Category: Law

My Conversation with Yasheng Huang

by  Tyler Cowen in

Here is the audio, video, and transcript, Yasheng is a China scholar and a professor at MIT.  Here is part of the episode summary:

Yasheng joined Tyler to discuss China’s lackluster technological innovation, why declining foreign investment is more of a concern than a declining population, why Chinese literacy stagnated in the 19th century, how he believes the imperial exam system deprived China of a thriving civil society, why Chinese succession has been so stable, why the Six Dynasties is his favorite period in Chinese history, why there were so few female emperors, why Chinese and Chinese Americans have less well becoming top CEOs of American companies than Indians and Indian Americans, where he’d send someone on a two week trip to China, what he learned from János Kornai, and more.

And an excerpt:

COWEN: Now, in your book, you write of what you call Tullock’s curse— Gordon Tullock having been my former colleague — namely, embedded succession conflict in an autocracy. Why has Chinese succession been so stable up to now? And will we see Tullock’s curse whenever Xi steps down, passes on, whatever happens there?

HUANG: I do want to modify the word that you use, stable. There are two ways to use that term. One is to describe the succession process itself. If that’s the situation we’re trying to describe, it is not stable at all. If you look at the entire history of the PRC, there have been so many succession plans that failed, and at a catastrophic level. One potential successor was persecuted to death. Another fled and died in a plane crash. Others were unceremoniously dismissed, and one was put under house arrest for almost 15 years, and he died —

COWEN: But no civil war, right?

HUANG: Yes, that’s right.

COWEN: No civil war.

HUANG: That’s right. There’s another way to talk about stability, which is stability at the system level, and that, you are absolutely right. Despite all these problems with these successions, the system as a whole has remained stable. The CCP is in power. There’s no coup, and there were not even demonstrations on the street associated with the succession failures. So, we do need to distinguish between these two kinds of stability. By one criterion, it was not stable. By the other criterion, it is quite stable.

The reason for that is, I think — although it’s a little bit difficult to generalize because we don’t really have many data points — one reason is the charisma power of individual leaders, Mao and Xiaoping. These were founding fathers of the PRC, of the CCP, and they had the prestige and — using Max Weber’s term — charisma, that they could do whatever they wanted while being able to contain the spillover effects of their mistakes. The big uncertain issue now is whether Xi Jinping has that kind of charisma to contain future spillover effects of succession failure.

This is a remarkable statistic: Since 1976, there have been six leaders of the CCP. Of these six leaders, five of them were managed either by Mao or by Deng Xiaoping. Essentially, the vast majority of the successions were handled by these two giants who had oversized charisma, oversized prestige, and unshakeable political capital.

Now we have one leader who doesn’t really have that. He relies mostly on formal power, and that’s why he has accumulated so many titles, whereas he’s making similar succession errors as the previous two leaders.

Obviously, we don’t know — because he hasn’t chosen a successor — we don’t really know what will happen if he chooses a successor. But my bet is that the ability to contain the spillover effect is going to be less, rather than more, down the road, because Xi Jinping does not match, even in a remote sense, the charisma and the prestige of Mao Zedong and Deng Xiaoping. There’s no match there.

Recommended.  And I am happy to recommend Yasheng Huang’s forthcoming book The Rise and Fall of the East.

Pre-order here: https://www.amazon.com/dp/0300266367?ref_=cm_sw_r_cp_ud_dp_CXCHDSQB8JBKEXM4J5BE

Dollars, dollars, everywhere…

by  Tyler Cowen in

As if the dual currency exchange is not enough to contend with, Argentina has around 15 different exchange rates, including a “soy dollar” for soy exports, a “Qatar dollar” for Argentine tourists travelling to the World Cup last year, and even the “Coldplay dollar”, a special exchange rate for paying foreign entertainers that made a name for itself when the band had a string of sellout concerts last year.

