Category: Uncategorized

What I’ve been reading

by  Tyler Cowen

1. Andrew Mango, Ataturk: The Biography of the Founder of Modern Turkey.  A pleasurable read and full of information.  For me it was most useful as a foreign policy history of Turkey, more than a biography of Ataturk himself.  One implication is that Turkey won’t be making too many more concessions on the global stage, or for that matter with the Kurds.

2. Virginia Woolf, On Being Ill.  This is insanely good, and I can’t believe I had never read it before.  It’s super short, but a thrilling reading experience at every word.  It’s in the “jaw hits floor” category.

3. Thomas P. Hughes, Networks of Power: Electrification in Western Society, 1880-1930.  The best history of electrical infrastructure which I have found.  It is very good on explaining the difficulties in organizing an entire economy around electricity and why it took so long.  It is also fascinating on why the English lagged behind the Germans and Americans in the transition to electricity, in large part because of local interest group politics.  It sheds light on the “mystery” of British decline.  A long, nerdy book, with unintelligible Cooper Union-like diagrams, I loved it.  It’s one of mankind’s most stirring stories.

4. Owen Hatherley, A Guide to the New Ruins of Great Britain.  I didn’t enjoy this book, so I didn’t read much of it, but I thought it was splendid in conception.  It requires some working knowledge of British urban landscapes and I, for one, have never been to Sheffield.  It’s a smartly written conceptual survey of the empty buildings that have come to populate British cities and I am sorry that I wasn’t up to it.

The wisdom of Scott Sumner

by  Tyler Cowen in

On structural unemployment:

…there is no hard and fast distinction between cyclical and structural unemployment. For instance, if structural unemployment in American has risen closer to European levels, it may be partly due to the decision to extend unemployment insurance from 26 weeks to 99 weeks, and to increase the minimum wage by over 40% right before the recession. Does that mean that demand stimulus cannot lower unemployment? No, because the maximum length of unemployment insurance is itself an endogenous variable. If stimulus were to sharply boost aggregate demand it is quite likely that Congress would return the UI limit to 26 weeks, as it has during previous recoveries. For similar reasons, the real minimum wage would decline with more rapid growth in demand. Aggregate supply and demand are hopelessly entangled, a problem that many economists haven’t fully recognised.

Read the whole thing.  I would add a few points.  First, structural and cyclical hypotheses interact in another way, namely that the degree of nominal stickiness for unemployed workers will depend on structural factors.  Second, the partially structural nature of unemployment is becoming increasingly clear with time; wages are not sticky forever and we are not at risk of a downward deflationary spiral from a round of wage-cutting among the unemployed.  Third, the unemployment itself is becoming increasingly structural, even if you think it was mostly cyclical in the first place.  Not working is bad for people.  Fourth, structural unemployment does change the appropriate mix of monetary and fiscal policies, although the net effect is indeterminate in theory.  Monetary policy should be expansionary, but structural forces behind unemployment can make traditional fiscal policy either more or less effective (it is more important to target disaffected workers, but also harder to do so) and you can think of that as the frontier policy question of the day.

Here is Scott’s bleg.  Could Scott be blogging again?  The consumer surplus from the internet just went up.

Assorted links

by  Tyler Cowen

1. Another list with different countries in a rank order.

2. Ross Douthat on Unnatural Selection.

3.  Not just CPI bias, and contrary to common impression per capita gdp growth rates also have been falling.  If median income growth rates are slower yet, that is a sign of potent rent-seeking by minority groups (finance, medicine, politicians, lobbyists, etc.).

4. Update on who is the world’s most traveled person.

5. Debate over whether ATM sounds are real.

Assorted links

by  Tyler Cowen

1. There is still some low-hanging fruit.

2. Download many silent films here.

3. It turns out that Randall Dale Adams sued Errol Morris, for telling his life story in The Thin Blue Line (and thereby vindicating him and getting him out of jail).  And is Egalia funded by Swedish educational vouchers?

4. Edward Hugh on Spain.

5. Milton Friedman and the financial crisis.

6. David Henderson writes a critique of TGS.  He doesn’t contest that median income is nearly stagnant and that TFP is dramatically down since 1973; in the latter case, which clearly establishes the core point of the book, rather than admitting the conclusion he shifts the talk to the difficulties of predicting the future (though I stress that TGS will indeed end at some currently unknown point in time).  Both facts are prima facie evidence that innovations are not doing much to improve the standard of living of the typical person, especially compared to some earlier periods of time.  David is simply backwards concerning the argument on land; it’s not that land today is too expensive, it’s that extra land (we still have plenty of it in Nevada or for that matter Virginia) doesn’t have the marginal economic import it used to, most of all because of modern agriculture.  His numbers on land strongly support my point rather than refuting it.   The measured consumer surplus from the internet is small, not large.  The evidence that more education would yield a high return is quite strong, see the earlier post today.  I’ve written about the benefits of deregulation in plenty of other places but in this book I wanted people to focus on technological rather than political issues.

