Category: Uncategorized
How the government shutdown will end the real Deep State has acted
Here is a reprise from my January 17 column:
The real power here is held by government employees, especially those in critical jobs. Let’s say that more TSA screeners decided to walk off the job. It’s already the case that the TSA absentee rate has gone up to 7.6 percent, from 3.2 percent a year ago. It is possible to imagine screeners staying home in much greater numbers, thus crippling the entire nation. That could either force President Donald Trump’s hand or lead to a congressional override of a potential presidential veto.
And the close:
So what does the final equilibrium look like? Some number of extra weeks (months?) of talking about Trump and the wall. Trump over time becoming less popular. Congressional Republicans folding, and Trump lying about both the outcome and the process. Democrats looking better, at least relatively. Federal workers emerging with bruised morale, but mostly intact.
If you think those are implausible outcomes, you haven’t been paying close enough attention to the last two years.
File under Prophets of the Marginal Revolution…
Friday assorted links
1. “This KFC Gravy Candle Will Give Your Home the Rich, Meaty Aromatherapy It Deserves.”
2. “Nobody is ever in the middle of the road with this project…” (NYT, Ukraine, physics lab, movie, grand project, makes no sense).
3. Russian Novichok attack board game markets in everything.
4. “Most Americans are unwilling to pay $10 a month to fight climate change, a survey found.”
5. MIETNSSJ: “How to Make Sex Scenes Natural and Nonthreatening? Cue the ‘Intimacy Coordinator’” (NYT)
It seems to me Amihai Glazer deserves the credit here
I keep on seeing papers and notices of the notion that commonly owned firms — say commonly owned by diversified mutual funds — might collude rather than competing vigorously against each other. After all, maximization of joint profit would seem to be the imperative, not firm-by-firm profit.
It is not so widely known who first came up with that idea, and it is my former colleague at UC Irvine, Amihai Glazer. I know this because Ami and I had a co-authored paper on this topic, could it have been as early as the late 1980s? (I don’t remember the year.) And while it was genuinely joint work, the key idea came entirely from Ami, not from me.
We tried to publish the paper at several journals, but they all told us it was crazy.
I should also note Ami and I never quite agreed on what the paper meant. I always viewed it as more of a theoretical curiosity. I’m still not sure I understand Ami’s take, but in general he saw it as closer to a real world possibility or maybe stronger than that. I also thought that even if joint ownership came about, forces akin to those discussed in the socialist calculation debate still would require something akin to firm-by-firm competition, rather than managed collusion (what about just picking managers with sluggish temperaments, thus leading to an intermediate solution?) I don’t think that was Ami’s view back then at least.
I don’t know where my copy of the paper is, I hope Ami still has one. In the meantime, I hope credit goes where credit is due, and that is to Amihai Glazer.
Thursday assorted links
Cable TV really does matter for political outcomes
This is only one estimate, from Gregory J. Martin and Ali Yurukoglu, but nonetheless it is backed by a plausible identification stragegy and this is very interesting research:
We find that in a hypothetical world without Fox News but with no other changes, the Republican vote share in the 2000 election would have been about half a percentage point lower. By 2008, the effect of there being no Fox News rises to more than six percentage points – a result of the channel’s increasing viewership and increasingly conservative slant over this period.
Unfortunately, that is followed by a real clunker of a paragraph:
All of these results suggest that citizens and regulators have reason to be concerned about media consolidation and the non-market objectives of media owners. A hypothetical monopolist controlling all three channels and interested in electoral influence would have enormous power over election outcomes.
How many things are wrong in those two sentences? How can a profession supposedly devoted to rigor allow such sloppy thought to continue? Here are a few of my objections:
1. The real story in this paper is about Fox News, and Fox — whether you like it or not — is very much an alternative to the mainstream media approach. If you don’t like Fox, you might have preferred the “bad old days” of three dominant and pretty similar networks.
2. Do the authors have any argument that “the non-market objectives of media owners” are bad? No. In fact, there is a longstanding literature that “the market objectives of media owners” are bad, whether you agree or not. Do they really just mean to say “I don’t like Fox News”? Just say it. Don’t worry, I don’t think most authors, especially of media studies, are objective to begin with.
3. Don’t the results suggest we should perhaps be worried about polarized news rather than consolidated news ownership?
4. Is it possible to consolidate news ownership in a world with so many cable channels and so many news alternatives to cable? I strongly doubt this, but in any case it is not something the authors have shown. Instead, they have shown that a renegade news channel can rise to a position of great political influence.
