Category: Uncategorized
Americans Believe Diversity is Our Strength
Surveys from the Pew Research Center show that Americans are much more positive about diversity than Europeans. Remarkably only 7% of Americans think that diversity makes America a worse place to live–the next closest on that score is Spain where more than three times as many people think diversity makes Spain a worse place to live.
Liberals are more positive about diversity than conservatives but close to a majority of American conservatives (47%) think that diversity makes America better–which would make American conservatives more positive about diversity than most European liberals.
Optimism about diversity is one of America’s most admirable qualities.
Diversity can reduce trust and a society that combines distrust and a powerful central government threatens to oscillate between civil war and authoritarianism. Under limited government, however, a little distrust can not only be managed it’s a positive. If America were more homogenous, for example, we would have abandoned freedom of speech and religion a long time ago. It’s precisely because we can’t agree on what to say that we let everyone say what they want.
Hat tip: Cardiff Garcia.
The rich are also different from one another
That is my latest Bloomberg column, here is the introductory section:
The richest Americans are much less likely to have inherited their wealth than their counterparts in many supposedly more egalitarian countries. They’re not remarkably rich in degrees from elite universities. Rich Democrats have more social connections than rich Republicans.
These are some surprising insights from a new study of the very wealthy by Jonathan Wai of Duke University and David Lincoln of Wealth-X, based on data on 18,245 individuals with a net worth of $30 million or more.
The study portrays high-net-worth individuals as a more idiosyncratic and diverse group than reductionist cliches about “the 1 percent” might suggest.
Looking globally, extreme wealth is most closely connected to elite education in South Korea, Chile, and South Africa, and least so in Ukraine and Qatar. The U.S. is near the bottom of the top third of the country rankings for the tightness of this connection. Germany is close to the bottom, reflecting how German paths to riches run through forms of manufacturing and medium-sized business that are not so closely tied to elite higher education.
And:
For all the talk of Sweden and Austria as relatively egalitarian societies, they are also the countries where the greatest proportion of high-net-worth individuals inherited their wealth: 43.8 percent and 49.6 percent, respectively. In the U.S., inherited wealth accounts for only 12.6 percent of the very wealthy individuals in the study’s sample.
There is much more at the link.
Assorted Thursday links
My Conversation with Ezra Klein
The very beginning is a little slow, but I thought Ezra was one of the very best guests. The topics include the nature and future of media, including virtual reality, the nature of leadership (including Ezra’s own), how running a project shapes your political views, a wee bit on health care, what he thinks are the Obama and Clinton models of the world, Robert Putnam’s research on the costs of diversity, the proper role of shame in society, animal welfare, and of course Ezra’s underrated and overrated, with takes on Bob Dylan, The Matrix, William F. Buckley, Joe Biden, and more. There is no video but here is the podcast and transcript. Here is one excerpt:
COWEN: …Now Putman, let me ask you about Putnam, and how Putnam relates to Donald Trump. As you know, Robert Putnam at Harvard, he has some work showing that when ethnic diversity goes up that there’s less trust, less cooperation, less social capital.
If you think of yourself in the role of an editor, so you have an American society, diversity has gone up, and a lot of people have reacted to this I would say rather badly — and I think you would agree with me they’ve reacted rather badly — but there’s still a way in which the issue could be framed that while diversity is actually a problem, we can’t handle diversity.
Putnam almost says as such, and do you think there’s currently a language in the media where you have readers who are themselves diverse, where it’s possible not to just be blaming the bigots, but to actually present the positive view, “Look, people are imperfect. A society can only handle so much diversity, and we need to learn this.” What’s your take on that?
KLEIN: I strongly agree. We do not have a language for demographic anxiety that is not a language that is about racism. And we need one. I really believe this, and I believe it’s been a problem, particularly this year. It is clear, the evidence is clear. Donald Trump is not about “economic anxiety.”
COWEN: A bit, but not mainly, I agree.
KLEIN: That said, I think that the way it’s presented is a choice between economic anxiety and racism. And one I don’t think that’s quite right, and two I don’t think that’s a productive way of having that conversation.
COWEN: Why don’t we have that language? Where did it go, or did we ever have it?
And:
COWEN: You see this with Medicaid. A lot of people don’t sign up. They don’t have addresses. You can’t even get them, whatever.
KLEIN: They don’t like doctors. They’re afraid of doctors.
COWEN: This is me.
KLEIN: You’re afraid of doctors?
COWEN: “Afraid” isn’t the word.
KLEIN: Averse. [laughs]
COWEN: Maybe dislike. Averse. [laughs] They should be afraid of me, perhaps.
Definitely recommended. The same dialogue, with a different introduction, is included in The Ezra Klein Show podcast.
