Tuesday assorted links
2. Is Jacob Neusner the most-published man? Is Jacob Neusner underrated?
3. Are the minimum wage and EITC complements?
4. Has Vanguard saved investors $1 trillion?
5. Dog owners already knew this.
6. George Soros’s campaign to elect better prosecutors.
7. China regulation of the day: “TV stations must play down shows’ casts and limit celebrities’ appearances on reality shows.”
My dialogue with Bob Zoellick on Trump and trade
What if Donald Trump actually won the election? What would happen with trade and the economy?
Here is part one, all nice and pretty with photos, part two will come tomorrow. Zoellick suggests that if Trump abrogated various trade deals, the legal default would be a return to…Smoot-Hawley! As former USTR, he should know. Anyway, here is one part of the dialogue:
Cowen: I expect a somewhat slightly more optimistic scenario. I think a President Trump would give us a reality-TV version of a tariff hike. I don’t necessarily think he wants to experience the pain of tariffs going up, markets crashing and all the political fallout early in his time in office.
Yet he’s promised he would do something and he loves to spar with people and claim he’s being done wrong and rail against elites rather than own problems and solve them. So I think what he would probably do is announce that he had abrogated these treaties, not actually do it. There would be a very high level of uncertainty but I don’t think the laws on the books would necessarily change.
The biggest thing at stake here is uncertainty. Under all of these scenarios, the real impact would be on services, which often rely more on the regulatory system. Uncertainty would result in a higher implicit tax on exports of services to the U.S. than on exports of goods.
Zoellick: I think that’s an extremely optimistic interpretation. Remember, he has the authority to act. He can raise tariffs and create havoc.
I agree on your uncertainty point, but I think you may be a little blithe about the risk to markets. Other countries aren’t just going to stand for the U.S.’s blustering.
This is serious stuff. I worked on German unification. I’ve done a bunch of trade deals. I’ve had some experience internationally. If you act the way Trump talks you’re going to pull down a 70-year-old system that got us out of the Great Depression and helped the U.S. become the strongest economy in the world. This isn’t for fooling around with.
Here is the full, raw text with no formatting. Eleven full pages, that is for me the best version! There are many, many points of interest, I really liked this exchange.
The FDA and the EpiPen Shock
I haven’t written much about the massive increase in the price of the EpiPen because I’ve said it all before–mostly this about FDA costs and delay and some bending of various laws to favor cronies and, as with the infamous Shkreli and Daraprim case, one solution would be a reciprocity system that allowed importation of epipen-like devices approved abroad.
I’m glad, however, that I didn’t go into this in detail because SlateStarCodex has knocked one out of the park on this issue:
…when was the last time that America’s chair industry hiked the price of chairs 400% and suddenly nobody in the country could afford to sit down? When was the last time that the mug industry decided to charge $300 per cup, and everyone had to drink coffee straight from the pot or face bankruptcy? When was the last time greedy shoe executives forced most Americans to go barefoot?
…[lots of stuff about FDA and EpiPen specifically]…
Imagine that the government creates the Furniture and Desk Association, an agency which declares that only IKEA is allowed to sell chairs. IKEA responds by charging $300 per chair. Other companies try to sell stools or sofas, but get bogged down for years in litigation over whether these technically count as “chairs”. When a few of them win their court cases, the FDA shoots them down anyway for vague reasons it refuses to share, or because they haven’t done studies showing that their chairs will not break, or because the studies that showed their chairs will not break didn’t include a high enough number of morbidly obese people so we can’t be sure they won’t break. Finally, Target spends tens of millions of dollars on lawyers and gets the okay to compete with IKEA, but people can only get Target chairs if they have a note signed by a professional interior designer saying that their room needs a “comfort-producing seating implement” and which absolutely definitely does not mention “chairs” anywhere, because otherwise a child who was used to sitting on IKEA chairs might sit down on a Target chair the wrong way, get confused, fall off, and break her head.
(You’re going to say this is an unfair comparison because drugs are potentially dangerous and chairs aren’t – but 50 people die each year from falling off chairs in Britain alone and as far as I know nobody has ever died from an EpiPen malfunction.)
Imagine that this whole system is going on at the same time that IKEA donates millions of dollars lobbying senators about chair-related issues, and that these same senators vote down a bill preventing IKEA from paying off other companies to stay out of the chair industry. Also, suppose that a bunch of people are dying each year of exhaustion from having to stand up all the time because chairs are too expensive unless you have really good furniture insurance, which is totally a thing and which everybody is legally required to have.
And now imagine that a news site responds with an article saying the government doesn’t regulate chairs enough.
