Samantha Power has a new and excellent book out, The Education of an Idealist: A Memoir, which I very much enjoyed. And so a Conversation with Tyler was in order, here is the audio and transcript, here is one bit:
COWEN: For a final closing segment, I just have some super simple questions about foreign policy again. Over the course of the last summer, Iran apparently seized two British tankers. There’ve been other incidents in the Strait of Hormuz in some way connected with Iran. From a game-theoretic point of view, why would they do this? Why does this make sense?
POWER: Well, the one thing that they would know that would give them some point of leverage is the extreme war fatigue within the United States, and really within the Western world. So, by upping the stakes, arguably — I mean, who knows why the hell they’re doing what they’re doing?
But by upping the stakes, they arguably could be sending a signal like, “You want to get in this game? It’s not as if we’re an island and you can just break the deal, penalize us gratuitously, penalize the people who are still trying to maintain the terms of the deal, and that there won’t be collateral consequences outside the nuclear space.”
Because the nuclear consequences, as they begin to enrich and violate the terms of the deal — having legitimately argued that we had violated the terms of the deal — the effects of those are not day-to-day effects in the news world. It’s a bit abstract for the public and even for policymakers. It’s an incremental abrogation.
But acts like this show that they have leverage, that they are active militarily in parts of the world where we have a vested interest in maintaining freedom of navigation. So I think they’re showing that they can hit in domains outside the nuclear domain. I think that is probably what they’re doing.
Here is another segment:
COWEN: In which ways do you feel your thought is in some manner still Irish in orientation in a way that would distinguish you from, say, American-born individuals?
POWER: It’s hard to know because I can’t run the counterfactual, so I don’t know what’s just because my mother is a physician and very empathetic toward her patients, and do I learn from that? Or am I moved by having come from a small country, at that time a poor country, that was sending —
COWEN: With a history of oppression, right?
POWER: With a history of oppression, with a history of the dignity of its people being trampled. Is that why I care so much about individual dignity? Again, I can’t run the history a different way.
COWEN: Very simple — are baseball games too long? Why not make it 7 innings?
POWER: Why not make it 12?
COWEN: It’s boring, right?
POWER: For you and, as it turns out, for others.
COWEN: For me. So many games are over 3 hours. Shouldn’t the game be 2 hours, 17 minutes?
We also cover her first impressions of America, being a wartime correspondent, China and Iraq, Star Wars vs. Star Trek, van Morrison vs. Bob Dylan, robot empires vs. robot umpires, her favorite novel, how personal one should get in a memoir and why, and German defense spending, among other topics.
Suppose we had stable money. It’s then obvious that long-term savers would prefer long-bonds to rolling over short bonds. If held to maturity, the long-bond guarantees a known rate of return and payout at the time it is bought while the rolling of short-term bonds exposes you to risk. Thus, in a regime of stable money, long-term savers should prefer long-bonds and the yield curve should normally be inverted. That’s the essence of an excellent post by John Cochrane:
If inflation is steady, long-term bonds are a safer way to save money for the long run. If you roll over short-term bonds, then you do better when interest rates rise, and do worse when interest rates fall, adding risk to your eventual wealth. The long-term bond has more mark-to-market gains and losses, but you don’t care about that. You care about the long term payout, which is less risky. (Throw out the statements and stop worrying.) So, in an environment with varying real rates and steady inflation, we expect long rates to be less than short rates, because short rates have to compensate investors for extra risk.
If, by contrast, inflation is volatile and real rates are steady, then long-term bonds are riskier. When inflation goes up, the short term rate will go up too, and preserve the real value of the investment, and vice versa. The long-term bond just suffers the cumulative inflation uncertainty. In that environment we expect a rising yield curve, to compensate long bond holders for the risk of inflation.
So, another possible reason for the emergence of a downward sloping yield curve is that the 1970s and early 1980s were a period of large inflation volatility. Now we are in a period of much less inflation volatility, so most interest rate variation is variation in real rates. Markets are figuring that out.
Most of the late 19th century had an inverted yield curve. UK perpetuities were the “safe asset,” and short term lending was risky. It also lived under the gold standard which gave very long-run price stability.
Technological innovation can create or mitigate risks of catastrophes—such as nuclear war, extreme climate change, or powerful artificial intelligence run amok—that could imperil human civilization. What is the relationship between economic growth and these existential risks? In a model of endogenous and directed technical change, with moderate parameters, existential risk follows a Kuznets-style inverted Ushape. This suggests we could be living in a unique “time of perils,” having developed technologies advanced enough to threaten our permanent destruction, but not having grown wealthy enough yet to be willing to spend much on safety. Accelerating growth during this “time of perils” initially increases risk, but improves the chances of humanity’s survival in the long run. Conversely, even short-term stagnation could substantially curtail the future of humanity. Nevertheless, if the scale effect of existential risk is large and the returns to research diminish rapidly, it may be impossible to avert an eventual existential catastrophe.