Yesterday’s antitrust laws can’t solve today’s problems
I view antitrust law as a body of doctrine that is largely obsolete. Here is one part of my broader argument, from today’s Bloomberg column:
Or consider the body of law assessing resale-price maintenance in the book trade. Today you can buy used books online. That constrains the prices of both used and new books, no matter how judges might rule. In 1998, the U.S. Justice Department initiated an antitrust suit against Microsoft, partly on the grounds that the company sought to extend its market power to browsers. Few people today think the company’s Internet Explorer browser failed because the government restored competitiveness; Firefox and Google built better software. Yet prosecutors spent years distracting the talent of one of America’s most successful companies, as they had with IBM earlier in a 13-year case dropped in 1982.
Policy should instead focus on the real problems that depress living standards for the middle class and the poor. Rates of inflation have been high for housing, medical care and higher education, major budget items for many people. As for housing, there are harmful restrictions on cheaper building, but in the expensive areas there is no monopolistic landlord who owns all the housing stock. So that is not an antitrust issue, nor is university tuition for the most part.
On the other hand, there is a strong case that growing concentration in the hospital market has raised health-care costs. Some major metropolitan areas have only a small number of hospital chains. Part of the problem is that highly regulated environments encourage consolidation and larger firms to deal with compliance costs, so antitrust law won’t provide an easy fix. Nonetheless, hospitals probably should be the biggest area of concern for antitrust enforcers, as competition does not now operate freely.
And this:
The major internet companies are a new target of antitrust attention, yet most of them give their main product away for free. Contrary to charges that they were going to stifle innovation, Google and its parent company, Alphabet, have led or subsidized innovation in driverless vehicles, artificial intelligence and wearable devices. Most major tech companies also are seeking to expand their innovative presence outside their main businesses, with artificial intelligence being a major new field of competition. Complainers about Amazon are more likely to be suppliers than consumers, the presumed beneficiaries of antitrust enforcement.
The best we can hope for is benign neglect, as I cannot imagine today’s politics producing an improved version of antitrust laws. Do read the whole thing, I consider IP law, cable regulation, and a number of other issues too.
The long tail is better than you think
Reductions in entry costs allow producers to “take more draws,” and given the unpredictability of quality at the time of investment, taking more draws can generate more “winners.” Our illustrative estimates for music show that the production mechanism could generate almost 20 times as much benefit as the consumption mechanism for an equal-sized increase in the number of products.
That is from a new working paper by Luis Aguiar and Joel Waldfogel, @pmarca oh we miss ye I bet you would have retweeted this.
Tuesday assorted links
1. Out of prison, out of work. I say the key point is “moral decay,” and not prison vs. video games, etc.
2. Y Combinator.
3. Ozimek update on Trump and the stock market.
4. An app for rating scientific papers.
5. The shanties culture that is Fairfax. And Vox interviews Ed Glaeser on infrastructure.
6. “The government’s agreement with the FARC had taken nearly six years to negotiate and won the support of the United States, the United Nations and Pope Francis. Ringo Starr even recorded a song for it.
It didn’t matter.” Good analysis by Nick Miroff.
Who will win the Nobel Prize in Economics this coming Monday?
I’ve never once nailed the timing, but I have two predictions.
The first is William Baumol, who is I believe ninety-four years old. His cost-disease hypothesis is very important for understanding the productivity slowdown, see this recent empirical update. Oddly, the hypothesis is most likely false for the sector where Baumol pushed it hardest — music and the arts.
Baumol has many other contributions, but the next most significant is probably his theory of contestable markets, plus his writings on entrepreneurship.
The other option is a joint prize for environmental economics, perhaps to William Nordhaus, Partha Dasgupta, and Martin Weitzman. A prize in that direction is long overdue.
The “Web of Science” predicts Lazear, Blanchard, or Marc Melitz, based on citation counts. Other reasonable possibilities include Robert Barro, Paul Romer, Banerjee and Duflo and Kremer (joint?), David Hendry, Diamond and Dybvig, and Bernanke, Woodford, and Svensson, arguably joint. I still am of the opinion that Martin Feldstein is deserving, don’t forget he did empirical public finance, was a pioneer in health care economics, and built the NBER. For a dark horse pick, how about Joseph Newhouse (RCTs and the Rand health care study)?
There are other options — what is your prediction?
Monday assorted links
2. “Jessica Adams, the astrologer for Cosmopolitan magazine in Australia, said she heard from “an avalanche of people worried that they were no longer a Leo and concerned that astrology is a fraud”.” The political economy of zodiac realignment.
3. Some reasons why many Colombians voted no. I am myself a Coasean, and I don’t believe in holding grudges — at all. Yet when you consider the notion of seats in the legislature, or transitional payments that non-terrorist Colombians won’t receive, rejection of this referendum should hardly come as a surprise. How many electorates would have voted for something comparable? It just wasn’t a peace deal that could be sold so readily to a people who have fought against FARC for over fifty years. It’s easy enough to blame the process of referendum (which by the way I do not in general favor), but maybe something also was wrong with the peace deal and with the peace preconditions themselves. Would the deal actually have ended the civil war? Is “ending the civil war” really what voters rejected? Here is further Monkey Cage commentary.
