Category: Uncategorized

When can companies force change by standing up to foreign governments

by  Tyler Cowen in

From Jason Miklian, John E. Katsos, and Benedicte Bull:

It’s easy to condemn firms for meek apologies — and to criticize the NBA and others as willing tools of the Chinese regime, “submitting to authoritarianism” to make a buck. However, our research suggests even when companies want to support global democracy and human rights, they find it much harder than anticipated and trap themselves in unenviable choices…

Our research has shown, time and again, how companies fail to live up to these lofty expectations [improving liberties and human rights]. It’s not for lack of trying. Instead, companies find the problems governments want them to solve are incredibly hard — and companies themselves suffer the political fallout when they can’t get things right.

And this:

Companies are most likely to deliver benefits when the measures they take are concrete, focused on specific goals and build on existing corporate expertise. These measures are more likely to affect change when companies join in collective actions by the business community that complement international political campaigns.

There is much more at the link, including discussions of China and South Africa.

Abhijit Banerjee reminiscenses

by  Tyler Cowen in

Abhijit and I were in the same first year class at Harvard, and I have two especially strong memories of him from that time.

First, he was always willing to help out those who were not as advanced in the class work as he was.  Furthermore, that was literally everyone else.  He was very generous with his time.

Second, when it came to the first-year Macro final (I don’t mean the comprehensive exams), Andy Abel wrote a problem with dynamic programming, which was Andy’s main research area at the time.  Abhijit showed that the supposed correct answer was in fact wrong, that the equilibrium upon testing was degenerate, and he re-solved the problem correctly, finding some multiple equilibria if I recall correctly, all more than what Abel had seen and Abel wrote the problem.  Abhijit got an A+ (Abel, to his credit, was not shy about reporting this).

One of my favorite Abhijit papers is “On Frequent Flyer Programs and other Loyalty-Inducing Economic Arrangements,” with Larry Summers.  I believe it was published QJE 1987, but somehow the jstor link does not show up from google searches.  This was one of the first papers to show how consumer loyalty programs could segment the market and have collusive effects.

Another favorite Abjihit paper of mine is his job market paper, “The Economics of Rumours,” later published in ReStud 1993.  Have you ever wondered “if this rumor is true, why haven’t I heard it before?”  Abhijit works through the logic of the model on that one, in a scintillating performance.  It turns out this paper is now highly relevant for analyzing information transmission through social media.

Abhijit is the clearest case I know of a brilliant theorist who decided the future was with empirical work — he was right.  Nonetheless his early theory papers are still worthy of attention.  When Abhijit went on the job market, his letter writers suggested he might someday win a Nobel Prize, so strong were his talents.  They were right, but I suspect they had no idea for what the prize in fact would turn out to be.

Monday assorted links

by  Tyler Cowen

1. Portuguese political path dependence.

2. Japanese ninja student gets top marks for writing essay in invisible ink.  “Eimi Haga followed the ninja technique of “aburidashi”, spending hours soaking and crushing soybeans to make the ink.  The words appeared when her professor heated the paper over his gas stove.”

3. New part of Tale of Genji found.

4. An ecologist on tree thinning and wildfires.

5. Why was Nepal never colonized?

6. Young people who are convinced they should give away all of their inherited wealth.

The modern world has not yet abolished slavery and forced deprivation

by  Tyler Cowen

The health service has said that it will stop locking up, isolating and physically restraining autistic children after an inquiry stated that it was damaging to their health.

NHS England has committed to make radical changes within 18 months, including a pledge not to place children with autism and learning difficulties in psychiatric wards unless they have a mental illness.

Matt Hancock, the health secretary, commissioned an inquiry led by Teresa Fenech, director of nursing at NHS England, after a series of scandals that involved the abuse of vulnerable patients, enforced medication and the use of seclusion cells.

In one case a girl with autism, Bethany, then aged 17, was held in isolation for 21 months at a private psychiatric hospital in Northampton.

Here is more from The Times of London, via Michelle Dawson.

“Two big names in European writing win literature Nobels”

by  Tyler Cowen

I chuckled at that FT headline, fortunately the on-line version names Olga Tokarczuk and Peter Handke in its header.

Can you imagine a sports header: “Big name wins NBA most valuable player award.”  No, they would name the “big name” because that big name is in fact big.

I still think Stephen King should get one.  I didn’t enjoy trying to read Tokarczuk, though I suspect she is a very good writer in Polish.  By Handke I can recommend his Sorrow of Dreams, a memoir of his mother dying, and also a book that influenced Knausgaard.  But mostly I am find him boring, pessimistic, and nasty, perhaps consistent with his support for Milosevic and the tyranny in Serbia.  I don’t think that disqualifies him from the prize per se, but neither do I see him as an author who had to win, though he is indeed “a big name in European writing.”  The thing is, he is nothing more than that.

