloodlust on both sides of the political aisle, it’s safe to say that most Americans are roundly rejecting Cowen’s thesis at the moment. But perhaps that means the message of Stubborn Attachments is needed now more than ever.

Recommended, here is the link.

Those new service sector jobs

The DAWN Café is an upcoming trial project that will test an inclusive working environment. The café will seemingly be staffed with robots that will wait on you by bringing you your coffee and asking if you need anything. But if you think this is another example of robots coming for our jobs, you would be mistaken. Embedded within the robots are real intelligence: they’re operated remotely by people with severe disabilities who often can’t leave their bed.

Here is the story, via Dustin Palmer.

Everyone is upset at Amazon, but…

When we reported last month on the approximately $4.5 billion that city taxpayers are spending on the “dynamic neighborhood” of Hudson Yards on Manhattan’s West Side, eagle-eyed readers may have noticed that our breakdown of the costs featured a tilde (~) before the $750 million figure for tax breaks for commercial developers — indicating that “this figure is our best guess.”

Now, a draft paper by two New School researchers has conducted an even more comprehensive trawl for Hudson Yards public costs, and while it generally confirms our analysis, it finds a couple of items we missed: A total of $1.1 billion worth of items, in fact, bringing the public price tag to a staggering $5.6 billion, with hundreds of millions of dollars still to flow from city coffers.

Ho hum!  It’s not a tech company, so who cares?  Here is the article, via Alex X.  As for FoxConn and Wisconsin: “Remember: Wisconsin is giving Foxconn more $$$ and incentives than New York, Virginia and Tennessee combined gave Amazon. And the real kicker? Foxconn will create far fewer jobs (13,000) than Amazon (55,000)”

Do we need a Journal of Controversial Ideas?

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

Now enter a newly announced project, called the Journal of Controversial Ideas. It will publish one issue per year, devoted to ideas that otherwise may not receive a fair hearing, and it will allow for anonymous or pseudonymous publication. Princeton philosopher Peter Singer is one of the names associated with the journal, which does not yet have an agreement with a publisher.

I am skeptical though not hostile toward this enterprise. It is sad that such a journal is seen as necessary. But I would suggest instead putting forth your ideas on a blog, on Twitter or on YouTube. Many politically incorrect figures have done just that. A Jordan Peterson YouTube lecture might range from the Bible to Jung to a critique of contemporary feminism, none of it refereed, but he has attracted millions of viewers. At the end of it all you get the Jordan Peterson worldview, which I suspect has more resonance than any particular empirical claim Peterson might make along the way.

In an internet-centered intellectual world, what persuades people is reading or hearing a charismatic personality, year in year out, promoting a particular view of the world. A lot of controversial ideas will have to ride that roller coaster, for better or worse.

The Journal of Controversial Ideas is intended to be open access, though without a publishing contract we can’t know if it will have an open online comments section. It would be odd if not (would we have to create a companion Journal of Controversial Comments?), but with open comments you have to wonder whether a prestige publisher will take on the associated libel and reputational risks, and how high status the journal actually will be. It would not be practical to referee the comments, but that may mean the truly open internet, with its free-for-all atmosphere, will remain the dominant source for controversial ideas. “Controversial for me but not for thee” hardly seems like a winning slogan for such a revisionist enterprise.

Overall, I think controversial ideas will do best on the non-refereed internet, but I am not opposed to giving this venture a try.  Refereeing is supposed to boost status, but will anyone put a publication here on their tenure vita?  And:

To make a controversial idea stick through the academic process, maybe you do have conquer the biases and beat the odds against you, as Harvey MansfieldRobert P. George and Oded Galor have done (to name just three). You also might pursue a “Straussian” approach, embedding subversive messages in your paper and covering them up with flowery rhetoric, hoping that some but not too many people notice what you are really saying.

Do read the whole thing.

Ho hum, or hidden externalities?

The ratings agency Fitch shrugged on Tuesday at what it considered the “muted impact” on the economies and credit ratings of New York and Washington.

According to Fitch, 25,000 jobs are the equivalent of about a quarter of a percentage point of all the jobs in metro New York. In metro Washington, they’d represent about three-quarters of a percentage point of the labor force. The Washington region is already growing by about 50,000 jobs, or an Amazon HQ2, each year, according to the D.C. Policy Center. New York over the past year gained about 70,000 jobs.

Here is more from Emily Badger at the NYT.

