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“What will they do on Thursday?”
So wondered Eli Dourado. Well, from the front page of Nature:
Sight restored by turning back the epigenetic clock [in mice, to be clear]
Neurons progressively deteriorate with age and lose resilience to injury. It emerges that treatment with three transcription factors can re-endow neurons in the mature eye with youthful characteristics and the capacity to regenerate.
OK people, are you ready for Friday? C’mon, Eli, give ’em another dare!
Via Tom Jens.
Canada gamble of the day
Canada’s deficit is growing at the fastest rate among developed nations as it seeks to prop up its economy during the Covid-19 pandemic.
Canadian officials are betting the aggressive approach will pay off, pointing to the number of jobs already recovered, and argue that the country can afford to pour money into the economy while borrowing costs are historically low. But some economists warn the heavy spending could lead to a fiscal crisis, and one major ratings firm has already stripped the country of its triple-A rating…
Canada’s virus-related spending, the bulk of which originates with the federal government, has totaled about 382 billion Canadian dollars, the equivalent of $294 billion, and accounts for roughly 19% of Canada’s total economic output.
Yet data from the IMF indicate Canada’s fiscal position during the pandemic—incorporating all levels of government—has deteriorated at the fastest pace among the major economies in the Group of 20 industrialized countries as it seeks to keep the economy pumping.
…So far, Canada has recovered about 80% of the jobs lost in March and April because of the virus, whereas the U.S. has regained just over half of employees shed. Canada’s economy grew by a record 40.5% annual rate in the third quarter, Statistics Canada said Tuesday. However, growth is expected to grind to a halt in the final three months of 2020 as restrictions re-emerged to deal with a rise in Covid-19 infections.
The federal government’s debt is also set to surpass C$1 trillion for the first time this year, or 50% of GDP, and debt from all levels of Canadian government will surge to roughly 115% of GDP this year from 89% in 2019, the IMF said.
Here is the WSJ article, do stay tuned…
Wednesday assorted links
1. Gross contracts written under coercion. But contracts nonetheless, and informed by agency theory.
3. Google discovers a new problem with machine learning? (Is it new?) Source paper here.
5. Family portrait (photo).
6. 52 things Tom Whitwell learned this year. Some are disputable, but always a good series.
7. My colleague Walter E. Williams has passed away.
8. Should South Korea allow its K-pop royalty to postpone conscription duties until age 30? (NYT)
My excellent Conversation with Zach Carter
Zach is author of the recent book The Price of Peace: Money, Democracy, and the Life of John Maynard Keynes, which has been on many year-end “best of” lists. Here is the audio, transcript, and video. Here is part of the CWT summary:
Zach joined Tyler to discuss what Keynes got right — and wrong — about the Treaty of Versailles, how working in the India Office influenced his economic thinking, the seemingly strange paradox of his “liberal imperialism,” the elusive central message of The General Theory, the true extent of Keynes’ interest in eugenics, why he had a conservative streak, why Zach loves Samuel Delaney’s novel Nova, whether Bretton Woods was doomed to fail, the Enlightenment intuitions behind early defenses of the gold standard, what’s changed since Zach became a father, his next project, and more.
Here is one excerpt:
COWEN: [Keynes is] sympathetic to his own ideas and wants to promote them. But to me, there’s a discord. Milton Friedman spends, what, 45 minutes talking to Pinochet, has a very long record of insisting economic and political freedom come together — maybe even too simplistically — writes against the system of apartheid in South Africa and Rhodesia, calls for free markets there. And people give Friedman hell over that.
Keynes writes the preface for the Nazis and favors eugenics his whole life, and that’s hardly ever mentioned.
CARTER: I don’t know that the way that Keynes talks about eugenics is as salient as you suggest. The best article that I came across on Keynes and eugenics is by this guy — I think David Singerman. It’s in the Journal of British Studies. It’s a pretty in-depth look at the way Keynes came to eugenics and what he did and did not support. It’s very clear that Keynes didn’t support eugenics in the way that Americans sterilizing poor Black workers in the South were interested in eugenics.
Keynes was broadly interested in it from the perspective of birth control. This is a time when eugenics and genetics are not as clearly defined as they are today, so he’s thinking about heritability of eye colors — how he gets involved in this stuff. He never really supports anything other than birth control.
When he actually has power as a policymaker, he just doesn’t do any of this stuff. He is working on the Beveridge plan. He is working on financial stuff that is much more egalitarian than what we think of him when we think about eugenics.
COWEN: But he is chair of the British Eugenics Society for eight years late in his career.
CARTER: He doesn’t do much there. There are big debates that are happening within that society, and he’s mostly sitting them out. Singerman goes into this in much more detail. It’s been a while since I read the article, but Singerman seems to think that this is a useful way of understanding Keynes’s worldview, but not that Keynes is some guy who’s going around wanting to sterilize people and do the things that we think of with the eugenics movement in the United States.