Bravo! 44 pp. of brilliant text, another 40 pp. of proofs and derivations, and rumor has it that Leopold is only 17 years old, give or take.
If you happen to know Leopold, please do ask him to drop me a line.
For the pointer I thank Pablo Stafforini.
That is the new and excellent book out by David Sorkin. I feel I have read many good books on Jewish history, and I don’t always see the marginal value of adding to that pile, but this one really delivered. Plenty more detail without losing any conceptual overview. Ever wonder what exactly happened to Jewish emancipation, and why, as the Napoleonic conquest of Europe was reversed? This is the place to go. By the way, in the middle of the eighteenth century there were more Jews in Curacao, Suriname and Jamaica than in all of the North American colonies combined.
You can order it here, worthy of my year-end “best non-fiction of the year” list.
On January 5, 1845, the Prussian cultural minister Karl Friedrich von Eichorn received a request from a group of six young men to form a new Physical Society in Berlin. By the time their statutes were approved in March, they numbered forty-nine and were meeting biweekly to discuss the latest developments in the physical sciences and physiology. They were preparing to write critical reviews for a new journal, Die Fortschritte der Physik (Advances in physics), and from the beginning they set out to define what constituted progress and what did not. Their success in this rather aggressive endeavor has long fascinated historians of science. In fields from thermodynamics, mechanics, and electromagnetism to animal electricity, ophthalmology, and psychophysics, members of this small group established leading positions in what only thirty years later had become a new landscape of physical science populated by large institutes and laboratories of experiment and precision measurement.
How was this possible? How could a bunch of twenty-somethings, without position or recognition, and possessed of little more than their outsized confidence and ambition, succeed in seizing the future? What were their resources?
That is the opening passage from M. Norton Wise, Aesthetics, Industry, and Science: Hermann von Helmholtz and the Berlin Physical Society.
That is the topic of my latest Bloomberg column, here is one bit:
In a nutshell, younger people today are very comfortable with a small screen and older people are not. Both younger and older people can be found staring at their phones for texts or email or directions, but the big difference comes in cultural consumption. According to one study, the median age of an American television viewer is about 56, whereas for mobile and computer video viewers the median age is 40. Forty percent of those viewers are between 13 and 34…
Just as many older people don’t grasp the import of YouTube, most younger people have a weak sense of the power of cinema on a large screen. It’s not entirely their fault. It’s relatively easy to see older movies on a big screen in London or Paris, and maybe in New York City and Los Angeles (and Silver Spring, Maryland, home to the American Film Institute). In most other places in America, it’s much more difficult.
Sadly, the world is rapidly becoming a place where cinematic history, as it was created for larger screens, no longer exists. Netflix, for all its wonders and diverse contemporary selection, is notoriously bad about making older movies available for streaming, and at any rate the service does not provide a properly large screen for those films.
There is much more at the link, and the economically-minded reader will note this is an application of the Alchian-Allen Theorem.
The growth of foreign trade was especially significant for Germany, which by the middle of the nineteenth century was among the world’s three leading exporters. The German export trade at the time was mostly in food and raw materials. As worldwide economic connections grew and Germany itself developed from an agricultural into an industrial nation, world trade became increasingly important as an agent of German prosperity. Between 1850 and 1913 German foreign trade increased on the average of 4% annually, even faster than overall economic production. As a result, Germany’s share in the volume of world trade had reached 13% in 1913, while the export quota of the German Reich amounted to 17.5% of total industrial production.
That is from Wilfried Feldenkirchen, Werner von Siemens: Inventor and International Entrepreneur.
To show their devotion to Murugan, the Hindu God of War, devotees in South India and Sri Lanka (all males) are pierced with large hooks and then hung on a festival float, as if they were toys on a nightmarish baby mobile. It’s an amazing and horrifying display not unlike Christian devotees in the Philippines who are nailed to crosses.
But what are the effects of these practices on those who undergo them? Surprisingly, positive. In, Xygalatas et al. (2019), Effects of Extreme Ritual Practices on Psychophysiological Well-Being, a group of anthropologists, biologists and religious studies scholars compared measures of physiological, psychological and social well being in a small group of devotees compared to a matched sample. The group performing the ritual had no long lasting health harms but did appear to benefit psychologically through feelings of euphoria and greater self-regard and socially through higher status.
