Category: Uncategorized

China fact of the day

by  Tyler Cowen in

Bureaucratic politics is a politics of privilege.  By 1956, the wages of the highest-ranking party and government personnel were set at 36.4 times those of the lowest rank.  (By way of comparison, the highest wage in the “corrupt” Nationalist government in1946 was 14.5 times that of the lowest wage.)

That is from the new and important The World Turned Upside Down: A History of the Chinese Cultural Revolution, by Yang Jisheng, who himself participated in the Cultural Revolution.

Are disenchanted Iranians turning to other faiths?

by  Tyler Cowen in

The spiritual gap between Iran’s Shia ayatollahs and the people they rule is widening. The strictures of the theocracy and the doctrine of Shia supremacy alienate many. So growing numbers of Iranians seem to be leaving religion or experimenting with alternatives to Shiism. Christians, Zoroastrians and Bahais all report soaring interest. Leaders of other forms of Islam speak of popular revivals. “There’s a loyalty change,” says Yaser Mirdamadi, a Shia cleric in exile. “Iranians are turning to other religions because they no longer find satisfaction in the official faith.”

…The repression isn’t working. The state says over 99.5% of Iran’s 82m people are Muslim. But its numbers are not reliable. A poll of more than 50,000 Iranians (about 90% of whom live in Iran) conducted online by Gamaan, a Dutch research group, found a country in religious flux. About half of the respondents said they had lost or changed their religion. Less than a third identified as Shia. If these numbers are even close to correct, Iran is much more diverse than its official census shows.

Here is more from The Economist.  Speculative, but interesting.

What should I ask Dana Gioia?

by  Tyler Cowen in

Dana is what I call one of the world’s information billionaires.  For more specifics, here is part of his Wikipedia page:

Michael Dana Gioia (/ˈdʒɔɪ.ə/; born December 24, 1950) is an American poet and writer. He spent the first fifteen years of his career writing at night while working for General Foods Corporation. After his 1991 essay “Can Poetry Matter?” in The Atlantic generated international attention, Gioia quit business to pursue writing full-time. He served as the chairman of the National Endowment for the Arts (NEA) between 2003 and 2009. Gioia has published five books of poetry and three volumes of literary criticism as well as opera libretti, song cycles, translations, and over two dozen literary anthologies.

Gioia is the Judge Widney Professor of Poetry and Public Culture at the University of Southern California, where he teaches, as well as a Senior Fellow at the Trinity Forum. In December 2015 he became the California State Poet Laureate.

He is also well-known as a composer of opera libretti, and more recently as a spokesperson for the importance of Catholicism for culture.  And he is brother of TedGioia, former CWT guest.  And here is Dana’s home page.

I will be doing a Conversation with him — so what should I ask?

Saturday assorted links

by  Tyler Cowen

1. Rap song about Janet Yellen.

2. Never too much talent?  Should you be bullish on the Nets?

3. Toward a more libertarian pandemic?

4. Will Wilkinson Substack.

5. B.1.1.7 not in decline.  And that variant is exploding in Denmark.

6. Vaccines to take Israel back from the Ibex, photo gallery, recommended.  And some verticality in a video version.  Consider it “the Ibex salt-water paradox.”

7. Peter Huber tribute, he has passed away.

That was then, this is now, now it’s now again

by  Tyler Cowen in

To see how much the sanitary and medical revolutions have changed the risks of global interaction, examine what kills Americans abroad these days: cardiovascular events including heart attacks account for 49 percent of all deaths, injuries for a further 25 percent, and infectious diseases other than pneumonia for just 1 percent…even travel to pathogen-rich environments has become far, far safer than it used to be: a study of 185 deaths of US Peace Corps volunteers,  placed in some of the world’s least healthy countries, found that unintentional injuries and suicides were far more deadly than infection, accounting for more than 80 percent of deaths between them.

That is from Charles Kenny’s new and excellent The Plague Cycle: The Unending War Between Humanity and Infectious Disease, which was started well before Covid.

Federal minimum wage of $15?

by  Tyler Cowen in

It’s a slam-dunk case that doubling the federal minimum wage — it’s been $7.25 since 2009 — would lead to significant declines in employment opportunities for workers with few skills or little experience. According to data from the Bureau of Labor Statistics for 2019 (before the pandemic), in 47 states, at least one-quarter of all workers earn less than $15 per hour. In 20 states, half of all workers earn less than $18 per hour, and in 30 states, the median hourly wage is less than $19.

These statistics show that $15 is a very high wage floor. For employers to keep all their workers would require raising the wages of a huge share of the national workforce. But the number of workers affected would be so large that this wouldn’t happen. Instead, the number of jobs in the low-wage workforce would shrink.

The nonpartisan Congressional Budget Office confirms this basic intuition, estimating that joblessness would increase by 1.3 million if the national hourly wage floor were hiked to $15 [TC: and that is pre-pandemic]. The CBO also concluded that this policy would reduce business income, raise consumer prices and reduce gross domestic product.

That is from Michael Strain at Bloomberg.  I would add this.  No matter what you think about the recent literature on the minimum wage, all economic theories imply that minimum wages should be decided at the state and local level, given the economic heterogeneity of the United States.  That is the message that you as an economist should be carrying forward.

Do you think Puerto Rico should be a state?  Should they have a $15 minimum wage too?  Come on.  Yes, it is easy enough to make an exception for them, and by the way the median manufacturing wage in Mississippi is below $15 as well.  Rinse and repeat.

I am sorry to speak in such terms, but the reality is that an allied cabal of activists and left-wing economists have combined on social media to insist on a particular approach to minimum wage economics and to bully those who disagree.