Read the whole thing.
Addendum: Steve in the comments reminds me that there is a case of a big increase in the price of chairs. Of course, it proves the rule.
The deindustrialization of Boydton, Virginia
Microsoft did not dispute reports that it would spend $1.1 billion on the Boydton data center, and said that “on average, data centers employ tens to several dozen people,” in a mixture of corporate and contracted positions. It declined to let a reporter tour the site.
“They talked about 100 jobs, but it’s a slow process,” said Thomas C. Coleman III, the mayor of Boydton. So far, he says, the biggest impact “has been a couple of lunch tables at the Triangle gas station.”
That is from Quentin Hardy at the NYT.
“Clinton economist trusts government too much”
Being a reticent fellow myself, I enjoyed that Bloomberg-given headline. That is for my latest column, on the recent book and ideas of Heather Boushey. She wishes government to take a much larger hand in sick paid leave, parental leave, and care for the elderly, among other issues. Here is one excerpt:
Most likely, there is a big difference between short-run and long-run effects. For instance, employers value the workers they have, and are reluctant to fire them when labor costs go up. A lot of “pro-worker” policies thus seem to be a kind of magical free lunch. Over time, however, as a generation of workers turns over and is replaced, mandatory benefits represent a real added cost, evaluated anew, and employers will respond accordingly. They will cut the paid dollar wage, cut other job benefits, require more hard work, automate more, or cut back on plans for growing the business. The downward-sloping demand curve is the best established empirical regularity in all of economics, and in this context that means some laborers — maybe most laborers — will pay a price for their new benefits, one way or another.
Note that if firms have better bargaining power than do workers, workers can in the short run claw some of that back through the law. Yet that superior bargaining power simply will be reestablished one generation of workers later, albeit with jobs at a new higher-mandated-benefit, lower-something-else equilibrium. Hardly anyone gets that. And:
Boushey doesn’t estimate or indicate the expense of her proposed mandatory benefits, although she does suggest on page 1 that the cost would be “very small.” She is developing a new kind of supply-side economics, this time on the left, but like her right-wing counterparts she is running the risk of excess optimism about how much her suggested improvements will boost productivity in the system.
Give them cash I say, do read the whole thing.
Here is Heather Boushey’s new book from Harvard University Press, Finding Time: The Economics of Work-Life Conflict. I disagree with it fundamentally, but still many of you will find it of considerable value. She is also the chief economist for Hillary Clinton’s transition team, and I would trust her with nuclear weapons.
Most Important News of Your Day/Lifetime?
An international team of scientists from the Search for Extraterrestrial Intelligence (SETI) is investigating mysterious signal spikes emitting from a 6.3-billion-year-old star in the constellation Hercules—95 light years away from Earth. The implications are extraordinary and point to the possibility of a civilization far more advanced than our own.
The safe bet is against but stranger things have happened.
Here and more information here.
Hat tip: Next Draft.
Monday assorted links
2. Miss Hokusai anime film coming out. And new information about Elizabeth Bishop.
3. Italy’s poop museum (NYT).
4. Megan McArdle on what we should have done instead of Obamacare.
Obit of Sir Anthony Jay, co-creator of Yes Minister
This is from the Telegraph obit:
“However, not many, perhaps, were aware that the serial was commissioned with a serious political purpose: to popularise public choice theory. It is because it succeeded spectacularly that Jay received a knighthood in 1988.”
There are numerous interesting points in the obituary, for instance:
In Zimbabwe, Robert Mugabe was said to be a No 1 fan.
For the pointer I thank David Stein. And here is my earlier Conversation with Margalit Fox, senior obituary writer for The New York Times.
Tim Harford’s *Messy*
The subtitle is The Power of Disorder to Transform Our Lives, and it is Tim’s best and deepest book. You’ll be hearing more about it in due time, the publication date is October 4, you can pre-order it here.
Tyler Cowen’s guide to Enlightenment
No, that is not enlightenment about life, that is enlightenment about Enlightenment, as in the eighteenth century phenomenon. P., a loyal MR reader, wrote to me with such a request, noting correctly that “I usually find that broad, ambitious survey books are not the answer.”
That survey would be Peter Gay, recently a bestseller in China by the way, and then Ernst Cassirer, Jonathan Israel, and Roy Porter, but let me outline an alternative program of study. The goal here is to be practical, engaging, and vivid, not comprehensive or scholarly per se:
Books:
Geoffrey Clive’s short book The Romantic Enlightenment.
James Boswell, Journals, selected excerpts, he was an early blogger by the way, and David Hume, An Enquiry Concerning Human Understanding. I find that to be one of the wittiest of books. Plus Hume’s Essays.