COWEN: I don’t think he wants to sterilize people, but he has those essays on population, which are not put into the collected works. They’re not mentioned by Roy Harrod. He is greatly worried that the people from some countries — I think including India — will outbreed the people from Britain, and this will wreak havoc on prices and wages, and it’s a big crisis. He even says, “We need to worry not only about the quantity of people, but the quality of people in the world.”
A very good episode, definitely recommended. And here is Zach on Twitter.
This has been quite a week for science
Vaccine approval in the UK, protein folding advances, isn’t there a SpaceX launch today?, and now this:
Cultured meat, produced in bioreactors without the slaughter of an animal, has been approved for sale by a regulatory authority for the first time. The development has been hailed as a landmark moment across the meat industry.
The “chicken bites”, produced by the US company Eat Just, have passed a safety review by the Singapore Food Agency and the approval could open the door to a future when all meat is produced without the killing of livestock, the company said.
…The product would be significantly more expensive than conventional chicken until production was scaled up, but Eat Just said it would ultimately be cheaper.
…The growth medium for the Singapore production line includes foetal bovine serum, which is extracted from foetal blood, but this is largely removed before consumption. A plant-based serum would be used in the next production line, the company said, but was not available when the Singapore approval process began two years ago.
As Eli said on Twitter, what are they planning for Thursday? Here is the full story, via Michelle Dawson. Just yesterday I was rereading my CWT with her, it is very good.
Wage stickiness for incumbents vs. new workers
Masao Fukui, job market candidate from MIT, has made some significant progress on this problem, paper here. You should cringe if you just hear ‘wage stickiness” — for the incumbents, maybe, due to morale effects, because a grumpy worker who just took a pay cut might wreck things. But why is there wage stickiness for the new, not yet hired workers? Isn’t the new wage bargain what they need to negotiate in the first place? Other than postulating stubborn unemployed workers who overestimate their worth, how might we generate microfoundations for wage stickiness for the not yet hired, also known as “the unemployed”? Here is Fukui’s abstract:
I develop a new theory of wage rigidity and unemployment fluctuations. The starting point of my analysis is a generalized version of Burdett and Mortensen’s (1998) job ladder model featuring risk-neutral firms, risk-averse workers, and aggregate risk. Because of on-the-job search, my model generates wage rigidity both for incumbent workers, through standard insurance motives, and for new hires, through novel strategic complementarities in wage setting between firms. In contrast to the conventional wisdom in the macro literature, the introduction of on-the-job search implies that: (i) the wage rigidity of incumbent workers, rather than new hires, is the critical determinant of unemployment fluctuations; (ii) fairness considerations in wage setting dampen, rather than amplify, unemployment fluctuations; and (iii) new hire wages are too flexible, rather than too rigid, in the decentralized equilibrium. Quantitatively, the wage rigidity of incumbent workers caused by the insurance motive alone accounts for about one fifth of the unemployment fluctuations observed in the data.
As for wage stickiness for the not yet hired workers, here is I think the key point:
I show using simple phase diagrams that new hire wages must always feature rigidity at the top of the job ladder. This comes from the fact that at the very top of the job ladder, potential new employers have no incentive to increase wages above what the incumbent firms offer because there would be no additional workers to poach. This extremely strong strategic complementarity spills over toward lower job ladder rungs, and the wages are asymptotically rigid regardless of functional forms or parameter values. This result provides an explanation for the recent evidence on new hire wage rigidity.
The paper has many other interesting features. For instance, once wage rigidity for incumbent workers is a larger cause of unemployment, as opposed to just wage rigidity for new hires, the Shimer empirical critiques of labor market matching models dissipate. So matching models are strengthened, as are models of real rather than nominal rigidity of wages.
I am not yet sure if Fukui is right, but in any case this paper is a major contribution to the theory of wage-setting and it seems he is getting closer to the truth than anyone else has.
Tricky stuff! Via Ivan Werning.
American Ph.Ds are failing at start-ups
We document that since 1997, the rate of startup formation has precipitously declined for firms operated by U.S. PhD recipients in science and engineering. These are supposedly the source of some of our best new technological and business opportunities. We link this to an increasing burden of knowledge by documenting a long-term earnings decline by founders, especially less experienced founders, greater work complexity in R&D, and more administrative work. The results suggest that established firms are better positioned to cope with the increasing burden of knowledge, in particular through the design of knowledge hierarchies, explaining why new firm entry has declined for high-tech, high-opportunity startups.
Here is more from Thomas Åstebro, Serguey Braguinsky, and Yuheng Ding.
Tuesday assorted links
1. New data on YouTube consumption.
2. New Canadian paper: “…for most parameter values, the optimal policy is to adopt an initial shutdown level which reduces the reproduction number of the epidemic to close to 1. This level is then reduced once a vaccination program is underway.”
3. More on Deep Mind and protein structures. And off-label drug uses, to an extreme.
4. Steve McQueen’s Lovers Rock is one of the very best movies of this year; search Amazon Prime for “Small Axe,” select episode two. Short too.
