Category: Uncategorized
*The Korean Mind: Understanding Contemporary Korean Culture*
This is a weird book, published primarily in Singapore, and somehow not fitting the canons of what people “are supposed to do” (NB: it is not at all racist, just bolder in its cultural generalizations than is currently in vogue). Nonetheless I learned a great deal from the book, while taking some parts with a grain of salt. Here is one interesting bit of many:
Since 1948 the government in North Korea has been dominated by people from North Hamkyong Province, where the late Il Sung Kim, founder of the North Korean regime, was active as a guerrilla leader during World War II. Since that time people from the North Korean provinces of Hwanghae and Kangwon, which are the closest to South Korea, have been virtually banned from high government offices because they are considered untrustworthy and unfit. In South Korea government has been controlled mostly by natives from North Kyongsang Province in the Youngnam (formerly Shilla) region.
…Ongoing competition and conflicts between people from Cholla and Kyongsang Provinces are said to be serious enough that they have significant negative impact on national politics, the economy, and life in general.
The author is Boye Lafayette de Mente, and he seems to know a lot about Korean bowing. Do note the book is mainly about South Korea. Reviewers, by the way, complain that there are significant mistakes in the Korean characters. Recommended nonetheless, albeit with caveats, you can buy it here.
Friday assorted links
1. New species of beetle named after Greta Thunberg.
2. D.C. Fontana, the best of the Star Trek script writers, has passed away (NYT).
4. The return of freestanding bath tubs.
5. Recent debates over inequality measures (The Economist, recommended).
6. Bob Zoellick on what kind of Chinese cooperation has been induced by engaging with China (pdf).
Claims about real rates of return
With recourse to archival, printed primary, and secondary sources, this paper reconstructs global real interest rates on an annual basis going back to the 14th century, covering 78% of advanced economy GDP over time. I show that across successive monetary and fiscal regimes, and a variety of asset classes, real interest rates have not been “stable”, and that since the major monetary upheavals of the late middle ages, a trend decline between 0.6-1.8bps p.a. has prevailed. A consistent increase in real negative-yielding rates in advanced economies over the same horizon is identified, despite important temporary reversals such as the 17th Century Crisis. Against their long-term context, currently depressed sovereign real rates are in fact converging “back to historical trend” – a trend that makes narratives about a “secular stagnation” environment entirely misleading, and suggests that – irrespective of particular monetary and fiscal responses – real rates could soon enter permanently negative territory. I also posit that the return data here reflects a substantial share of “nonhuman wealth” over time: the resulting R-G series derived from this data show a downward trend over the same timeframe: suggestions about the “virtual stability” of capital returns, and the policy implications advanced by Piketty (2014) are in consequence equally unsubstantiated by the historical record.
That is from a new paper by Paul Schmelzing, via the excellent Kevin Lewis.
Thursday assorted links
1. Who can read the facial expressions of cats?
2. Ted Gioia’s 100 best recordings of 2019.
3. “Did you know: Brazil has more homicides than America + China + Russia + the EU + the rest of the Anglosphere combined?” Link here from Scott Alexander links.
Are we undermeasuring productivity gains from the internet? part I
From my new paper with Ben Southwood on whether the rate of scientific progress is slowing down:
Third, we shouldn’t expect mismeasured GDP simply from the fact that the internet makes many goods and services cheaper. Spotify provides access to a huge range of music, and very cheaply, such that consumers can listen in a year to albums that would have cost them tens of thousands of dollars in the CD or vinyl eras. Yet this won’t lead to mismeasured GDP. For one thing, the gdp deflator already tries to capture these effects. But even if those efforts are imperfect, consider the broader economic interrelations. To the extent consumers save money on music, they have more to spend or invest elsewhere, and those alternative choices will indeed be captured by GDP. Another alternative (which does not seem to hold for music) is that the lower prices will increase the total amount of money spent on recorded music, which would mean a boost in recorded GDP for the music sector alone. Yet another alternative, more plausible, is that many artists give away their music on Spotify and YouTube to boost the demand for their live performances, and the increase in GDP shows up there. No matter how you slice the cake, cheaper goods and services should not in general lower measured GDP in a way that will generate significant mismeasurement.
Moving to the more formal studies, the Federal Reserve’s David Byrne, with Fed & IMF colleagues, finds a productivity adjustment worth only a few basis points when attempting to account for the gains from cheaper internet age and internet-enabled products. Work by Erik Brynjolfsson and Joo Hee Oh studies the allocation of time, and finds that people are valuing free Internet services at about $106 billion a year. That’s well under one percent of GDP, and it is not nearly large enough to close the measured productivity gap. A study by Nakamura, Samuels, and Soloveichik measures the value of free media on the internet, and concludes it is a small fraction of GDP, for instance 0.005% of measured nominal GDP growth between 1998 and 2012.
