Category: Political Science
That is the theme of my latest Bloomberg column, here is one excerpt:
More than 10 million people die each year from air pollution, according to a new study — far more than the estimated 2.6 million people who have died from Covid-19 since it was detected more than a year ago. And while Covid is headline news, ordinary air pollution remains a side issue for policy wonks and technocrats.
[To be clear, I am not seeking to minimize Covid as a major issue.] And:
Why aren’t these deaths a bigger issue in U.S. political and policy discourse? One reason may be that 62% of those deaths are in China and India. The number of premature deaths due to particulate matter in North America was 483,000, just slightly lower than the number of measured deaths from Covid to date. An estimated 876 of those deaths were of children under the age of 4.
Another reason for the weak political salience of the issue may be its invisibility. Air pollution causes many deaths. But it is rare to see or read about a person dying directly from air pollution. Lung cancer and cardiac disease are frequently cited as causes of death, even though they may stem from air pollution.
Another problem is that the question of how to better fight air pollution does not fit neatly into current ideological battles. You might think Democrats would emphasize this issue, but much of the economic burden of tougher action would fall on the Northeast, a largely Democratic-leaning area.
And exactly how many people die each year from global warming? Why not have a greater focus on ordinary air pollution?
Here is the audio, transcript, and video. So many good parts it is hard to excerpt, here is part of the summary:
John joined Tyler to apply that habit of mind to a number of puzzles, including why real interest rates don’t equalize across countries, what explains why high trading volumes and active management persist in finance, how the pandemic has affected his opinion of habit formation theories, his fiscal theory of price level and inflation, the danger of a US sovereign debt crisis, why he thinks Bitcoin will eventually die, his idea for health-status insurance, becoming a national gliding champion, how a Renaissance historian for a father and a book translator for a mother shaped him intellectually, what’s causing the leftward drift in economics, the need to increase competition among universities, how he became libertarian, the benefits of blogging, and more.
Here is one bit from John:
COCHRANE: You ask two questions here. One is active management, and the other is trading. I’d like to distinguish them. It’s a puzzle in the Chicago free market sense.
Let me ask your question even more pointedly. If you believe in efficient markets, and you believe in competition, and things work out right, we’ve scientifically proven since the 1960s, that high-fee active managers don’t earn any more than a proverbial monkey throwing darts in a well-managed slow index. So why do people keep paying for high-fee active management?
Chicago free market — we’re not supposed to say, “Oh, people are dumb for 40 years — 50 years now,” [laughs] but there’s a lot of it. It’s one of those things. Active management is slowly falling away. The move towards passive index investment is getting stronger and stronger.
There’s a strong new literature, which I’ll point to. My colleague here, Jonathan Berk, has written some good articles on it. This is the puzzle of efficient markets. If everybody indexed, markets couldn’t be efficient because no one’s out there getting the information that makes markets efficient. Markets have to be a little inefficient, and somebody has to do the trading.
Your second question is about trading. Why is there this immense volume of trading? When was the last time you bought or sold a stock? You don’t do it every 20 milliseconds, do you? [laughs]
I’ll highlight this. If I get my list of the 10 great unsolved puzzles that I hope our grandchildren will have figured out, why does getting the information into asset prices require that the stock be turned over a hundred times? That’s clearly what’s going on. There’s this vast amount of trading, which is based on information or opinion and so forth. I hate to discount it at all just as human folly, but that’s clearly what’s going on, but we don’t have a good model.
Here goes, here is one good excerpt of many:
Isaac Asimov’s New Guide to Science. I read that when I was 13 or 14 and thought it was just amazing. (I was an exchange student in Germany at the time. I didn’t learn much German but I did have my eyes opened to many aspects of science that I previously knew nothing about!) Some of John Gribbin’s books, like In Search of Schrödinger’s Cat, really inspired me. Douglas Hofstadter — especially Metamagical Themas. (I read GEB when I was a teenager but found it a bit of a slog.) But, honestly, I think I was always interested in creating technology to some extent. I spent hours and hours playing with Lego when I was young and then transitioned pretty quickly to programming. I remember being pretty certain that I’d love programming before I’d ever written a line of code and, sure enough, I did. So, maybe it’s just something about how my mind is wired.