Despite their potential risks, extreme rituals in many contexts are paradoxically associated with health and healing (Jilek 1982; Ward 1984). Our findings suggest that within those contexts, such rituals may indeed convey certain psychological benefits to their performers. Our physiological measurements show that the kavadi is very stressful and high in energetic demands (fig. 2C, 2D). But the ostensibly dangerous ordeal had no detectable persistent harmful effects on participants, who in fact showed signs of improvement in their perceived health and quality of life. We suggest that the effects of ritual participation on psychological well-being occur through two distinct but mutually compatible pathways: a bottom-up process triggered by neurological responses to the ordeal and a top-down process that relies on communicative elements of ritual performance (Hobson et al. 2017).
Specifically, the bottom-up pathway involves physical aspects of ritual performance related to emotional regulation. Ritual is a common behavioral response to stress (Lang et al. 2015; Sosis 2007), and anthropological evidence shows that in many cultures dysphoric rituals involving intense and prolonged exertion and/or altered states of consciousness are considered as efficient ways of dealing with various illnesses (Jilek 1982). In our study, those who suffered from chronic illnesses engaged in more painful forms of participation by enduring more piercings. Notably, higher levels of pain during the ritual were associated with improvements in self-assessed health post-ritual. Although the pain was relatively short-lived, there is evidence that the social and individual effects of participation can be long-lasting (Tewari et al. 2012; Whitehouse and Lanman 2014).
The sensory, physiological, and emotional hyperarousal involved in strenuous ordeals can produce feelings of euphoria and alleviation from pain and anxiety (Fischer et al. 2014; Xygalatas 2008), and there is evidence of a neurochemical basis for these effects via endocrine alterations in neurotransmitters such as endorphins (Boecker et al. 2008; Lang et al. 2017) or endocannabinoids (Fuss et al. 2015). These endocrine effects are amplified when performed collectively, as shown by studies of communal chanting, dancing, and other common aspects of ritual (Tarr et al. 2015). While it is uncertain how long-lasting these effects are, such euphoric experiences may become self-referential for future well-being assessment.
At the same time, a top-down pathway involves social-symbolic aspects of ritual. Cultural expectations and beliefs in the healing power of the ritual may act as a placebo (McClenon 1997), buffering stress-induced pressures on the immune system (Rabin 1999). In addition, social factors can interact with and amplify the low-level effects of physiological arousal (Konvalinka et al. 2011). Performed collectively, these rituals can provide additional comfort through forging communal bonds, providing a sense of community and belonging, and building social networks of support (Dunbar and Shultz 2010; Xygalatas et al. 2013). The Thaipusam is the most important collective event in the life of this community, and higher investments in this ritual are ostensibly perceived by other members as signs of allegiance to the group, consequently enhancing participants’ reputation (Watson-Jones and Legare 2016) and elevating their social status (Bulbulia 2004; Power 2017a). Multiple lines of research suggest that individuals are strongly motivated to engage in status-seeking efforts (Cheng, Tracy, and Henrich 2010; Willard and Legare 2017) and that there is a strong positive relationship between social rank and subjective well-being (Anderson et al. 2012; Barkow et al. 1975). Indeed, we found that individuals of lower socioeconomic status were more motivated to invest in the painful activities that can function as costly signals of commitment. Recent evidence from a field study in India shows that those who partake in these rituals indeed reap the cooperative benefits that result from increased status (Power 2017b).
In addition, the cost of participation can have important self-signaling functions. On the one hand, it can boost performers’ perceived fitness and self-esteem, which positively affects mental health (Barkow et al. 1975). On the other hand, through a process of effort justification, such costs can strengthen one’s attachment to the group and sense of belonging (Festinger 1962; Sosis 2003). This role of costly rituals in generating positive subjective states (Bastian et al. 2014b; Fischer et al. 2014; Wood 2016) and facilitating social bonding (Bastian, Jetten, and Ferris 2014a; Whitehouse and Lanman 2014) may offer insights into the functions of painful religious practices.
The mind has an amazing ability to turn what would be torture under some scenarios into something else.
Hat tip: Kevin Lewis.
That is a new paper from Anselm Hager and Hanno Hilbig, here is the abstract:
Why are some societies more unequal than others? The French revolutionaries believed unequal inheritances among siblings to be responsible for the strict hierarchies of the ancien régime. To achieve equality, the revolutionaries therefore enforced equal inheritance rights. Their goal was to empower women and to disenfranchise the noble class. But do equal inheritances succeed in leveling the societal playing field? We study Germany—a country with pronounced local‐level variation in inheritance customs—and find that municipalities that historically equally apportioned wealth, to this day, elect more women into political councils and have fewer aristocrats in the social elite. Using historic data, we point to two mechanisms: wealth equality and pro‐egalitarian preferences. In a final step, we also show that, counterintuitively, equitable inheritance customs positively predict income inequality. We interpret this finding to mean that equitable inheritances level the playing field by rewarding talent, not status.