5. Cecilia Rouse on debt cancellation.
6. Covid-19 in America detected as early as Dec.13-16 2019? See here for good criticisms, still an open question.
7. Update on FDA vaccine review. And new information on the EU review schedule.
Why you should use *Modern Principles* for your class
Alex has had numerous posts on Modern Principles, but here is my two cents. A textbook, as the name indicates, is a book. It has to be conceived of as a book, and thought of as a book, and written as a book, and ideally it should be read as a book. There are many other textbooks out there, and I do not wish to name names, but consider the following question. Which are the authors who really love books? Who spend their lives reading books? And indeed writing books. And who spend their lives studying what makes books good or bad? Who view books as truly essential to their overall output?
An ancillary question to ask is who are the authors who are truly dedicated to video, and to on-line communication more generally, as an independent outlet for their efforts and creativity?
Here is information on our new fifth edition, better than ever. Because we love books.
The December 1st test
No, it’s not quite December 1st, but it is close. And I recall a number of people, including numerous MR commentators, suggesting that once the election is over (with a modest lag) that Covid-19 would disappear from our radar screens, and that the “liberal media” would stop talking about it.
The first three articles on the NYT home page right now are:
Vaccines are Coming. But First a Long, Dark Winter.
Cuomo Fears ‘Nightmare of Overwhelmed Hospitals’ as Virus Cases Spike.
Covid-19 Live Updates: California’s Governor Warns of ‘Drastic Action’ as Hospitals Near Crisis.
Perhaps I am “lemon picking” by not waiting for the morning, but I have other posts planned for then. CNN by the way is right now leading with Covid, WaPo is more about election and appointments, but after that it is Covid too, most of all vaccines (a better emphasis I might add).
Let’s hope the morning is cheerier! Protein folding!
Monday assorted links
1. Canada bans mass export of prescription drugs.
2. Andrew Gelman redux. And my earlier Bloomberg column on Heather Boushey.
3. The cheerleaders at least can earn big bucks (NYT). Arbitrage!
4. Update/revision: Wikipedia presents strongly conflicting accounts of the assassination in Iran.
5. Maybe repealing the Corn Laws didn’t really help Britain? Though it did help lower earners, that being offset in the aggregate by terms of trade effects that harmed the wealthy. Here is a related tweet storm.
6. Agnes Callard, impossible to excerpt, definitely recommended (NYT).
Markets in everything, messed up edition
Shawn Graham, a professor of digital humanities at Carleton University in Ottawa, uses a convolutional neural network called Inception 3.0, designed by Google, to search the internet for images related to the buying and selling of human bones. The United States and many other countries have laws requiring that human bones held in museum collections be returned to their descendants. But there are also bones being held by people who have skirted these laws. Dr. Graham said he had even seen online videos of people digging up graves to feed this market.
Here is the full NYT story, interesting more generally, via TEKL.
Who Mismanages Student Loans and Why?
From Kimberly Rodgers Cornaggia and Han Xia:
With a license to use individually identifiable information on student loan borrowers, we find that a majority of distressed student borrowers manage their debt sub-optimally and that suboptimal debt management is associated with higher loan delinquency. Cross-sectional analysis indicates that loan (mis)management varies significantly across student gender, ethnicity, and age. We test several potential selection-based explanations for such demographic variation in student loan management, including variation in students’ overconfidence, consumption preferences and discount rates, and aversion to administrative paperwork. Motivated by federal and state allegations against student loan servicers, we also test for the presence of treatment effects. Overall, the empirical evidence supports the conclusion that loan servicers’ differential treatment across borrowers play an important role in student loan outcomes.
Here is a key background fact:
Broadly, subsidized student borrower assistance programs include provisions for loan forbearance, loan deferment, and
income-driven repayment (IDR) options for financially distressed borrowers.
Borrowers should switch to those provisions more than they do, with older students, non-traditional students, males, and non-whites performing less well than others. Here is the link to the paper, via the excellent Kevin Lewis.
Sunday assorted links
1. How well is India doing? (Bloomberg)
2. The world of Cartel TikTok (NYT). The world is not as ruled by “the Woke” as you might think!
3. KFC Rolls Out Self-Driving 5G ‘Chicken Trucks’ in China.
Saturday assorted links
1. Greenstone and Nath on cost-effective carbon abatement.
2. William Bolcom remembers Boulez.
3. Robin Hanson on pandemic spending and prevention; see also my comment #2 in the list.
4. Can the British turn moon dust into oxygen?
5. NHS to trial blood test to detect more than 50 forms of cancer. You know the scientific resurgence of the British (or should I say the English?) is a remarkable and much underreported story. Start with the Anglosphere and mix in a few top universities and the revenue-rich creative cluster of southeast England… There is much we can learn from this episode, and it is more important than say continuing to debate Brexit.
6. The Novavax vaccine. Nita Patel (guess where she is from? Try for the state) gets special praise and “Her all-female crew is an essential part of Novavax’s lab team.”