Overall, my single biggest science policy suggestion would be to pursue far greater structural diversity in our mechanisms. More different kinds of grant making institutions, more different kinds of research organizations, more different career paths for participants, etc. That’s not easy to do — bureaucracies by their nature seek to standardize which this fosters homogeneity. So, to the extent that the Endless Frontier Act can bring us closer to a more structurally varied world, I’m probably supportive relative to the status quo. My biggest qualm would probably be that it combines regional development policy with scientific policy. While the political merit is easy to see, I’m not sure that that’s a good idea. Talent clusters are real and I think it probably makes more sense to think about how best to improve those clusters than it does to foster underdog competitors.
Recommended, interesting throughout.
Ubiquitous facial recognition technology can expose individuals’ political orientation, as faces of liberals and conservatives consistently differ. A facial recognition algorithm was applied to naturalistic images of 1,085,795 individuals to predict their political orientation by comparing their similarity to faces of liberal and conservative others. Political orientation was correctly classified in 72% of liberal–conservative face pairs, remarkably better than chance (50%), human accuracy (55%), or one afforded by a 100-item personality questionnaire (66%). Accuracy was similar across countries (the U.S., Canada, and the UK), environments (Facebook and dating websites), and when comparing faces across samples. Accuracy remained high (69%) even when controlling for age, gender, and ethnicity. Given the widespread use of facial recognition, our findings have critical implications for the protection of privacy and civil liberties.
Here is more from Michal Kosinki, published in a journal which is an offshoot of Nature.
STAT is reporting a ‘scandal’:
The Trump administration quietly took around $10 billion from a fund meant to help hospitals and health care providers affected by Covid-19 and used the money to bankroll Operation Warp Speed contracts, four former Trump administration officials told STAT.
The NYTimes tried to create a similar scandal back in June when it reported on a diversion of funds to OWS from lung treatment research.
Coronavirus Attacks the Lungs. A Federal Agency Just Halted Funding for New Lung Treatments.
The shift, quietly disclosed on a government website, highlights how the Trump administration is favoring development of vaccines over treatments for the sickest patients.
My response at the time and today is the same. Good! The real scandal is why Congress never put big funding behind Operation Warp Speed–thus requiring the administration to fund OWS by surreptitiously cutting elsewhere. The Trump administration gets blamed for its inept handling of the pandemic but Congress is supposed to be in charge of the laws and the purse strings and Congress was an abysmal failure. Who in Congress lauded let alone funded Operation Warp Speed, the only big success of the pandemic response?
Here’s what I was shouting from the rooftops in June, Get BARDA More Money! It actually pains me to read this today because even a few extra billion then would have made a big difference.
The real scandal is how little we are spending on advanced research for vaccines–$2.2 billion is a pittance, less than a day’s worth of economic loss caused by COVID. Given their limited budget, BARDA is making good investments. Congress, however, has not allocated enough money to BARDA, one of the few agencies that had the foresight to do the right things, such as investing in emergency vaccine capacity, even before the pandemic hit. Congress’s failure to fund BARDA is why the administration is scraping the bottom of the barrel to get them all the funding they can.
We should go big, really big, on vaccines. But when I talk with people in Congress, I tell them that a big plan is ideal but if we can’t do that then at least GET BARDA MORE MONEY!
Addendum: The fact that BARDA can’t get enough funding from Congress in a pandemic is a good example of why we need a Pandemic Trust Fund.
Canada has approved the AstraZeneca vaccine. The US has not. The US has paid for an AstraZeneca factory in Baltimore and stockpiled millions of doses. The US should lease the factory to Canada or simply make the doses available for export. The same factory will also produce the J&J vaccine so it’s possible that there is some small opportunity cost. Exporting vaccine to our close ally, trading partner, and neighbor, however, would create significant political, economic, and health benefits for the United States.