The sex recession

From Kate Julian at The Atlantic:

Gen Xers and Baby Boomers may also be having less sex today than previous generations did at the same age. From the late 1990s to 2014, Twenge found, drawing on data from the General Social Survey, the average adult went from having sex 62 times a year to 54 times. A given person might not notice this decrease, but nationally, it adds up to a lot of missing sex. Twenge recently took a look at the latest General Social Survey data, from 2016, and told me that in the two years following her study, sexual frequency fell even further.

Some social scientists take issue with aspects of Twenge’s analysis; others say that her data source, although highly regarded, is not ideally suited to sex research. And yet none of the many experts I interviewed for this piece seriously challenged the idea that the average young adult circa 2018 is having less sex than his or her counterparts of decades past. Nor did anyone doubt that this reality is out of step with public perception—most of us still think that other people are having a lot more sex than they actually are.

I enjoyed this sentence:

In a famous 2007 study, people supplied researchers with 237 distinct reasons for having sex, ranging from mystical (“I wanted to feel closer to God”) to lame (“I wanted to change the topic of conversation”). The number of reasons not to have sex must be at least as high.

This is interesting too:

“Millennials don’t like to get naked—if you go to the gym now, everyone under 30 will put their underwear on under the towel, which is a massive cultural shift,” Jonah Disend, the founder of the branding consultancy Redscout, told Bloomberg last year. He said that designs for master-bedroom suites were evolving for much the same reason: “They want their own changing rooms and bathrooms, even in a couple.” The article concluded that however “digitally nonchalant” Millennials might seem—an allusion, maybe, to sexting—“they’re prudish in person.”

The sex recession remains a puzzle.  Here is my much earlier blog post on why people don’t have more sex.

How is Obamacare doing?

Yes, it is more popular, but how is it doing?:

Obamacare has continued to devastate the individual health insurance market:

  • In March of 2016, there were 20.2 million people covered in the individual health insurance market according to a hard count of state insurance department filings done by Mark Farrah and Associates.
  • In March of 2017 that count was down to 17.7 million.
  • In March of 2018 the count was 15.7 million–a 22% drop in two years.

This means 4.5 million people lost their individual health insurance in just two years.

Hardest hit are the 40% of middle class individual market consumers who are not eligible for a subsidy.

  • In March of 2016 there were 7,520,939 people covered in the off-exchange individual health insurance market where subsidies are not available.

  • In March of 2017 5,361,451 were covered.

  • In March of 2018 4,004,522 were covered–a 47% drop in two years.

And, the Obamacare subsidies paid to consumers are hardly sustainable.

According to the CBO, the average Medicaid outlay for a non-disabled adult is $4,230–a program that virtually has no premiums and co-pays. But because the risk pool is so bad and therefore expensive in the Obamacare exchanges, the average subsidy cost for taxpayers is $6,300–and that doesn’t include what the consumer pays in premiums and out-of-pocket expenses for Obamacare coverage.

Why has the Obamacare individual market melted-down in these last two years? Because its premiums and deductibles are sky high–for all but the lowest income participants.

In Northern Virginia, for example, the cheapest 2019 Obamacare individual market Silver plan for a family of four (mom and dad age-40) making a subsidy eligible $65,000 a year costs $4,514. That plan has a $6,500 deductible meaning the family would have to spend $11,014 on eligible health care costs before collecting other than nominal first dollar benefits.

That same family, but making too much for a subsidy, as 40% of families do, and a typical family in the affluent Virginia 10th, would have to spend $19,484 in premiums plus a $6,500 deductible, for a total of $25,984 in eligible costs before they would collect any meaningful benefits.

That is from Robert Laszewski, with additional interesting points at the link.  Do see my earlier post on what does and does not make sense in Obamacare — the risk pool for the individual market simply isn’t big or robust enough.

Is the carbon tax idea dead?

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

And one striking result from Tuesday’s election is that voters in Washington state, a Democratic stronghold, soundly rejected a proposed carbon tax by a margin of 56 to 44 percent. This raises the prospect that the carbon tax may be dead as a policy for the time being, including at the state level. As my Bloomberg Opinion colleague Liam Denning writes: “We can debate the magnitude of the vaunted blue wave, but there was definitely no green wave.”

Like many economists, I have long supported the idea of a carbon tax, and still do. Government has to tax something. So why not tax those activities which generate social costs, in this case through disruptive climate change? It is a very intuitive argument that has persuaded many economists on both sides of the political spectrum.

But a carbon tax is just not a popular idea with American voters, of either party. It is hard to argue that the Republican Party or the conservative movement has a stranglehold over the politics of Washington state.