The potentially surprising bit in there is “equitable inheritance customs positively predict income inequality,” emphasis added by this blogger.
For the pointer I thank the excellent Kevin Lewis.
The author is Eugene McCarraher, and the subtitle of this Belknap Press book is How Capitalism Became the Religion of Modernity. Here is one excerpt:
The world does not need to be re-enchanted, because it was never disenchanted in the first place. Attending primarily to the history of the United States, I hope to demonstrate that capitalism has been, as Benjamin perceived, a religion of modernity, one that addresses the same hopes and anxieties formerly entrusted to traditional religion. But this does not mean only that capitalism has been and continues to be “beguiling” or “fetishized,” and that rigorous analysis will expose the phantoms as the projections they really are. These enchantments draw their power, not simply from our capacity for delusion., but from our deepest and truest desires — desires that are consonant and tragically out of touch with the dearest freshness of the universe. The world can never be disenchanted, not because our emotional or political or cultural needs compel us to find enchantments — though they do — but because the world itself, as Hopkins realized, is charged with the grandeur of God…
However significant theology is for this book, I have relied on a sizable body of historical literature on the symbolic universe of capitalism. Much of this work suggests that capitalist cultural authority cannot be fully understood without regard to the psychic, moral, and spiritual longings inscribed in the imagery of business culture.
I remain wedded to the traditional Weberian view that capitalism represents a discrete break away from such modes of thought, and I believe this perspective supported by the work of Joe Henrich and co-authors on WEIRD. Nonetheless, this is a book of note, and it has a clearly stated thesis on matters of direct relevance to what is explored on Marginal Revolution. Due out in November, pre-order at the link above.
Here is the audio and video, here is part of the CWT summary:
Now a dean at Sonoma State University, Robbins joined Tyler to discuss 19th-century life and literature and more, including why the 1840s were a turning point in US history, Harriet Beecher Stowe’s Calvinism, whether 12 Years a Slave and Django Unchained are appropriate portraits of slavery, the best argument for reparations, how prepaid postage changed America, the second best Herman Melville book, why Ayn Rand and Margaret Mitchell are ignored by English departments, growing up the daughter of a tech entrepreneur, and why teachers should be like quarterbacks.
Here is one excerpt:
COWEN: You’ve written a good deal on the history of the postal service. How did the growth of the postal service change romance in America?
ROBBINS: Well, everybody could write a letter. [laughs] In 1844 — this was the other exciting thing that happened in the 1840s. Rowland Hill in England changed the postal service by inventing the idea of prepaid postage. Anybody could buy a stamp, and then you’d put the stamp on the letter and send the letter.
Prior to that, you had to go to the post office. You had to engage with the clerk. After the 1840s and after prepaid postage, you could just get your stamps, and anybody could send a letter. In fact, Frederick Douglass loved the idea of prepaid post for the ability for the enslaved to write and send letters. After that, people wrote letters to each other, letters home, letters to their lovers, letters to —
COWEN: When should you send a sealed letter? Because it’s also drawing attention to itself, right?
ROBBINS: Well, envelopes — it’s interesting that envelopes, sealed envelopes, came about 50 years after the post office became popular, so you didn’t really have self-sealing envelopes until the end of the 19th century.
COWEN: That was technology? Or people didn’t see the need for it?
ROBBINS: Technology, the idea of folding the envelope and then having it be gummed and self-sealing. There were a number of patents, but they kept breaking down. But technology finally resolved it at the end of the 19th century.
Prior to that, you would write in code. Also, paper was expensive, so you often wrote across the page horizontally and then turned it to the side and crossed the page, writing in the other direction. If somebody was really going to snoop on your letters, they had to work for it.
COWEN: On net, what were the social effects of the postal service?
ROBBINS: Well, communication. The post office and the need for the post office is in our Constitution.
COWEN: It was egalitarian? It was winner take all? It liberated women? It helped slaves? Or what?
ROBBINS: All those things.
COWEN: All those things.
ROBBINS: But yeah, de Tocqueville mentioned this in his great book in the 1830s that anybody — some farmer in Michigan — could be as informed as somebody in New York City.
COWEN: Margaret Mitchell or Ayn Rand?