More generally, the US is focused on vaccinating its residents first. That’s understandable. But step two is vaccinating the world. The Kremer team advocated going big on vaccine capacity for two reasons. First, we needed a lot of capacity to vaccinate the US fast and fast was valuable. Second, going big meant that the US could vaccinate its population quickly but then have that capacity available to vaccinate the rest of the world.
Contrary to what many people feared, Operation Warp Speed hasn’t taken doses from the rest of the world, Operation Warp Speed has built the infrastructure to deliver doses to the rest of the world. Our motto in advising governments and NGOs was ‘Capacity is the antidote to conflicts over distribution.‘
The United States will soon be the first big country with a fully vaccinated population. The US will then have a chance to lead the world into the post-pandemic era with a “Biden plan” for world vaccination akin to the Mashall Plan.
Invest more. Vaccinate the world. End the pandemic.
Start with Canada.
One hour, fifteen minutes, almost all of it about the history and culture and economic future of the Caribbean, here is the audio. It starts with Rasheed interviewing me, but later becomes more of a back-and-forth dialog, covering Cuba, Trinidad, Barbados, the best music from Jamaica, why Haiti has failed so badly, whether the Caribbean will be Latinized, and much more. This one is pretty much entirely fresh material and I enjoyed doing it very much.
Rasheed is from Barbados, he is a very recent Emergent Ventures winner, and more generally his podcast focuses on the role of China in the Caribbean. Newsletter and some prestigious podcast guests coming soon!
Here is Rasheed on Twitter.
I will be doing a Conversation with her, most of all about her forthcoming and very good translation of Virgil’s Aeneid. She is a professor of classics at the University of Chicago, and here is Wikipedia:
She is an expert on Lucan, Persius, Seneca, and other writers of the time, most of all the age of Nero, and she is now working on a book on the reception of the classical authors amongst the Chinese intelligentsia. Here is Shadi on Twitter.
So what should I ask her?
Nearly 60 percent of the people facing charges related to the Capitol riot showed signs of prior money troubles, including bankruptcies, notices of eviction or foreclosure, bad debts, or unpaid taxes over the past two decades, according to a Washington Post analysis of public records for 125 defendants with sufficient information to detail their financial histories.
The group’s bankruptcy rate — 18 percent — was nearly twice as high as that of the American public, The Post found. A quarter of them had been sued for money owed to a creditor. And 1 in 5 of them faced losing their home at one point, according to court filings.
Here is more from The Washington Post. You will notice that the very poorest people don’t have a lot of those problems.
I don’t pretend to know what this really means, but here is the report:
Planned legislation to establish new business areas in Nevada would allow technology companies to effectively form separate local governments.
Democratic Gov. Steve Sisolak announced a plan to launch so-called Innovation Zones in Nevada to jumpstart the state’s economy by attracting technology firms, Las Vegas Review-Journal reported Wednesday.
The zones would permit companies with large areas of land to form governments carrying the same authority as counties, including the ability to impose taxes, form school districts and courts and provide government services.
The measure to further economic development with the “alternative form of local government” has not yet been introduced in the Legislature.
Sisolak pitched the concept in his State of the State address delivered Jan. 19. The plan would bring in new businesses at the forefront of “groundbreaking technologies” without the use of tax abatements or other publicly funded incentive packages that previously helped Nevada attract companies like Tesla Inc.
Sisolak named Blockchains, LLC as a company that had committed to developing a “smart city” in an area east of Reno after the legislation has passed…
The Governor’s Office of Economic Development would oversee applications for the zones, which would be limited to companies working in specific business areas including blockchain, autonomous technology, the Internet of Things, robotics, artificial intelligence, wireless, biometrics and renewable resource technology.
Zone requirements would include applicants owning at least 78 square miles (202 square kilometers) of undeveloped, uninhabited land within a single county but separate from any city, town or tax increment area. Companies would have at least $250 million and plans to invest an additional $1 billion in their zones over 10 years.
The zones would initially operate with the oversight of their location counties, but would eventually take over county duties and become independent governmental bodies.
The zones would have three-member supervisor boards with the same powers as county commissioners. The businesses would maintain significant control over board membership.