Ask yourself a simple question: were any of them calling for a temporary two-year cut in the minimum wage for restaurants and small businesses during a devastating pandemic?  If not, are they really carrying forward the banner of science?

“But not all those elasticities are the same…”

by  Tyler Cowen in

That has been one common response to my recent post asking people to be consistent across assumptions about elasticities.  And that is true, those differing elasticities are not all exactly the same.  Yet a few points remain relevant:

1. If you see the world as dynamic, full of entrepreneurship, and solving problems fairly rapidly and effectively, you should tend to think that a wide variety of elasticities will be high.  Conversely, if you think we are all sluggish, overregulated, creatures of routine boobs, you will tend to see a wide variety of elasticities as being pretty low.

That doesn’t have to follow, but if you instead have your own Rube Goldberg approach, well let’s please hear about it in more detail.

2. The elasticities that “most people on Twitter want” are “long run labor demand inelastic” (minimum wage hike good!) and “short run industry supply curve elastic” (stimulus is good!).  In other words, they want the short-run elasticity to be higher than the long-run elasticity.  By insisting that not all elasticities are the same, they actually have made the problem more difficult for themselves.

3. Individual firm and aggregate supply curves of course can differ.  To get the aggregate curve to be more dynamic and responsive than individual curves, typically you would invoke some notion of increasing returns.  But a pandemic is exactly when increasing returns are least likely.

Plausibly there are increasing returns to greater vaccine use.  But nominal stimulus?  Nope.  We are not living in a world of “my pet shop is doing so well I am going to spend money on your movie theater.”  Apart from the high multiplier associated with public health improvements, we right now live in a world of bottlenecks and sectorally specific problems.  Trying to get increasing returns on your side isn’t going to help, in fact it will work against you.

In sum, I am not saying there is no way you can get all of your elasticities to fit together in the preferred manner.  After all, if nanotechnology works, alchemy may work too.  I am just asking you to…show your work.  And in the meantime be less moralizing and dogmatic.  Perhaps you cannot in fact, right now, have all of the things you want.

Consistency about elasticities

by  Tyler Cowen in

If you think “stimulus” is effective right now, presumably you think supply curves are pretty elastic and thus fairly horizontal. That is, some increase in price/offer will induce a lot more output.

If you think we should hike the minimum wage right now, presumably you think supply curves are pretty inelastic and thus fairly vertical.  That is, some increase in price for the inputs will lead not to much of a drop in output and employment, maybe none at all.  The supply curve is fairly vertical.

You might somehow think that supply is elastic with respect to output price, but inelastic with respect to input price.  Is there a model that can generate that conclusion?  It is the net profit on the marginal output units that should matter for decisions.  And did you start with that model, or develop it afterwards to justify your dual intuitions?

Do you right now favor both a lot of stimulus and a big minimum wage hike?  What are your assumptions about elasticities?  Show your work!

Do you favor a minimum wage hike, but also think a lot of immigrants to this country won’t lower real wages by very much if at all?  The latter view would seem to imply a fairly elastic demand for less skilled labor.  (The new labor can be absorbed into the market with only a small price change.)  Are your assumptions about elasticities consistent there as well?

Are your assumptions about elasticity with respect to stimulus and elasticity with respect to tax cuts consistent?

If you favor a minimum wage hike, do you criticize wage subsidies because inelastic demand for labor means most of the value of the wage subsidy will be captured by the employer? Or do you somehow want both policies at the same time, because they both involve “government helping people”?

If you favor a minimum wage hike because you think the demand for labor is inelastic, does that mean you don’t see “downward sticky wages” as a big problem?  After all, the demand for labor is inelastic, right?

What are your assumptions about elasticities?  And are those even the assumptions that actually matter to you?

How many economists do you know who start with beliefs about elasticities and then apply them consistently, before considering the politics of the conclusions?

How many of you actually think you are consistent across all of these views about elasticities?  How many of you think you actually have a jerry-rigged model (“increasing returns for me but not for thee?”) that holds it all together?

Inspired by these tweets from Garett Jones.

Felix Camilo Ayala, RIP

by  Tyler Cowen in

He was an indigenous, Nahuatl-speaking Mexican painter in the “Naive” tradition, working on board, amate paper, and ceramics.  Some of you will know that I was his biographer, along with his two brothers Marcial Camilo and Juan Camilo, both painters as well.  I spent many hours interviewing Felix Camilo (and his friends and relatives) about the events of his life, so it is especially sad for me to see such a tragic final episode, namely death by Covid in his mid-sixties.  He simply was not able to breathe any more, and then he died.

Felix was less ambitious than his brothers, but he had a natural eye for a lovely scene.  Pretty much everyone in San Agustin Oapan, his home village, liked or loved him, and such general popularity there is rare.  He worked hard to avoid faction, to stay on good terms with all, and to raise his children after his wife passed away almost thirty years ago.

Here is an update on the coronavirus situation in Mexico:

Officials reported 1,219 deaths Saturday, which was a near-record for one day, and 463 deaths Sunday.

Mexico has now seen over 1.64 million total infections and registered over 140,000 deaths so far in the pandemic. With the country’s extremely low testing rate, official estimates suggest the real death toll is closer to 195,000.

Here is some basic background on Felix Camilo, his village, and my involvement with it.  These days, one of my friends in Oapan estimates that about two percent of the village has died from Covid, and about half of those are relatively young.  There are many comorbidities and no medical care to speak of.

Here are a few other Felix Camilo images.  He was never a famous painter, but he played a significant part in capturing and communicating a culture that is vanishing rapidly.