ROBBINS: Well, it’s interesting that two of the best-selling novelists of the 20th-century women are both equally ignored by English departments in universities. Margaret Mitchell and Gone with the Wind is paid attention to a little bit just because, as I said, it’s something that literature and film worked against, but not Ayn Rand at all.
COWEN: What’s a paradigmatic example of a movie made better by a good soundtrack?
ROBBINS: The Pink Panther — Henry Mancini’s score. The movie is ridiculous, but Henry Mancini’s score — you’re going to be humming it now the rest of the day.
COWEN: What is the Straussian reading of Babar the Elephant?
ROBBINS: When’s the last time you read it?
COWEN: Not long ago.
That is the new and forthcoming book by New York Times writer Binyamin Appelbaum. I did not agree with all of the perspectives in the book, but enjoyed reading it, and found no errors of fact in it (rare for a book on free market economics!). I was happy to give it this blurb:
“I very much enjoyed reading The Economists’ Hour, an entertaining and well-written look at how market-oriented ideas rose from the academy and transformed nations. I do not agree with each and every perspective, but found this a valuable and highly recommendable book, which I devoured in a single sitting.”
The text even covers Walter Oi, who is arguably the most accomplished blind economist to have lived. Lots more on Laffer, Friedman, Alfred Kahn, Aaron Director, Thomas Schelling, the Chile episode, and more.
Are there systematic trends around the world in levels of creativity, aggressiveness, life satisfaction, individualism, trust, and suicidality? This article suggests a new field, latitudinal psychology, that delineates differences in such culturally shared features along northern and southern rather than eastern and western locations. In addition to geographical, ecological, and other explanations, we offer three metric foundations of latitudinal variations: replicability (latitudinal gradient repeatability across hemispheres), reversibility (north-south gradient reversal near the equator), and gradient strength (degree of replicability and reversibility). We show that aggressiveness decreases whereas creativity, life satisfaction, and individualism increase as one moves closer to either the North or South Pole. We also discuss the replicability, reversibility, and gradient strength of (a) temperatures and rainfall as remote predictors and (b) pathogen prevalence, national wealth, population density, and income inequality as more proximate predictors of latitudinal gradients in human functioning. Preliminary analyses suggest that cultural and psychological diversity often need to be partially understood in terms of latitudinal variations in integrated exposure to climate-induced demands and wealth-based resources. We conclude with broader implications, emphasizing the importance of north-south replications in samples that are not from Western, educated, industrialized, rich, and democratic (WEIRD) societies.
Here is the article, via several MR readers.
That is what I serve up in my Bloomberg column, note it is a reminder more than a modal prediction. Here is one excerpt:
Is the rest of the world getting China wrong yet again? Maybe the country is not doomed to live out unending top-down rule. What is history, after all, but the realization of the wills of countless unpredictable human beings.
Past mistakes about China are too numerous to mention.
A list then follows. And:
But has China suddenly become so predictable? Are events there now no longer contingent on the exercise of human will? Modern China is one of the most unusual and surprising societies humankind has created. There are no good models for it, nor are there data from comparable historical situations.
There is, unfortunately, a tendency for Westerners to impose superficial narratives on China and the Chinese, often based on scant observation.
For myself, I don’t have a coherent story about how the Chinese might move to greater liberty in the next 10 to 15 years. But I do think the actions of the current regime can be read as signs of vulnerability rather than entrenchment. Taiwan and Hong Kong, despite its current crisis, remain strong examples of the benefits of liberalization. Meanwhile, the notion of the internet — even with censorship — as a liberalizing force has been too quickly dismissed, especially in an America that has fallen out of love with Big Tech.
Which leads to a reality even deeper than China’s unpredictability: people’s continuing capacity to respond to current events and shape their futures for the better. As you listen, watch and read about China, keep in mind this essential human quality.
There is much more at the link.
Chinese national identity has long been considered to have been an obstacle to Singapore’s nation-building efforts. This is mainly because China was suspected of using its ethnic links to encourage Singapore’s communist rebellions during the 1950s and 1960s as Lee Kuan Yew was working towards establishing the city state. This study reviews Lee’s exchanges with Beijing and argues that he gave China the impression that he was building an anticolonial, pro-China nation. Beijing therefore responded positively to Lee’s requests for support. Reiterating its overseas Chinese policy to Lee, Beijing sided with him against his political rivals and even acquiesced in his suppression of Chinese-speaking “communists.” In addition, China boosted Lee’s position against Tunku Abdul Rahman, supported Singapore’s independence and lobbied Indonesia to recognize the territory as a separate state. China thus actually played a helpful role in Singapore’s nation building.