Here is the full article. I will keep you posted if anything comes of this. Addendum: Here is a legislative analysis of the bill, at some point these zones simply become counties? The underlying reality still is not clear to me.
And here is a different article: Joe Lonsdale Wants to Build a new Tech City Near Austin and a Tunnel Transportation System to Develop an Even Bigger Tech Hub.
The subtitle is A New Monetary History of China, and the author is Jin Xu. This is the first book this year to go straight to my “best books of the year list,” here is one excerpt:
Let’s shift the scene back to 1262, when the two poles of world civilization, Venice in the West and the Southern Song in the East, both faced the specter of war, and funding for these wars hung by a thread. Almost simultaneously, the authorities of both places came up with plans to deal with their emergencies, both involving the most advanced financial innovations of that time. The Southern Song’s Jia Sidao raised military funding by using the steadily devaluing huizi to buy up public land the strip the populace of wealth. Venice took a different road: Its parliament authorized the government to mortgage its tax revenue, and when a fiscal deficit developed, the administration issued government bonds paying interest of 5 percent. In retrospect, Venice’s financial innovation summoned the magic power of public debt as capital and effectively led Europe into an era of financial revolution. As for china, the excessively issued huizi did not regain the favor of the market; rather, public discontent and unrest threw open the door for invasion by the Mongolians.
…we witness China taking the lead on finance and currency, but in the wrong direction. China, at a very early stage, had “flying money” (feiqian) for remitting funds, as well as pawnshops, silver shops, and other such establishments for credit transfer; the Song dynasty’s paper currency originated in private institutions; and private local banks (qianzhuang) and money-exchange shops (piaohao) experienced extraordinary growth in the Ming and Qing dynasties. So why didn’t China produce a modern banking industry?
…The unbankability of China’s currency led to the failure of China’s paper currency system and forced it to take the silver route. Without banks, and without the coinage of silver, progressing from bank notes to paper currency was out of the question. Currency could only exist in the form of confusing and outmoded metage currency.
Definitely recommended, you can buy it here. And “metage” — what a good word!
This was presumably my last Bloomberg column about a policy from President Trump, here is the setting:
On his way out the door, President Donald Trump issued an executive order expanding on his earlier call for the creation of a “Garden of American Heroes.” The context is that recent events have supposedly shown that the U.S. no longer believes in its own greatness and has mocked its own history and heritage, and so this new tonic is needed to restore a spirit of homage and pride. Thus the government should carve out a new public space, full of statues of great Americans.
Here is one excerpt:
My first worry is that, however important heroism may be, it is not well represented en masse. The U.S. celebrates the heroic best when presenting an ethos of individualism, yet the executive order lists 244 Americans to be honored. In contrast, the Lincoln and Jefferson Memorials are solo presentations. The Iwo Jima statue in Arlington, Virginia represents a collective effort of flag raising, by only six soldiers. Mount Rushmore has just four presidents.
My worry is that a Heroes Garden of 244 would appear more collectivistic, even mildly fascistic, than heroic. It is hard to avoid a numbing effect when the number of figures is so large. Large numbers of figures also sometimes indicate victimization, such as in the “Tragedy of the Peoples” Holocaust memorial in Moscow, or with the more than 58,000 names on the Vietnam Veterans Memorial.
A final worry is that we do not live in a time of great portrait sculptors. Contemporary artists may be ironic or acerbic or witty or deeply conceptual to wonderful effect, as you can learn from a tour of the sculptures at the Hirshhorn Museum in Washington or the Storm King Art Center in upstate New York. But I don’t see many first-rate works with the aesthetic of, say, Michelangelo’s David or the portrayals of American heroes created by Augutus Saint-Gaudens. The reluctance of contemporary sculptors to communicate the quality of heroism is likely to produce a bland garden featuring an ugly official culture.
There are further points at the link.