Here is more from the FT, via Tom V.,

Britain’s Long Timeline of Housing Decline

by  Alex Tabarrok in

In 1947 the British Town and Country Planning Act made planning permission a requirement for land development; ownership alone no longer conferred the right to develop the land. A decline in construction was predictable but housing is a durable good. Even today more than a third of the British housing stock dates to before 1947. So it has taken time but, according to a new study, the act has had a slow but long-run depressing effect on construction with the result that today the average house in England costs more than ten times the average salary.

Britain has a severe housing crisis, especially in the most prosperous places in the Greater South East. Across England, the average house costs more than ten times the average salary, vacancy rates are below 1 per cent, and space per person for private renters has dropped substantially in recent decades.

This report explores the root cause of the UK’s housing problem, how policy in this area has developed over the last 75 years, and what action policymakers need to take to deliver enough homes in the UK.

…This report uses this new data and other sources to compare British housebuilding and outcomes to that in Ireland, France, Belgium, the Netherlands, (West) Germany, Austria, Switzerland, Denmark, Sweden, Norway, and Finland from 1955 to 2015. It finds that Britain’s housing shortage began at the beginning of the post-war period…

Housebuilding rates in England and Wales have dropped by more than a third after the introduction of the Town and Country Planning Act 1947, from 2 per cent growth per year between 1856 and 1939 to 1.2 per cent between 1947 and 2019.

This has been a key factor behind the UK’s long-standing housing crisis, which has led to inflated property prices and soaring rents in recent decades.

No Respect for Diversity of Opinion or Choice

by  Alex Tabarrok in

David Zweig notes an important correlation:

The colleges with the most stifling atmospheres for speech also have the most aggressive Covid vaccine policies. The colleges that most welcome and protect a free exchange of ideas, in turn, have the least intrusive vaccine requirements.

Number 1 ranked [on Fire’s Free Speech Index, AT] Chicago has no vaccine mandate at all. The university merely “strongly recommends” Covid vaccination. Numbers 2, 3, 4, and 5 on the list – Kansas State, Purdue, Mississippi State, and Oklahoma State – do not require any Covid vaccination either. They do each highly encourage vaccination, though.

At the bottom, Columbia not only requires the primary series for its students, but also requires the most recent bivalent booster. Ditto for second-to-last place Penn. For the many students who received an initial booster early on, this means a requirement of four doses. Rounding out the worst five colleges for free speech, Rensselaer Polytechnic Institute, Georgetown, and Skidmore also mandate all students be boosted. Though compared to Columbia and Penn they are relatively lax, only requiring “a booster,” meaning the third shot could have been from a long while ago, and not necessarily the bivalent.

Why are the colleges with the worst limits on free speech also the worst for limiting bodily autonomy?

Columbia and its ilk had a history of liberalism which, as is well-known now, has recently morphed into a more stifling form of modern progressivism that doesn’t tolerate dissent. The political tribalism that demands in-group thinking also demands in-group behavior — during, and now exiting the pandemic, the more extreme that one reacted toward Covid, the more one demonstrated their membership in the left wing. (Being double masked and triple vaxxed was for a long time a progressive identity marker.) Quite simply, an extreme vaccination policy, out of step with much of the world yet perfectly accepted in progressive America, announces one’s institution as an unimpeachable member of the tribe.

That there is an association between respect toward free speech and respect toward bodily autonomy — or a lack thereof for each — at academic institutions shouldn’t surprise anyone. Both reflect attitudes either in agreement with or against a libertarian ideal of individual freedom. But the degree of correlation is still disheartening.

…It is an embarrassment that policies at many of our most elite institutions of higher education are the most divorced from scientific evidence, and are now, finally, even alienating mainstream liberals. FIRE’s free speech rankings, alas, help explain how we got to this place.

We live in a diverse society and that requires respect. Unfortunately, at some of our nation’s top universities there is no respect for diversity of opinion or choice.