Diderot, Rameau’s Nephew, and Rousseau’s Second Discourse. Condorcet, Essay on the Progress of the Human Mind. Voltaire I consider overrated.
Swift, Gulliver’s Travels, yes I know it is arguably “anti-Enlightenment,” better yet. If you insist on another Irishman, Bishop Berkeley is an entertaining writer as well.
Founding documents of the United States, and Ben Franklin, Autobiography.
Kant, Perpetual Peace, “What is Enlightenment?”, and Lessing, Nathan the Wise.
Beccaria, Of Crimes and Punishments.
If you have the time to tackle longer books, start with Smith’s Wealth of Nations and Boswell’s Life of Johnson and then Casanova and Tristram Shandy (there is by the way a splendid book on the postmodern in the Enlightenment but I can no longer remember the cite). Leave Montesquieu to the Straussians, although the returns are high if you are so inclined.
For history, read up on eighteenth century scientific societies, Robert Darnton on the rise of publishing and the book trade, Habermas on the coffeehouse debate culture and the public sphere, and Brewer and McKendrick on the rise of consumer society in England. Try Wikipedia for Catherine the Great, Frederick the Great, and other rulers of the time. There is also Margaret C. Jacob, The Radical Enlightenment, and books on 18th century Freemasonry. The French Revolution seems to require its own blog post, as does the Industrial Revolution, slavery too, in a pinch resort to the MR search function box on this blog. Foucault will give you a sense of the dark side of the Enlightenment, his history is unreliable but read him on Discipline and Punishment and on ideology try the rather dense The Order of Things.
That all said, I would start with music and the arts first.
Music:
Haydn, the London symphonies and late piano sonatas and string quartets Op.76.
Mozart, the major operas, including reading through the libretti while listening. If you can only do one thing on this list…
Gluck, assorted operas, noting he is not nearly the equal of Haydn or Mozart as a composer but he did capture the spirit of Enlightenment.
C.P.E. Bach, the Prussian Sonatas.
Painting:
Study French painting from Chardin through David, picture books will do if you can’t visit the original works. Focus on Watteau, Boucher, Fragonard, Vigée-Le Brun, Boilly, Hubert Robert, and others, how their works tie into the history of the period and how the styles transformed over time. Visit Paris, Huntington Gardens, and Tiepolo’s work in the Residenz in Würzburg. Do a tour of Georgian architecture in England, in a pinch visit the derivative works at Harvard, Yale, and Alexandria, Virginia. Study Tiepolo more generally, Goya, and also Antonio Canova.
Movies:
Why not? I’ll toss up Dangerous Liaisons (Vadim and Malkovich versions), Barry Lyndon, Casanova, Amadeus, A Royal Affair (can’t forget Denmark!), Marie Antoinette, Ridicule, and The Madness of King George.
What did I leave out that is of utmost importance?
*American Heiress*
What an excellent title, the subtitle is The Wild Saga of the Kidnapping, Crimes and Trial of Patty Hearst, and the author is Jeffrey Toobin. Our age is actually not that crazy by historical standards. Yet here are the last four sentences:
In the end, notwithstanding a surreal detour in the 1970s, Patricia led the life for which she was destined back in Hillsborough. The story of Patty Hearst, as extraordinary as it once was, had a familiar, even predictable ending. She did not turn into a revolutionary. She turned into her mother.
Recommended.
Sunday assorted links
1. The culture that is Bethesda, Maryland.
2. Chile’s pension scheme under fire.
3. Child abuse in China: a neglected issue. The statute of limitations should be longer than two years. That’s two from The Economist, the current issue is their best of the year to my mind. Of course you should subscribe.
4. The Mayan-language Ixcanul is perhaps the best movie of the year so far, trailer here, the full movie is here but without subtitles, so brush up on your Mayan or see it on the big screen.
5. This piece illustrates Cowen’s Second Law, yes I know that is a refereed journal and the paper is based on real data but still it is best forgotten or better yet never viewed in the first place. They needed eleven (!) authors for that one, three of them women it would seem, and four on the team chanted that correlation is not causation. I wonder how the IRB discussion went. Less sexually charged is the game of “Diving chess.”
6. “Most of the world’s mathematicians fall into just 24 scientific ‘families’, one of which dates back to the fifteenth century. The insight comes from an analysis of the Mathematics Genealogy Project (MGP), which aims to connect all mathematicians, living and dead, into family trees on the basis of teacher–pupil lineages, in particular who an individual’s doctoral adviser was.” Link here.
