Category: Uncategorized
How would actual alien spacecraft influence asset prices?
Primarily as an exercise, I thought about that question for a while, and here is part of my answer in a Bloomberg column:
If you know you are being watched, what exactly do you wish to buy more of? I would bet on defense stocks to rise, whether or not there is much we can do to defend ourselves against this alien presence.
Of course investors could not be sure that these alien drone probes will merely observe us forever. They might be observing with the purpose of rendering judgment. If they are offended by our militaristic tendencies, the quality of our TV shows and our inability to adopt the cosmopolitan values of “Star Trek” over the next 30 years, maybe they will zap us into oblivion. But that kind of systematic risk is hard to insure against. After such an act of obliteration, neither gold nor Bitcoin will do you any good.
My main prediction is that alien UFOs will be bullish for the dollar. The U.S. government seems most closely connected to the UFO phenomenon, for whatever reason. (Maybe its pilots fly more sallies and record better data?) In any case, if alien UFOs become more likely, an informational advantage would accrue to the federal government. And the dollar already has a tradition as a safe haven currency…
Most of us would get used to the idea of alien presence without quite believing in it. As The New Yorker makes clear, many Americans believed in alien-origin UFOs after World War II, as did many American policymakers. It might have spurred greater interest in the space program and science fiction, but it didn’t affect most aspects of American life, nor did it seem to drive markets.
Never underestimate the capacity of markets, like humans, to adapt. Just as many of the strangest parts of our lives can come to seem normal, so Wall Street can find a way to do business with just about anybody — aliens included.
I do full, literally mean everything stated in the column. But the piece also has (at least) two esoteric meanings — can you guess what they are?
Tuesday assorted links
1. The Chinese feminist eugenicist movement: just how well do those two views fit together?
2. How good is oxygen intervention for India and Indians?
5. Douthat on whether Trump made everything progressive (NYT).
Who is the best-known, non-political American married couple?
With Bill and Melinda Gates divorcing, and Kanye and Kim doing the same, America now has a paucity of very well-known married couples, at least outside of politics, where Barack and Michelle Obama reign supreme.
Who is the Lucy and Desi of our time? The George Burns and Gracie Allen? The Sonny and Cher?
George and Amal Clooney are in the running, but is she so well known to most Americans? Could they tell you her name from scratch, or cite what she is known for?
Kurt Cobain has passed away, as has Kobe Bryant, Larry and Laurie David split some time ago, and John and Yoko and Paul and Linda (an honorary American couple, for media purposes) are distant memories. Movie stars barely still exist these days.
Perhaps Elon Musk will marry Grimes, who is a musical star of some renown.
Woody Allen and Soon-Yi Previn have been married for 24 years, and they are pretty well known.
Harry and Meghan maybe are becoming an American couple, at least for media purposes?
Who else?
The rise of research teams in economics
Solo authorship represented 80 percent of economics papers in 1960 and 65 percent in 1990, but then solo-authorship fell out of the majority in 2005 and represents only 26 percent of economics papers today (as measured by the right-hand axis). To put it another way, in 1950, there were 1.2 authors per economics paper. Average team size reached 2.0 for the first time in 2010. By 2018, team size averaged 2.7 (as shown on the left-hand axis). The jump in average team size in economics papers over the last ten years is greater than the jump over the prior half-century.
Here is more from Benjamin F. Jones. For higher impact papers, the trend is even more striking.
Concentration in product markets
Here are some new results:
This paper uses new data to reexamine trends in concentration in U.S. markets from 1994 to 2019. The paper’s main contribution is to construct concentration measures that reflect narrowly defined consumption-based product markets, as would be defined in an antitrust setting, while accounting for cross-brand ownership, and to do so over a broad range of consumer goods and services. Our findings differ substantially from well established results using production data. We find that 42.2% of the industries in our sample are “highly concentrated” as defined by the U.S. Horizontal Merger Guidelines, which is much higher than previous results. Also in contrast with the previous literature, we find that product market concentration has been decreasing since 1994. This finding holds at the national level and also when product markets are defined locally in 29 state groups. We find increasing concentration once markets are aggregated to a broader sector level. We argue that these two diverging trends are best explained by a simple theoretical model based on Melitz and Ottaviano (2008), in which the costs of a firm supplying adjacent geographic or product markets falls over time, and efficient firms enter each others’ home product markets.