Incentives matter, edition #4637

by  Tyler Cowen in

Many developed countries currently both face and resist strong migratory pressure, fueling irregular migration. The Central Mediterranean Sea is among the most dangerous crossings for irregular migrants in the world. In response to mounting deaths, European nations intensified search and rescue operations in 2013. We develop a model of irregular migration to identify the effects of these operations. Leveraging exogenous variation from rapidly varying crossing conditions, we find that smugglers responded by sending boats in adverse weather and shifting from seaworthy boats to flimsy rafts. As a result, these operations induced more crossings in dangerous conditions, ultimately offsetting their intended safety benefits due to moral hazard and increasing the realized ex post crossing risk for migrants. Despite the increased risk, these operations likely increased aggregate migrant welfare; nevertheless, a more successful policy should instead restrict the supply of rafts and expand legal alternatives for migration.

While I agree with that policy recommendation, I say good luck with that one.  “Not enough people are dying” is what one of those harsh, old school economists might have said instead.  Good thing we got rid of them.

In any case, that article is by Claudio Deiana, Vikram Maheshri, and Giovanni Mastrobuoni, forthcoming in the American Economic Journal (Economic Policy), with the title being “Migrants at Sea: Unintended Consequences of Search and Rescue Operations.”

On a land tax, from the comments

by  Tyler Cowen in

A land tax in its purest form will never survive contact with political reality. To implement it you have to tell people that own their own homes that they are in fact renting them from the government, and at rates which depend on how much other people covet their land. This may be economically incorrect but it is how opposition will play out.

Furthermore, determining land values as distinct from property values in highly built-up areas with strong planning constraints (e.g. the UK) is an exercise in guesswork. You cannot realistically disentangle the value of the land from the actual and likely permissions on that land. The valuation process will be intensely political, prone to corruption, and any modelling easily manipulated by how exemplars are chosen. In the UK at least it would be a bloodbath.

That is from Sonofid.  And from dan1111:

So much hand wringing over NYC and San Francisco, and treating this as the standard “urban” case.

Meanwhile, 90% of US cities feature depressed urban cores with very cheap, under-used land. Maybe figuring out how to make more US cities desirable is the low hanging fruit? And there is plenty of comparative study that can be done, since some cities have been better at rebounding than others.

My Conversation with Glenn Loury

by  Tyler Cowen in

Moving throughout, here is the audio, video, and transcript.  Here is part of the summary:

Economist and public intellectual Glenn Loury joined Tyler to discuss the soundtrack of Glenn’s life, Glenn’s early career in theoretical economics, his favorite Thomas Schelling story, the best place to raise a family in the US, the seeming worsening mental health issues among undergraduates, what he learned about himself while writing his memoir, what his right-wing fans most misunderstand about race, the key difference he has with John McWhorter, his evolving relationship with Christianity, the lasting influence of his late wife, his favorite novels and movies, how well he thinks he will face death, and more.

Here is one excerpt:

COWEN: What’s your favorite Thomas Schelling story?

LOURY: [laughs] This is a story about me as much as it is about Tom Schelling. The year is 1984. I’ve been at Harvard for two years. I’m appointed a professor of economics and of Afro-American studies, and I’m having a crisis of confidence, thinking I’m never going to write another paper worth reading again.

Tom is a friend. He helped to recruit me because he was on the committee that Henry Rosovsky, the famous and powerful dean of the college of the Faculty of Arts and Sciences at Harvard, who hired me — the committee that Rosovsky put together to try to find someone who could fill the position that I was hired into: professor of economics and of Afro-American Studies. They said Afro-American in those years.

Tom was my connection. He’s the guy who called me up when I was sitting at Michigan in Ann Arbor in early ’82, and said, “Do you think you might be interested in a job out here?” He had helped to recruit me.

So, I had this crisis of confidence. “Am I ever going to write another paper? I’m never going to write another paper.” I’m saying this to Tom, and he’s sitting, sober, listening, nodding, and suddenly starts laughing, and he can’t stop, and the laughing becomes uncontrollable. I am completely flummoxed by this. What the hell is he laughing at? What’s so funny? I just told him something I wouldn’t even tell my wife, which is, I was afraid I was a failure, that it was an imposter syndrome situation, that I could never measure up.