Furthermore, this defeat isn’t just a one-off. 2009’s American Clean Energy and Security Act — a cap-and-trade bill in Congress similar to a carbon tax in its essentials though not all of its exact mechanisms — failed even when Democrats controlled Congress and the presidency. The momentum in Canada, typically considered more left-wing than the U.S., also is running against carbon taxes. In 2014, Australia voted to repeal its carbon-pricing law. Washington state itself rejected an earlier carbon-tax proposal, coupled with a cut in the state sales tax, in 2016.

The broader data are striking. According to a World Bank estimate, 23 countries have carbon taxes of some kind, while 176 have targets or support for renewable energy alternatives. It’s hard to avoid the conclusion that the carbon tax just isn’t a big political winner.

There is much more at the link.

My Conversation with Eric Schmidt

Self-recommending, here is the audio and video.  Here is the video, here is one excerpt from the dialogue:

COWEN: So you receive an offer to run Google. Why were you so skeptical about Google at first?

SCHMIDT: Well, I assumed that search wasn’t very important, and I assumed the ads didn’t work. I was so concerned about the ads that, after I accepted the offer — because it just seemed like it was interesting, and a lot of luck comes from doing things that are interesting, and sort of creating your own luck — I hauled the then–sales executive, whose name was Tim Armstrong, who you all know well, and I said, “Tim, prove to me that these ads work.”

So they showed me a set of ads, and they looked pretty foolish to me. So I said, “Well, let’s go find the finance person,” of which there was one, and the accounting system was done on QuickBooks. I said, “Prove to me that people are paying for these ads,” and they did.

We then did an ads conversion in the first year, which was called Project Drano, where we basically took three different ads databases, which were simple compared to today’s databases, and merged them into one. And I was terrified, absolutely terrified that the ruse that we had — because we had fixed pricing on our ads — that people would discover that our ads were not worth anything.

So I organized what I called the cash restriction period, where the only thing you could do if you wanted to spend money, is you could only spend money on Friday at 10 AM, and you had to come to me to justify it, which very much shuts down spending.

So we get to this conversion, we turn the thing over, and of course, we didn’t bother to build into the tools. We had no metrics. We didn’t know what was going on. I’m going, “Oh my God, the company is bankrupt. My first year, I’ve done a terrible job. What will the board think?” I did my best to notify everybody we were going to go kaput.

The auction produced a price that was three times higher than the previous prices. Very interesting. So much for the cash restriction period, and the rest is history.

And from Eric:

We did all sorts of things. My favorite example is that we would interview people to death. We interviewed this one gentleman sixteen times, and we couldn’t decide. So I picked a random number, which was half, and I said, “We should have a max of eight, and if we can’t decide after eight . . .” We’ve since done a statistical analysis, and the answer today is four to five interviews.

And here is my bit on Eric:

COWEN: Now early on, you were an intern at Bell Labs, and also PARC, which belonged to Xerox, and I think of those two institutions as stemming from earlier glory years of American science.

Is it fair to think of your career as in some sense, you’re the person who spans those two eras, the Bell Labs-PARC era of doing things, and then the tech era of manipulating information, and that your ability to bring expertise from those two areas together is what has made you a unique figure? Is that a fair assessment of how you fit into the picture?

And there is this bit:

COWEN: How did it influence you having a father who was a famous economist? He wrote on balance of payments crises. What did you draw from him? Did that have a role in using so much economics in Google?

SCHMIDT: Well, what’s interesting is, I asked my father, “If you’re such a good economist, why are we not rich?”

I very much enjoyed doing this event, which was for Village Global, a new venture capital firm.  Here is a Village Global post on lessons from the event.

The elections

From Matt Yglesias on Twitter:

Very normal Democrats won all kinds of House races without reviving “blue dog” antics but also a bunch of reality checks for the capital-l Left in these results.

Not just a couple of House races where insurgent candidates fizzled, but the California rent control initiative the Washington “green new deal” initiative and the MD-Gov race all show limited appetite for ambitious left policy in even blue states.

Conversely, the more modest economic progressive agenda of Medicaid expansion and minimum wage increases continues to triumph even in very conservative states.

From Angus:

“over the past 21 midterm elections, the President’s party has lost an average 30 seats in the House, and an average 4 seats in the Senate” NY Times sez it’s R – 26 in House and + 2-5 in Senate. Yet they call it “A rebuke to Trump”. That’s kind of just wishful thinking.