That is a new NBER working paper by C. Lanier Benkard, Ali Kurukoglu, and Anthony Lee Zhang. It is very supportive of recent research by Estaben Rossi-Hansberg (here and here, with co-authors) that market concentration simply has not been going up in recent times.
Monday assorted links
1. Stapp and Dourado criticizing bitcoin. Better than the usual b.s.
3. How old are you? Recommended for all those above a certain age, but which age might that be? There is only one way to find out.
5. Johnny Rogan, one of the best biographers, has passed away.
6. “We find that the shutdown of Google News reduces overall news consumption by about 20% for treatment users, and reduces page views on publishers other than Google News by 10%. This decrease is concentrated around small publishers.” Link here.
What should we regulate *more*?
Since the Biden team does not seem too favorably disposed to deregulation, perhaps it is worth asking in which areas we should be pushing for additional regulation. Here are a few possible picks, leaving pandemic-related issues aside, noting that I am throwing these ideas out and in each case it will depend greatly on the details:
1. Air pollution. No need to go through this whole topic again, carbon and otherwise. Remember the “weird early libertarian days” when all air pollution was considered an act of intolerable aggression?
2. Noise pollution. There is good evidence of cognitive effects here, but what exactly are we supposed to do? Can’t opt for NIMBY now can we!?
3. Something around chemicals? How about more studies at least?
4. Housing production. You can look at this as more or less regulation depending on your point of view. But perhaps cities of a certain size should be required by the state government to maintain sufficient affordability.
5. Mandates for standardized reporting of data? For example, the NIH requires that scientists report various genomic data in standardized ways, and this is a huge positive for science. What else might work in this regard?
6. Federal occupational licensing, in lieu of state and local.
7. Software as a service from China?
8. Animal welfare and meat production.
9. Is there a useful way to regulate to move toward less antibiotic use?
10. Should we have more regulation of AI that measures human emotions? How about facial and gait surveillance in public spaces?
11. How about regulating regulation itself?
What else?
I thank an MR reader for some useful suggestions behind this post.
Positive externalities through family member incarceration?
This result surprised me, but perhaps there are gains from getting the bad apples out of the household?:
Every year, millions of Americans experience the incarceration of a family member. Using 30 years of administrative data from Ohio and exploiting differing incarceration propensities of randomly assigned judges, this paper provides the first quasi-experimental estimates of the effects of parental and sibling incarceration in the US. Parental incarceration has beneficial effects on some important outcomes for children, reducing their likelihood of incarceration by 4.9 percentage points and improving their adult neighborhood quality. While estimates on academic performance and teen parenthood are imprecise, we reject large positive or negative effects. Sibling incarceration leads to similar reductions in criminal activity.
That is new from Samuel Norris, Matthew Pecenco, and Jeffrey Weaver, forthcoming in the AER. Via Ilya Novak. Here is Noah on this study, here is a related result from Sweden.
Sunday assorted links
1. Those new service sector jobs.
2. How much would be collected from a higher capital gains rate?
3. Fairfax County police chief under fire for earlier behavior.
4. “The Pfizer vaccine’s “280 different components, manufactured in 86 different sites across 19 countries, driven partly by the research of Turkish migrants to Germany, is globalization in a needle.”” Link here.