5. Might it have been better simply to have written?: “I am really worried that Rupert Murdoch, in the absence of regulation, could buy up all the news channels and implement political outcomes I do not like.” That is an entirely coherent argument, and I wonder if it isn’t what the authors were getting at but couldn’t bring themselves to write it and thus were forced into the most illogical two sentences I have read this week.
6. By the way, Murdoch owns a lot of media properties and most of them have political stances, and most of all tones, fairly different from that of Fox News. Worth a ponder.
For the pointer I thank the excellent Samir Varma.
How productive are owner-managers?
We find that the average premature death of a million-dollar-earning owner causes an 82% decline in firm profits.
And:
The data reveal a striking world of business owners who prevail at the top of the income distribution. We find that most private business profits reflect the return to owner human capital. Overall, the top earners are predominantly working rich, and the majority of top income accrues to the human capital of wage earners and entrepreneurs, not idle owners of financial and physical capital.
That is from Matthew Smith, Danny Yagan, Owen M. Zidar, and Eric Zwick, “Capitalists in the Twenty-First Century,” a new research paper.
Thursday assorted links
Tuesday assorted links
Facts that contradict the standard housing bubble story
Here I am doing a mix of quoting and paraphrasing the excellent Kevin Erdmann:
1. “Housing construction has been constricted in our most prosperous cities.”
2. “Home prices in many developed countries rose at least as sharply as inthe US.”
3. “…rent inflation has been persistently high for 20 years.”
4. “Growth in real rent expenditures generally had been declining throughout the supposed boom period.”
5. “During the boom, the relative income of the typical homebuyer did not decline.”
6. During the boom, homeowners were not “buying up.”
7. Homeownership rates, even at their peak levels in 2004, among age groups under 65 years old, were no higher than homeownership rates had been in the late 1970s and early 1980s.”
8. “…when taking into account all types of housing, the number of new housing units never even rose very far above the long-term average.”
Those are all from Kevin’s new and very important book Shut Out: How a Housing Shortage Caused the Great Recession and Crippled Our Economy. The simple “housing bubble” story is not in fact as true as it might seem, as Kevin shows, and furthermore just look at how many parts of America now have home prices at or above their “bubbly peaks.” I hope this work gets the attention it deserves.
Privacy vs. control
It is often suggested that Facebook, Google, and the other major tech companies violate the privacy of their users, and of course the companies are criticized on those grounds. Yet I never see those critics go after other sources of privacy violations, such as say the friends and acquaintances who gossip behind our backs. If privacy were so important, you might expect the overall campaign to be “pro-privacy” rather than just “anti-corporate” or “anti-tech.”
One possibility is that service users don’t see much of a chance that the “Zip files” assembled on them by the algorithms stand much chance of harming their fortunes or even being released in decipherable form.
Still, people are made vaguely uncomfortable by some of what is going on. Could it be a “control” issue rather than a privacy issue? That is, people do not like “feeling out of control” when it comes to their lives, including their personal data. They used to “feel in control” and now they do not, in part because of the very media critics who view themselves as solving the privacy problem.
If it is a control problem, the chance that placebos will improve matters is higher, because I do not see our privacy losses as being reversible, or people even caring all that much. What is the cheapest placebo that can help us address the control problem? Passing some meaningless piece of legislation? Self-reforms from the media? The right kinds of proclamations from the tech companies? All of the above?
I believe public discourse would be improved if we realized “privacy problems aren’t always about privacy,” to paraphrase Robin Hanson.
A new Emergent Ventures tranche
I am pleased to announce a new and special tranche of the Emergent Ventures project at Mercatus. I describe it as a new allocation of funds specially dedicated to:
“advancing humane solutions to those facing adversity – based on tolerance, universality, and cooperative processes”
So if you have a relevant project along these lines, I would very much encourage you to apply. The rest of Emergent Ventures will continue to operate as before.
Sunday assorted links
Saturday assorted links
Friday assorted links
The polity that is Sikkim
High in the Himalayas, Sikkim is one of the tiniest states in India. But it is about to embark on an experiment of global interest.
Sikkim’s ruling party has announced an ambitious plan to implement a universal basic income for every one of its 610,577 citizens.
If successful, the scheme would represent the largest trial run anywhere in the world…
Here is the WaPo article, overall I am most bullish about the UBI idea for very poor countries, where the humanitarian upside is greater and the incentive to work still remains. Elsewhere, Buddhist poker player donates $600,000 to charity.