4. Yes there are some valid outrages in the overall story, but it’s worth stressing that tax-loss carryforwards really are very common, including for HRC and the NYT. The quality of discussion on this issue has been weak, including from some very smart people. I’m also stunned but not surprised by how “possibly might not have paid (some kinds of) taxes for eighteen years” has morphed into “did not pay taxes for eighteen years.” Imagine the button, people!
5. Medical marijuana increases labor supply for older adults.
6. Some results and correlations on financial markets and the elections: “In the two months prior to the conventions, the S&P 500 had a strong, positive relationship with Republican likelihood of winning the election. On the other hand, for the two months after July, the relationship shifts to a strong, positive relationship with Democrats’ likelihood of winning.” But here is Matthew A. Winkler: “Prices of U.S. debt and equities are showing the narrowest fluctuations for any presidential election year in at least two decades…” the Mexican peso, however, is another story.
Free trade has been good for the poor
A study by Pablo Fajgelbaum of the University of California, Los Angeles, and Amit Khandelwal, of Columbia University, suggests that in an average country, people on high incomes would lose 28% of their purchasing power if borders were closed to trade. But the poorest 10% of consumers would lose 63% of their spending power, because they buy relatively more imported goods. The authors find a bias of trade in favour of poorer people in all 40 countries in their study, which included 13 developing countries. An in-depth study of European industry by Nicholas Bloom, of Stanford University, Mirko Draca of Warwick University and John Van Reenen of the LSE found that import competition from China led to a decline in jobs and made life harder for low-tech firms in affected industries. But it also forced surviving firms to become more innovative: R&D spending, patent creation and the use of information technology all increased, as did total factor productivity.
That is from The Economist. Here are versions of the paper.
Sunday assorted links
1. Peter Boettke is now President of the Mont Pelerin Society.
2. Is it right to out Elena Ferrante? And here is the story of her (possible) mother.
3. “Here is how debt parking works.”
4. “Kolportiert wird, dass Daron Acemoglu vom Massachusetts Institute of Technology der erste Ökonomieprofessor sei, der ein siebenstelliges Angebot erhalten habe. Die Universität Chicago wollte ihn offenbar von Harvard abwerben.” That is Ernst Fehr on building up the University of Zurich.
When it comes to college, money isn’t the problem
The results reveal modest, increasing, and only weakly concave effects of resources: wins less than $100,000 have little influence on college-going (i.e., effects greater than 0.3 percentage point can be ruled out) while very large wins that exceed the cost of college imply a high upper bound (e.g., wins over $1,000,000 increase attendance by 10 percentage points). The effects are smaller among low-SES households. Further, while lottery wins reduce financial aid, attendance patterns are not moderated by this crowd-out. Overall, the results suggest that households derive consumption value from college and, in the current policy environment, do not generally face binding borrowing constraints.
That is from a new paper by George Bulman, Robert Fairlie, Sarena Goodman, and Adam Isen. Here is my earlier post Free college tuition for everyone?
Saturday assorted links
1. The case for the Clinton Foundation, by Dylan Matthews. And a look from The Economist.
2. Larry Summers on Shimon Peres.
5. Which states are sung about the most? (hint: not Connecticut)
How much energy do building codes save?
Not that much, or so it seems from the latest study of California, just published by Arik Levinson in the AER. This seems to be the bottom line:
1. In 1978 California started to enact some of the world’s most ambitious residential building energy codes. These building codes have been updated 13 times since.
2. The promise was for 80% savings for new buildings constructed after 1990. These assumptions assumed everything would go according to plan and there would be no behavioral adjustments.
3. The actual results?: “For electricity, post-1978 houses in California may be using up to 15 percent less than pre-1978 houses, but do not use less per degree-day when the weather gets hot, and do not use relatively less than similar post-1978 houses in other states with less strict building codes.” For natural gas there is a 25% savings, noting that this trend and the electricity trend both predate the 1978 legislation.
4. Levinson conjectures that most of the savings are coming from natural turnover in the housing stock disfavoring the least energy efficient units.
Here are earlier versions of the paper. Of course most regulations never receive a study anything near this thorough.
Assorted Friday links
1. Quora claims about Germans.
2. Profile of Daniel Hannan, one of the people behind Brexit.
3. The case against esoteric Trumpism. And list of academic and intellectual Trump supporters.
4. Why is the margin on Japanese food higher than the margin on Chinese food? Or is it?
5. “China’s recent obsession with glass tourist attractions has gone round the U-bend with the opening of some see-through treetop public toilets.” Link here.