This article demonstrates that limits on campaign contributions—which alter a candidate’s ability to raise money from certain types of donors—affect the ideologies of legislators in office. Using an original data set of campaign contribution limits in some US states over the last 20 years, I exploit variation across and within states over time to show that higher individual contributions lead to the selection of more polarized legislators, while higher limits on contributions from political action committees (PACs) lead to the selection of more moderate legislators. Individual donors prefer to support ideologically extreme candidates while access-seeking PACs tend to support more moderate candidates. Thus, institutional changes that limit the availability of money affect the types of candidates who would normally fund-raise from these two main sources of campaign funds. These results show that the connection between donors and candidates is an important part of the story of the polarization of American politics.
That is the topic of my current Bloomberg column, here is one bit:
Put aside U.S. politics for a moment and view the events of the last week from a global perspective. Without backing from the military, a crowd entered the Capitol building and disabled the U.S. Congress, and almost succeeded in achieving more violent goals yet.
The question is not what people should infer, or what most people will think. It’s what the people at the extremes will think and do. Even if many foreign citizens conclude that the events of last week were not a big deal, the most determined and rebellious observers might give them a different and more radical gloss. (Besides which, it actually was a big deal.) As the
Now imagine you live in Hungary, Uganda, Myanmar or any country that is experiencing political turmoil. If you had a violent plan against your own government, do you now rate your chances of success as lower or higher? Organizing a storming mob may have just become more appealing, especially since your adversary is almost certainly less formidable than the U.S. government.
And what if you express your surprise over recent events?:
Yet this very surprise, while justified, may itself induce a dangerous contagion effect. The surprise carries an implicit message: “It may not seem like you have many allies, but in fact you do, including in some powerful places.” So you can imagine how a supporter of say QAnon might come to believe that there are secret allies everywhere. And those beliefs may in turn encourage political violence.
One implication is that the media needs to be very careful about how they portray the perpetrators of the Jan. 6 events. Most media organizations have been publicizing the identities and deeds of these criminals, as they should. A lot of Americans need to be shocked out of their complacency about what happened, or at least nudged out of various theories of false equivalence. The more information becomes public, the more it becomes clear that at least part of the Capitol-storming group was conspiring and intent on violence and mayhem — and for very bad political ends: in essence, the destruction of American democracy.
Yet there is such a thing as too much information. In other contexts, the news media withhold the names, images and causes of many terrorists and criminals. To the extent those individuals are doing it for recognition, denying them that recognition may discourage future wrongdoers.
There are further arguments at the link.
As many of you will expect, I am fine with their decision. Furthermore I think they made it at exactly the right moment.
Questions for those who think that Twitter made the wrong decision:
1. Can you state your margin? That is, what would Trump have to do for you to think that Twitter should suspend his account?
2. Robert Nozick called for an archipelago of polities, each autonomously setting their own rules. Isn’t Twitter’s action quite consistent with this vision? Is the optimal libertarian equilibrium really one that adds centralized government regulation of tech platform speech codes? If so, does that induce you to reject libertarian doctrines more generally?
3. If you favor regulation to avoid this deplatforming, which many are calling for, is the optimal libertarian equilibrium really one that adds centralized government regulation of tech platform speech codes? Where else do you think technology companies should be more regulated when it comes to speech issues?
4. Do you think that the US is the only government that should regulate the speech codes of technology companies or are you in favor of the evolution that would actually occur, i.e. dozens of different countries regulating platform speech in heterogeneous fashion? If you don’t favor the latter, shouldn’t you be stridently on the side of tech platform independence here? Do you think that the modal government has more or less Millian liberal tendencies than say Jack Dorsey or Mark Zuckerberg?
Questions for those who think that Twitter made the right decision:
5. Why not ban the CCP or Ayatollah Khomenei or many of the other odious and even genocidal characters who populate Twitter today? This tweet still stands: https://twitter.com/khamenei_ir/status/1263551872872386562. (My view would be to ban the violence-promoting Ayatollahs and leave the CCP, albeit with labeling that it is state propaganda.)
6. This summer, Slate and many other media organizations condoned violence in explicit terms. Murders are in fact up a great deal this year. Given that incitement to violence is manifestly acceptable to Twitter in many cases, can you articulate the relevant standard in more detail?