5. Income at the margin for Supreme Court Justices (Bloomberg). Is this a problem or not?
6. The difficulties of being Australian (Pakistani).
Saturday assorted links
1. Testing Magnus Carlsen, recommended.
3. Good FT piece showing how and why Malcolm Gladwell is underrated.
4. Coronavirus corpus, linguistic.
5. NYT on Josquin. And the great Eli Broad has passed away (NYT).
6. Where is the best pizza? (NJ)
7. American policy for an economic recovery from the pandemic.
*American Republics*
That is the new Alan Taylor book and the subtitle is A Continental History of the United States, 1783-1850. Excerpt:
With 124,000 inhabitants in 1813, Mexico City was twenty times bigger than Washington, D.C. — and about forty times grander. Poinsett described the public buildings and churches as “vast and splendid,” providing “an air of grandeur…wanting in the cities of the United States.” A German intellectual, Alexander von Humboldt, thought the city’s statues and Baroque palaces “would appear to advantage in the finest streets of Paris, Berlin and [St.] Petersburg.”
…Mexico City had an array of cultural institutions created during the colonial era. “No city of the new continent, without even excepting those of the United States, can display such great and solid scientific establishments as the capital of Mexico,” marveled Humboldt. The United States had nothing to match Mexico’s Academy of Fine Arts, National Botanic Garden, National University, and School of Mines. Founded in 1551, the university was the oldest in the Americas.
The book is excellent, including on Mormons, and also the War of 1812, and it will be one of the best books of this year. It is time to admit that Taylor is not only one of the best historians, but he is one of the best writers period in any field. Recommended.
The American economy circa 2021
Spending on cars and trucks is 15.1 percent higher than it would have been on the 2019 trajectory; spending on furnishings and durable household equipment is 16.6 percent higher; and spending on recreational goods is a whopping 26 percent higher.
Altogether, durable goods spending is running $348.5 billion higher annually than it would have been in that alternate universe, as Americans have spent their stimulus checks and unused travel money on physical items.
The housing sector is experiencing nearly as big a surge. Residential investment was 14.4 percent above its prepandemic trend, representing $90 billion a year in extra activity. And that was surely constrained by shortages of homes to sell, and lumber and other materials used to make them. It is poised to soar further in coming months, based on forward-looking data like housing starts.
Another bright spot is business investment in information technology. The tech industry has been comparatively unscathed by the crisis. Spending on information processing equipment in the first quarter was 23 percent higher than its prepandemic trend, and investment in software 7.4 percent higher.
But:
Spending on transportation services remains 23 percent below its prepandemic trend, recreation services 31 percent, and restaurants and hotels 19 percent.
Those three sectors alone represent $430 billion in “missing” economic activity — largely equivalent, it’s worth noting, to the combined shift of economic activity toward durable goods and residential real estate.
A corollary shows up in trade data. Services exports are down 26 percent compared with the prepandemic trend, which reflects in significant part the freeze-up in global travel.
Here is the full NYT story.
What should I ask Mark Carney?
I will be doing a Conversation with him, if you are unaware here is his Wikipedia page. Here is his new book Values(s): Building a Better World For All. So what should I ask?
Friday assorted links
1. Richard Hanania follow-up on why everything is so liberal (the wrong word, in my view, btw).
2. Prospects for a universal coronavirus vaccine?
4. Short video on how Libra evolved into Diem.
5. Has Covid made airline boarding procedures worse?
6. Donkey delight at the Donkey Sanctuary.
7. Replication guide to Thinking: Fast and Slow.
8. Washington state approves seven percent capital gains tax.
Why the quality of the police is not higher
According to the Fairfax County Fraternal Order of Police, the average starting salary for a Fairfax County cop is $52,000. The median household income in the county was $124,831 in 2019.
And:
Fairfax County Police Department is down 188 officers, according to Sean Corcoran, president of the Fairfax County Coalition of Police. Officers eligible for retirement are leaving, others are getting out to join higher paying federal agencies like the Capitol Police.
It is thus very difficult to exercise quality control. Here is the full story.