Don’t apply positive discount rates to human lives

by  Tyler Cowen in

Ben Trachtenberg writes:

This Article presents two new arguments against “discounting” future human lives during cost-benefit analysis, arguing that even absent ethical objections to the disparate treatment of present and future humanity, the economic calculations of cost-benefit analysis itself – if properly calculated – counsel against discounting lives at anything close to current rates. In other words, even if society sets aside all concerns with the discounting of future generations in principle, current discounting of future human lives cannot be justified even on the discounters’ own terms. First, because cost-benefit analysis has thus far ignored evidence of rising health care expenditures, it underestimates the “willingness to pay” for health and safety that future citizens will likely exhibit, thereby undervaluing their lives. Second, cost-benefit analysis ignores the trend of improved material conditions in developed countries. As time advances, residents of rich countries tend to live better and spend more, meaning that a strict economic monetization of future persons values the lives of our expected descendents above those of present citizens. These two factors justify “inflation” of future lives that would offset, perhaps completely, the discount rate used for human life. Until regulators correct their method of discounting the benefits of saving human lives in the future, the United States will continue to suffer the fatal costs of underregulation, and agencies will remain in violation of legal requirements to maximize net benefits.

I don’t agree with the “underregulation” argument (growth matters too, especially with a low discount rate), but there is much to be said for Ben’s argument.  Do note that there are numerous complications in any correct analysis of this problem.

*Unnatural Selection*

by  Tyler Cowen in

The author is Mara Hvistendahl, and the subtitle is Choosing Boys over Girls, and the Consequences of a World Full of Men.  It will make my best books of 2011 list, excerpt:

A recent paper in the journal Reproductive Health Matters states, “For women attempting to have a son and experiencing pressure to fulfill their ‘womanly duty’ by having a male child, sex-selective abortion can be extremely empowering.”  The other, more tragic factor…is that women know best just how difficult it is to be female.

…Liao Li also tells me she prefers daughters.  “Girls are very good,” she says.  “They’re soft.  And they take care of you when you’re older.”  But she aborted two female fetuses, she intimates, because having a son is crucial to keeping up appearances: “If you don’t have a boy, you lose face.”

Women have become, in a sense, their own worst enemies.  Development, remember, was supposed to improve the lot of women — and in many areas it does.  But when it comes to reproduction, the opposite happens: women use their increased autonomy to select for sons.

Here is one good review.  I also learned from this book how prevalent the sex imbalance problem is becoming in some parts of the Balkans.

Who is impressed by a British accent?

by  Tyler Cowen

From Christopher Shea:

The main significant effect found in this study was that people who’d lived at least three months outside the US rated the English accent significantly lower than people who’d only lived in the US. In fact, Americans who had not lived abroad considered the English-accented person to be much more intelligent than themselves, but the people who had lived abroad rated the standard American accent more intelligent than the standard English one.  My preferred way of interpreting this (a bit tongue-in-cheek) is that Americans are happy to rate the English as more intelligent than themselves up until they actually start meeting and talking to the English.

There is more here.

 

Assorted links

by  Tyler Cowen

1. The last few times Brad DeLong has criticized me, he has simply imagined I hold positions which I do not.  Again.  And here is the time before that.  Perhaps he too quickly slots my views into debates he has with other people, when he sees some overlapping of claims.  On the first link, my point was to raise a certain “tension” in when market prices are considered sufficient statistics for “trouble” or not; I did not claim the two borrowing situations were the same or that currency denomination of debt is irrelevant.  On the second link, I’ve long argued we are seeing a mix of interacting AD and structural problems; Brad tries to refute me by showing — correctly — that there must be an AD problem in the mix.  It might be a valid criticism to note that in both cases I was not explicit enough, but a) that is not a “simple error,” and b) I’ve been plenty explicit in past posts and I don’t feel like repeating myself all the time.  I feel no guilt in putting some burden on the reader.

There is nothing wrong with the economics in Brad’s two posts, but in both cases he has failed The Tyler Cowen Turing Test.  Admittedly, it may be a difficult test to pass, but actually I should hope that is the case.

2. Retail politics, Argentina style.

3. Pizza discipline.

4. The economics of payroll tax relief.

5. Former GMU econ Ph.d. student now is Prime Minister of Somalia.

6. Here is one of my old attempts at an ideological Turing test.