Economist Chad Syverson probably has done the most to deflate the idea of major unmeasured productivity gains through internet technologies. For instance, countries with much smaller tech sectors than the United States usually have had comparably sized productivity slowdowns. That suggests the problem is quite general, and not belied by unmeasured productivity gains. Furthermore, and perhaps more importantly, the productivity slowdown is quite large in scale, compared to the size of the tech sector. Using a conservative estimate, the productivity slowdown implies a cumulative loss of $2.7 trillion in GDP since the end of 2004; in other words, output would have been that much higher had the earlier rate of productivity growth been maintained. If unmeasured gains are to make up for that difference, that would have to be very large. For instance, consumer surplus would have to be five times higher in IT-related sectors than elsewhere in the economy, which seems implausibly large.
You can find footnotes and references in the original. Here is my earlier post on the paper.
Wednesday assorted links
1. Kittyconomics (teaching economics through cat videos).
2. Imagery on good vs. bad banknotes.
4. “We won’t deal with millionaires,” says Sean Hoey, managing director of the facility, run by International Bank Vaults (IBV). “We will be dealing only with billionaires.” Article link.
My Conversation with Daron Acemoglu
Self-recommending of course, most of all we talked about economic growth and development, and the history of liberty, with a bit on Turkey and Turkish culture (Turkish pizza!) as well. Here is the audio and transcript. Here is one excerpt, from the very opening:
COWEN: I have so many questions about economic growth. First, how much of the data on per capita income is explained just simply by one variable: distance from the equator? And how good a theory of the wealth of nations is that?
ACEMOGLU: I think it’s not a particularly good theory. If you look at the map of the world and color different countries according to their income per capita, you’ll see that a lot of low-income-per-capita countries are around the equator, and some of the richest countries are pretty far from the equator, in the temperate areas. So many people have jumped to conclusion that there must be a causal link.
But actually, I think geographic factors are not a great explanatory framework for understanding prosperity and poverty.
COWEN: But why does it have such a high R-squared? By one measure, the most antipodal 21 percent of the population produces 69 percent of the GDP, which is striking, right? Is that just an accident?
ACEMOGLU: Yeah, it’s a bit of an accident. Essentially, if you think of which are the countries around the equator that have such low income per capita, they are all former European colonies that have been colonized in a particular way.
And:
COWEN: If we think about the USSR, which has terrible institutions for more than 70 years, an awful form of communism — it falls; there’s a bit of a collapse. Today, they seem to have a higher per capita income than you would expect a priori, if you, just as an economist, write about communism. Isn’t that mostly just because of what is now Russian, or Soviet, human capital?
ACEMOGLU: That’s an interesting question. I think the Russian story is complicated, and I think part of Russian income per capita today is because of natural resources. It’s always a problem for us to know exactly how natural resources should be handled because you can do a lot of things wrong and still get quite a lot of income per capita via natural resources.
COWEN: But if Russians come here, they almost immediately move into North American per capita income levels as immigrants, right? They’re not bringing any resources. They’re bringing their human capital. If people from Gabon come here, it takes them quite a while to get to the —
ACEMOGLU: No, absolutely, absolutely. There’s no doubt that Russians are bringing more human capital. If you look at the Russian educational system, especially during the Soviet time, there was a lot of emphasis on math and physics and some foundational areas.
And there’s a lot of selection among the Russians who come here…
The Conversation is Acemoglu throughout, you also get to hear me channeling Garett Jones. Again, here is Daron’s new book The Narrow Corridor: States, Societies, and the Fate of Liberty.
Superstar firms and market concentration
A new paper by Autor, Dorn, Katz, Patterson and Van Reenen (some real heavyweights) rebuts the notion that market concentration is rising because of inadequate antitrust concentration:
The fall of labor’s share of GDP in the United States and many other countries in recent decades is we ll documented but its causes remain uncertain. Existing empirical assessments typically rely on industry or macro data obscuring heterogeneity among firms. In this paper, we analyze micro panel data from the U.S. Economic Census since 1982 and document empirical patterns to assess a new interpretation of the fall in the labor share based on the rise of “superstar firms.” If globalization or technological changes push sales towards the most productive firms in each industry, product market concentration will rise as industries become increasingly dominated by superstar firms, which have high markups and a low labor share of value-added. We empirically assess seven predictions of this hypothesis: (i) industry sales will increasingly concentrate in a small number of firms; (ii) industries where concentration rises most will have the largest declines in the labor share; (iii) the fall in the labor share will be driven largely by reallocation rather than a fall in the unweighted mean labor share across all firms; (iv) the between-firm reallocation component of the fall in the labor share will be greatest in the sectors with the largest increases in market concentration; (v) the industries that are becoming more concentrated will exhibit faster growth of productivity; (vi) the aggregate markup will rise more than the typical firm’s markup; and (vii) these patterns should be observed not only in U.S. firms, but also internationally. We find support for all of these predictions.