Here you can buy The Stand for $8.30, by the way I love Houllebecq but the new one isn’t very interesting, as sadly it reads like a parody of his earlier, superior work.  Submission remains one of the truly great novels of recent times.

How many NBA players have tweeted in support of Hong Kong?

by  Tyler Cowen in

As I am writing this post, zero (perhaps someone has done so by the time this pops up, but it won’t have been much).  And yet there are about 300 players on opening day NBA rosters, more in the preseason of course, maybe 450?

Presumably the league has, either directly or indirectly, told them not to run off at the mouth on this topic.

I don’t feel I am trafficking in unjust stereotypes to note that many of these guys are pretty big, pretty tough, and not so used to being pushed around.  They come from a wide variety of backgrounds and also countries and income classes.

One hypothesis is that all three hundred of these individuals are craven cowards, worthy of our scorn.  Maybe.

Another hypothesis, closer to my view, is that it has turned out sports leagues (and players) are neither the most efficient nor the most just way to combat social and political problems related to China.

There is plenty of worthwhile China-related legislation and regulation on tap, including expanding the role for CFIUS, discouraging our allies from using Huawei 5G, and protesting against American companies working in Xinjiang (and yes that does include the NBA training camp there).  Human rights legislation related to Xinjiang is another plausible option, though I have not studied the details of those proposals.

It is fine to favor those and other measures — in conjunction with our allies as much as possible — while simultaneously thinking this is not the NBA’s fight.  Trump himself is far more “anti-China” than any other U.S. president in recent times, and he too decided to push this issue aside.

Should you really feel so much better about “the NBA standing up to China” if they are doing it because the U.S. Congress has intimidated them into this new form of “free speech”?

What I observe happening is that many people have been “dropping the ball” on China for years.  A highly visible issue comes up, and one where they also can take a potshot at multinational corporations.  So they take an isolated stand on an isolated case, mood affiliating on two different issues at once, namely “stand up to China,” and “criticize corporations for their craven corruptness.”

I say think through the problem in the broadest possible terms.  The approach of “sound coordinated measures through our government and its allies, while retaining commercial friendliness and political neutrality for MNCs” is in fact a pretty good one.  It could be much worse, and most likely it soon will be so.

My Conversation with Ben Westhoff

by  Tyler Cowen in

Truly an excellent episode, Ben is an author and journalist.  Here is the audio and transcript, covering most of all the opioid epidemic and rap music, but not only.

Here is one excerpt:

COWEN: But if so much fentanyl comes from China, and you can just send it through the mail, why doesn’t it spread automatically wherever it’s going to go? Is it some kind of recommender network? It wouldn’t seem that it’s a supply constraint. It’s more like someone told you about a restaurant they ate at last night.

WESTHOFF: It’s because the Mexican cartels are still really strongly in the trade. Even though it’s all made in China, much of it is trafficked through the cartels, who buy the precursors, the fentanyl ingredients, from China, make it the rest of the way. Then they send it through the border into the US.

You can get fentanyl in the mail from China, and many people do. It comes right to your door through the US Postal Service. But it takes a certain level of sophistication with the drug dealers to pull that off.

COWEN: It’s such a big life decision, and it’s shaped by this very small cost of getting a package from New Hampshire to Florida. What should we infer about human nature as a result of that? What’s your model of the human beings doing this stuff if those geographic differences really make the difference for whether or not you do this and destroy your life?

WESTHOFF: Well, everything is local, right? Not just politics. You’re influenced by the people around you and the relative costs. In St. Louis, it’s so incredibly cheap, like $5 to get some heroin, some fentanyl. I don’t know how it works in, say, New Hampshire, but I know in places like West Virginia, it’s still a primarily pill market. People don’t use powdered heroin, for example. For whatever reason, they prefer Oxycontin. So that has affected the market, too.

And:

COWEN: Did New Zealand do the right thing, legalizing so many synthetic drugs in 2013?

WESTHOFF: I absolutely think they did. It was an unprecedented thing. Now drugs like marijuana, cocaine, heroin, all the drugs you’ve heard of, are internationally banned. But what New Zealand did was it legalized these forms of synthetic marijuana. So synthetic marijuana has a really bad reputation. It goes by names like K2 and Spice, and it’s big in homeless populations. It’s causing huge problems in places like DC.

But if you make synthetic marijuana right, as this character in my book named Matt Bowden was doing in New Zealand, you can actually make it so it’s less toxic, so it’s somewhat safe. That’s what he did. They legalized these safer forms of it, and the overdose rate plummeted. Very shortly thereafter, however, they banned them again, and now deaths from synthetic marijuana in New Zealand have gone way up.