Somehow — miraculously — democracy did not die, I am still writing blog posts for tomorrow morning, fascism has yet to arrive, and life goes on!

p.s. the youth vote was not up much.  And at least one Kremlin mole has been ousted.

Emergent Ventures grant recipients, the first cohort

Here is the first round of winners of the new Emergent Ventures initiative at Mercatus, led by me.  The list is ordered roughly in the order grants were made, and reflects no other prioritization.  All project descriptions are mine alone and should not be considered literal attributions of intent to the project applicants.  Here goes:

Anonymous grant for writing in Eastern Europe.

Pledged grant to San Francisco’s Topos House, conditional on finding a “social science prodigy” to live in the house for a while and interact with the other Topos fellows.  Topos is a San Francisco house where several tech prodigies live and periodically seminars and larger group interactions are held there or connected to the house.

Travel grant made to 18-year-old economics prodigy, to travel to San Francisco to meet with members of the “rationality community.”  The hope is to boost her career trajectory.

Grant to support the work of Mark Lutter and his Center for Innovative Governance Research, on charter cities and also an attempt to create a new charter city.

Grant to Harshita Aurora to help her pursue work in brain science, including brain-computer interfaces to help disabled people manipulate and move objects.  Harshita is a 17-year-old Indian prodigy, who first received attention for her programming work in the app space.  Harshita made her bio and proposal public: https://drive.google.com/file/d/1j5Zf2RIiKVUUZzJb6qGQdx2WmG7q4NS9/view

Leonard Bogdonoff has a project to scrape Instagram and create a searchable concordance of street art around the world.  His website is here and his blog is medium.com/@rememberlenny.  One use of this project is to amplify the voice of “protest art” against the constraints of censorship from autocratic governments, but it is also a new way to glean usable information from Instagram.

Travel and conference grant to Juan Pablo Villarino, from Argentina, sometimes called “the world’s greatest hitchhiker.”

Ben Southwood, public intellectual from England, support for his writing and research on why progress in science has slowed down.

Eric Lofgren has worked at the Pentagon for seven years and now will spend a year at Mercatus/George Mason to develop the skills, including blogging and podcasting, to become the nation’s leading public intellectual on defense procurement.

A two-year pledge to Gaurav Venkataraman, at University College of London, to support his doctoral work on the idea of RNA-based memory.  This research also has exciting implications for the design of artificial intelligence.

Joy Buchanan, economist, a grant to conduct research on why people become entrepreneurs and initiate start-ups, using the methods of experimental economics.

Michael Sonnenschein, Masters student at MIT in development economics (and a television screenwriter) a grant for research to reform and improve the Haitian lottery system, and turn it into a means to combat poverty.

Stefan Roots is writing and editing an on-line and also paper newspaper to cover local news in Chester, Pennsylvania, aimed at the African-American community.

Jeffrey Clemens, professor at UC San Diego, a grant to help him develop his on-line writing in economics.

Kelly Smith has a project to further extend and organize a parent-run charter school system in Arizona, Prenda, using Uber-like coordinating apps and “minimalist” educational methods.

David Perell, to encourage and support his work in podcasting and social media.

We are in the midst of processing several other awards as well, so do not worry if you are not yet mentioned.

I am delighted to welcome this very prestigious and accomplished “entering class” of Emergent Ventures fellows.  If you are considering applying, please note that we are interested in other topics and methods as well.

Gang update

From El Salvador (WSJ):

Politicians must ask permission of gangs to hold rallies or canvass in many neighborhoods, law-enforcement officials and prosecutors said. In San Salvador, the nation’s capital, gangs control the local distribution of consumer products, experts said, including diapers and Coca-Cola . They extort commuters, call-center employees, and restaurant and store owners. In the rural east, gangs threaten to burn sugar plantations unless farmers pay up.

At what point do we say the government has been replaced?  On the analytics:

“We’ve left behind the era of the cartel and the kingpin,” said Alejandro Hope, a security consultant in Mexico City. “Today, most violence in Latin America is the result of a new system that’s more diverse, harder to control, and much more local.”

In Brazil to the south (NYT):

In Rio de Janeiro state alone, more than 5,197 people have been killed this year — far more than the 3,438 civilians killed in conflict last year in Afghanistan, according to United Nations figures.

One-quarter of those may have been killed by the state, a sign of state weakness not strength.

One approach is to view all this as a problem to be solved, and surely there is something to that attitude.  Another approach, not mutually exclusive, is to view it as a problem that is getting harder to solve.