Here is coverage from Peter Orszag. As I’ve said before, people are opting for Philippon’s Great Reversal story because of ideology and convenience and mood affiliation, but it is not supported by the facts.
Tuesday assorted links
1. “We find a small hot hand effect for free throws, concentrated in second and third shots in a free throw sequence, in players shooting at least 100 free throws in a season, and in games where players shoot four to five free throws. We find the opposite results for field goal attempts. If a player makes a field goal, he is less likely to make his next field goal attempt. These results are robust to controlling for the characteristics of the previous shot. Interestingly, both offenses and defenses respond to made field goals as if the hot hand effect exists.” Link here.
3. Do good teachers make you taller?
4. Claudia Sahm podcast with David Beckworth.
5. Alex Bell is now awesome and not just apparently awesome (NYT).
How to Buy Contact Lenses in Lithuania
Related to my previous post The Optometry Racket with thanks and attribution to loyal reader David Siegel.
Monday assorted links
Markets and comedic performance bonds in everything
Comedian Pete Davidson put on a show Wednesday in San Francisco—but ticketholders weren’t allowed in unless they signed a non-disclosure agreement with a $1 million penalty if broken.
Some attendees said that locking up your cell phone and signing a document that says you won’t share any part of the show on social media is just part of seeing a live show these days.
…Fans who did not want to sign the agreement could get a refund, but it appeared nobody took that option.
Here is the full story, via Ted Gioia.
Sunday assorted links
1. Renters also support NIMBY.
2. Observations from a small music company in Beijing.
3. Vietnam to introduce stats and probability in the second grade I am a big advocate of such changes.
4. Adam Sandler update (NYT).
5. Gwern’s most important writing.
6. New study of California affirmative action.
7. Markets in everything. Context here.
Saturday assorted links
1. Scott Sumner on progress, recommended.
2. “The Tribunal’s members are certain – unanimously, and sure beyond reasonable doubt – that in China forced organ harvesting from prisoners of conscience has been practiced for a substantial period of time involving a very substantial number of victims.” Link here.
Emmanuel Todd, *Lineages of Modernity*
Sadly I had to read this book on Kindle, so my usual method of saving passages and ideas by the folded page is failing me. I can tell you this is one of the most interesting (but also flawed) books I read this year, with “family structure is sticky and it determines the fate of your nation” as the basic takeaway.
Todd suggests that the United States actually has a fairly “backward” and un-evolved family structure — exogamy and individualism — not too different from that of hunter-gatherer societies. That makes us very flexible and also well-suited to handle the changing conditions of modernity. Much of the Arab world, in contrast, has a highly complex and evolved and in some ways “more advanced” family structure, involving multiple alliances, overlapping networks, and often cousin marriages. The mistake is to think of those structures as under-evolved outcomes that simply can advance a bit, “loosen up with prosperity,” and allow their respective countries to enter modernity. Rather those structures are stuck in place, and they will interact with the more physical features of globalization and liberalization in interesting and not always pleasant ways. Many of those societies will end up in untenable corners with no full liberalization anywhere in sight. Much of Todd’s book works through what the various options are here, and how they might apply to different parts of the world.
To be clear, half of this book is unsupported, or sometimes just trivial. There were several times I was tempted to just stop reading, but then it became interesting again. Todd covers a great deal of ground (the subtitle is A History of Humanity from the Stone Age to Homo Americanus), not all of it convincingly. But when he makes you think, you really feel he might be on to something.
Todd describes Germany as having a complex, multi-tiered, somewhat authoritarian family structure, and one that does not mesh well with the norms of feminism and individualism that have been entering the country. That family structure is also part of why Germany was, relative to its size, militarily so strong in the earlier part of the twentieth century. He also argues that the countries that stayed communist longer have some common features to their family structure, Cuba being the Latin American outlier in this regard.
Todd makes the strongest bullish case for Russia I have seen. He reports that TFR is back up to 1.8 after an enormous post-communist plunge, migration into the country is strongly positive, and Russia is very good at producing strong, productive women (again due to family structure). If you think human capital matters, the positives here are significant indeed.
Here is some related work by my colleagues Jonathan Schulz and Jonathan Beauchamp on cousin marriage.
You can order Todd’s book here. Recommended, though with significant caveats, mainly for lack of evidence on some of the key propositions.