COWEN: And what about Portugal and Slovenia — their experiments in decriminalization? How have those gone?

WESTHOFF: By all accounts, they’ve been massive successes. Portugal had this huge problem with heroin, talking like one out of every 100 members of the population was touched by it, or something like that. And now those rates have gone way down.

In Slovenia, they have no fentanyl problem. They barely have an opioid problem. Their rates of AIDS and other diseases passed through needles have gone way down.

And on rap music:

COWEN: This question is maybe a little difficult to explain, but wherein lies the musical talent of hip-hop? If we look at Mozart, there’s melody, there’s harmony. If you listen to Stravinsky’s Rite of Spring, it’s something very specifically rhythmic, and the textures, and the organization of the blocks of sound. The poetry aside, what is it musically that accounts for the talent in rap music?

WESTHOFF: First of all, riding a beat, rapping, if you will, is extremely hard, and anyone who’s ever tried to do it will tell you. You have to have the right cadence. You have to have the right breath control, and it’s a talent. There’s also — this might sound trivial, but picking the right music to rap over.

So hip-hop, of course, is a genre that’s made up of other genres. In the beginning, it was disco records that people used. And then jazz, and then on and on. Rock records have been rapped over, even. But what song are you going to pick to use? And if someone has a good ear for a sound that goes with their style, that’s something you can’t teach.

And yes on overrated vs. underrated, you get Taylor Swift, Clint Eastwood, and Seinfeld, among others.  I highly recommend all of Ben’s books, but most of all his latest one Fentanyl, Inc.: How Rogue Chemists Are Creating the Deadliest Wave of the Opioid Epidemic.

Daryl Morey vs. ESPN

by  Tyler Cowen in

Daryl Morey wrote a pro-Hong Kong tweet and had to retract it, and then both the Rockets and the NBA had to eat crow.  ESPN — part of the Disney empire I might add — has given only tiny, tiny coverage to the whole episode, even though it is a huge story on non-basketball sites.  I’ve been checking the espn/nba site regularly over the last 24 hours, and there is one small link in the upper corner, no featured story at all.

The ESPN pieces I’ve seen seem to be studiously carefully worded and non-incendiary.

Disney of course sells a lot of movies in China and presumably would love to sell more.

Everyone is upset about Morey, I haven’t seen anyone attack ESPN or even mention this.

Should we be so captive of the “endowment effect,” namely that deleting a tweet is more a form of visible “kowtowing” than is downplaying the story in the first place?

Didn’t Bastiat teach us about the seen vs. the unseen?  Right now people are overreacting with respect to the seen.

If you let your emotions be so whiplashed by “the seen,” you will find it harder and harder to understand the unseen.  Do not be a lap dog to the seen!

Addendum, from the comments: “The ESPN story that is on the top-right corner doesn’t even have a byline. It appears to be a reproduced AP story. So ESPN has not assigned a single reporter to produce a story about an NBA event that is on A1 of the NYT.”

And this: “ESPN forbids discussion of Chinese politics…“

What should I ask Ted Gioia?

by  Tyler Cowen in

I will be doing a Conversation with Ted, no associated public event.  He is a musician and most of all a music historian, above all for jazz and blues, with numerous excellent books on those topics.

Here is his home page.  Here is Ted on Twitter, one of the very best follows.  Here is his latest book Music: A Subversive History, due out next week.  And there is more:

Gioia was raised in a Sicilian-Mexican household in Hawthorne, California, a working class neighborhood in the South-Central area of Los Angeles. Gioia was valedictorian and a National Merit Scholar at Hawthorne High School, and attended Stanford University. There he received a degree in English (graduating with honors and distinction), served as editor of Stanford’s literary magazine, Sequoia, and wrote regularly for the Stanford Daily.  He was a member of Stanford’s College Bowl team, which was featured on television, and defeated Yale in the national finals. Gioia also worked extensively as a jazz pianist during this period, and designed and taught a class on jazz at Stanford while still an undergraduate.

After graduation, Gioia received a degree in Philosophy, Politics and Economics at Oxford University, where he graduated with first class honors. He then received an MBA from Stanford University.

Gioia has enjoyed successes in the worlds of music, writing and business. In the business world, Gioia has consulted to Fortune 500
companies while working for McKinsey and the Boston Consulting Group.  He helped Sola International complete an LBO and IPO on the New York Stock Exchange in the 1990s.  He has undertaken business projects in 25 countries on five continents, and has managed large businesses (up to $200 million in revenues). While working amidst the venture capital community on Sand Hill Road in Silicon Valley, Gioia stood out from the crowd as the “guy with the piano in his office.”

His knowledge of varied musical genres is virtually without parallel.  So what should I ask Ted?