Two “The Rest of the Story” Stories
“The rest of the story” stories have a punch line that twists everything that came before into an entirely new and deeper perspective. My favorite such story is about John Nestor.
Nestor became a minor if hated celebrity in the mid-1980s in Washington, DC for his policy of driving on the beltway in the left hand lane at 55 mph, not a mile faster, the rest of the traffic be damned. Nestor believed that the 55 mph speed limit saved lives and he was going to help other people by slowing them down regardless of the exasperation, raised fingers, or honking. He knew better than other people.
The truth, of course, is that it’s actually variance in speed that kills so by driving more slowly than everyone else Nestor was increasing risk not lowering it. But that’s not the punch line. The punch line? John Nestor was an FDA bureaucrat so obstinate that even the overly cautious FDA thought he was a menace and they pulled him from his job in the renal section for not approving a single new drug in more than four years. On the roads or at the FDA, John Nestor illustrated why I say caution can be deadly.
My second favorite story like this comes from a recent article on land use policy by Mark Gimein at the New Yorker:
In 1948, a federal housing bureaucrat named Paul Oppermann, trying to come to terms with the perils of the nuclear age, proposed a solution to the problem of protecting America’s cities from the bomb: empty them out preëmptively by encouraging the population to move to suburbs and small towns of fifty thousand or fewer. “No power in the world could afford to drop an atomic bomb on a city of 50,000 or less” is how the San Francisco Chronicle summarized the talk that Oppermann gave to a local planning organization. Plus, Oppermann explained, you get slum clearance into the bargain.
The punch line? “The next year, Oppermann assumed office as San Francisco’s planning director.” As Gimein notes Oppermann wasn’t able to move people out of San Francisco but he was able to “[cripple] growth with arcane lot-size rules and off-street-parking-space minimums.”
So now you know the rest of the stories.
Interview with Erik Hurst
From the Richmond Fed, it is excellent and interesting throughout, here is one good bit of many:
EF: Given the wage premium associated with a four-year degree and the availability of education financing, it seems like a real puzzle why more people are not obtaining degrees.
Hurst: I have been thinking a lot about that. What is it that’s causing so many young people, particularly young males, to not obtain skills required to be successful in today’s workforce? I have been working with Mark Aguiar and Kerwin Charles and Mark Bils to try to understand what these people’s lives look like. There’s a budget constraint that still has to hold. They have to eat. What you’re finding is that a lot of them are living in their parents’ basements or their cousin’s basement. So many are relying on family support. And a lot of them just aren’t even working at all. So when you go and take a look at the fraction of people in their 20s who haven’t worked in the prior 12 months in 2015, it’s 20 percent for men with less than a four-year college degree. In 1990, that number was 4 percent. So the first thing we are doing is documenting these facts and trying to find out what their lives look like: how they’re eating, what their living situations are like, what attachment they have to the labor force.
The second part we’re trying to think about is why. What we are considering is whether it’s possible that a leisure lifestyle is easier now in your 20s than it was in the past. In 1980, if you were in your 20s and you weren’t working, you were pretty isolated. You were sitting by yourself. You could watch a few channels on TV but no one else was out there. Now if you’re not working, you could be online on social media or you could be playing videogames in an interactive way, things that make not working more attractive than before. And those videogames and leisure goods generally are relatively cheap compared to what they were in 1980. So when you’re making your choice of working relative to your reservation wage, your reservation wage has gone up some because the outside option of not working is a lot more attractive. So that’s what we’re thinking but I don’t know how we’re going to test it.
Also, eventually these people will get older, of course, and many will have a spouse or kids. When that happens, their income requirements go up and they need jobs, but they probably haven’t been building the type of skills required to get a job. So that’s hard to understand. I have never written a paper before where people were myopic, but the behavior of a lot of people in their 20s now seems myopic.
I wish to suggest a related observation. If one argues that some percentage of unemployment is “voluntary” in this manner, one is often met with scorn, and with a not entirely accurate redescription of the view, based on a rebuttal that a sudden outbreak of laziness is unlikely. However if the return to higher education goes up, and the elasticity response is mediocre, sociological explanations are somehow entirely acceptable and perhaps even mandatory. You might call this Quantity Stickiness for Me But Not For Thee. It’s a bit like how wage stickiness is an acceptable behavioral postulate but employers’ “firing aversion” is not.
Hat tip goes to Justin Wolfers.
Lima, Peru bleg
Your assistance is humbly requested, noting that the shortness of the trip will prevent any significant excursions outside of the city. Do note I have been there twice, though not in the last nineteen years or so.
I thank you all in advance for your suggestions.