Everybody in the faculty meeting at Harvard’s economics department in 1982 was famous. Everybody. I was six years out of graduate school, and I didn’t know if I could fit in. He’s laughing, and I couldn’t get it. After a while, he regains his composure, and he says, “You think you’re the only one? This place is full of neurotics hiding behind their secretaries and their 10-foot oak doors, fearing the dreaded question, ‘What have you done for me lately?’ Why don’t you just put your head down and do your work? Believe me, everything will be okay.” That was Tom Schelling.

COWEN: He was great. I still miss him.

And the final question:

COWEN: Very last question. Do you think you will do a good job facing death?

Interesting and revealing throughout.

This is actually quite a common attitude toward science

by  Tyler Cowen in

On Christmas morning, Scarlett Doumato took a break from playing with her new toys, marched into the kitchen, returned with plastic bags and started collecting evidence — the half-eaten Oreo and a pair of munched-on carrots she’d left for Santa and his reindeer the night before.

Scarlett, a 10-year-old from Cumberland, R.I., could see teeth marks in both. But neither she nor her parents could prove that the person who ate the cookie was Santa or that the reindeer were the ones that chomped on the baby carrots.

Scarlett decided to call for backup.

A few days later, the fourth-grader sent the evidence she’d collected to local police with a letter explaining her investigative methodology and what she was trying to find out: “Dear Cumberland Police department, I took a sample of a cookie and carrots that I left for Santa and the raindeer on christmas eve and was wondering if you could take a sample of DNA and see if Santa is real?”

Here is the full story by Jonathan Edwards, via the excellent Kevin Lewis.

The medical culture that is Britain

by  Tyler Cowen in

Universities have been told they must limit the number of medical school places this year or risk fines, a move attacked as “extraordinary” when the NHS is struggling with staff shortages.

Medical schools have been told to curtail offers to ensure that there is “no risk” of them accepting more would-be doctors than permitted by a government cap, with universities saying they are likely to offer fewer places than normal to sixth-formers this year.

Ministers have been criticised for holding firm to a 7,500 cap on new medical students in England while also acknowledging that a chronic shortage of doctors and nurses is contributing to long delays for NHS treatment.

Robert Halfon, the universities minister, wrote to vice-chancellors last week telling them to limit their offers to sixth-formers, causing frustration among universities, which face fines of £100,000 per student for persistent over-recruitment. Universities say that in the summer, they were forced to reject students for administrative reasons such as submitting vaccine certificates late to stay within permitted numbers.

Here is more from the Times of London (gated).  Perhaps Tyrone approves!

The wisdom of Alex Tabarrok

by  Tyler Cowen in

This will in relative terms help the larger, better established researchers, right?  And how will it handle GDPR, the right to be forgotten, data storage under EU law, and so on?  What is the chance this has all been thought through properly?

The economics of non-competes

by  Tyler Cowen in

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

The value of noncompete clauses is easy to illustrate. Say you run a hedge fund. Many members of your trading team will have partial access to your firm’s trading secrets, and if they leave they can take those secrets with them. In the absence of noncompete agreements, firms would be more likely to “silo” information — becoming less efficient and less able to pay higher wages.

Nondisclosure agreements for workers in such positions are common, but they are difficult to enforce — making noncompete agreements more relevant. How exactly might you find out if some other newly created hedge fund is using your trading algorithms?

Or say you are a sales company with a customer list, or a nonprofit with a donor list. An employee who sees those lists could use that information to start a competing business, or take that information to competitors. It seems reasonable in such cases to restrict the ability of employees to “jump ship.”

If noncompetes are banned outright, to repeat, the effect will be less information-sharing within the company. New workers in particular, who have not demonstrated their long-term loyalty, will have a hard time getting access to information and getting ahead. More senior employees will have the advantage, hardly a formula for boosting economic opportunity.

I call for federalism and piecemeal regulation of the practice, not the all-out federal ban proposed by Lina Khan’s once again overreaching FTC.