Law professors and zoning advocates may need a new example
The paper title is “Strip Clubs, ‘Secondary Effects’, and Residential Property Prices,” and the authors are Taggart J. Brooks, brad R. Humphries, and Adam Nowak, here is the abstract maybe strip clubs are more popular than I thought:
The ‘secondary effects’ legal doctrine allows municipalities to zone, or otherwise regulate, sexually oriented businesses. Negative ‘secondary effects’ (economic externalities) justify limiting First Amendment protection of speech conducted inside strip clubs. One example of a secondary effect, cited in no fewer than four United States Supreme Court rulings, is the negative effect of strip clubs on the quality of the surrounding neighborhood. Little empirical evidence that strip clubs do, in fact, have a negative effect on the surrounding neighborhood exists. To the extent that changes in neighborhood quality are reflected by changes in property prices, property prices should decrease when a strip club opens up nearby. We estimate an augmented repeat sales regression model of housing prices to estimate the effect of strip clubs on nearby residential property prices. Using real estate transactions from King County, Washington, we test the hypothesis that strip clubs have a negative effect on surrounding residential property prices. We exploit the unique and unexpected termination of a 17 year moratorium on new strip club openings in order to generate exogenous variation in the operation of strip clubs. We find no statistical evidence that strip clubs have ‘secondary effects’ on nearby residential property prices.
Is this evidence for or against “the death of distance”?
For the pointer I thank the excellent Kevin Lewis.
Tuesday assorted links
1. “After 12 weeks, we had four very reliable rats: Ms. Kleinworth, Ms. Coutts, Mr. Morgan, and Mr. Lehmann (we were quite surprised that he made it). Their performance was comparable to that of the world’s best fund managers.”
2. Charles Koch on education and Schopenhauer.
3. eBook sale on Virginia Postrel’s The Future and its Enemies. They’re still with us!
4. No great stagnation in modular cat houses.
5. Brazilian gender parity sumo wrestling for women?
6. The culture that is Saudi, slide show of a sort.
Demographics and Growth
Why is growth so slow? Tim Lee has a good run down of eight theories including one suggested by myself, demographics:
Americans are having fewer babies than they did in the past, and this has had two related effects: The population as a whole is growing more slowly, and the average age of the population is rising.
There’s reason to think that both trends are bad for economic growth. Younger people are more likely to pursue new ideas, take risks, and start new businesses. So an aging population is likely to lead to a less dynamic economy.
Slower population growth can also be a source of economic stagnation in its own right. A rapidly growing population means rising demand for products of all kinds — new homes, restaurants, shopping malls, and so forth. So more businesses will be started in general, which means more opportunities for experimentation. Successful stores, restaurants, and other businesses can be expanded or franchised to other metropolitan areas, allowing good ideas to spread quickly.
In contrast, in a country with a more stagnant population, starting a new business requires replacing an existing business. Even if a young person has an innovative idea for a new company, the practical difficulties of getting the business started might be too great for putting the idea into practice. And so change can only happen by convincing existing business owners to change their behavior — an inherently slower and more difficult process.
A just-released NBER working paper by Nicole Maestas, Kathleen J. Mullen and David Powell provides some new evidence for this hypothesis by looking at the US states:
Population aging is widely assumed to have detrimental effects on economic growth yet there is little empirical evidence about the magnitude of its effects. This paper starts from the observation that many U.S. states have already experienced substantial growth in the size of their older population and much of this growth was predetermined by historical trends in fertility. We use predicted variation in the rate of population aging across U.S. states over the period 1980-2010 to estimate the economic impact of aging on state output per capita. We find that a 10% increase in the fraction of the population ages 60+ decreases the growth rate of GDP per capita by 5.5%. Two-thirds of the reduction is due to slower growth in the labor productivity of workers across the age distribution, while one-third arises from slower labor force growth. Our results imply annual GDP growth will slow by 1.2 percentage points this decade and 0.6 percentage points next decade due to population aging.
Exporting vs. education
Also known as Mexico fact of the day. Here is a new result from David Atkin, published in the American Economic Review:
This paper presents empirical evidence that the growth of export manufacturing in Mexico during a period of major trade reforms (the years 1986 to 2000) altered the distribution of education. I use variation in the timing of factory openings across commuting zones to show that school drop-out increased with local expansions in export-manufacturing industries. The magnitudes I find suggest that for every 25 jobs created, one student dropped out of school at grade 9 rather than continuing through to grade 12. These effects are driven by less-skilled export-manufacturing jobs which raised the opportunity cost of schooling for students at the margin.
The title is “Endogenous Skill Acquisition and Export Manufacturing in Mexico,” here are earlier ungated copies. By the way, here is my earlier discussion of why Mexico is not a better-educated nation:
A high school diploma brings higher wages in Mexico, but in the United States the more educated migrants do not earn noticeably more than those who have less education. Education does not much raise the productivity of hard physical labor. The result is that the least educated Mexicans have the most reason to cross the border. In addition, many Mexicans, knowing they may someday go to the United States, see less reason to invest in education.
It seems both factors matter.
Driverless taxis coming to Singapore
Delphi Automotive Plc, the vehicle-electronics supplier that last year conducted the first coast-to-coast U.S. demonstration of a self-driving car, will begin testing autonomous autos in Singapore this year that may lead to robot taxis by the end of the decade.
The test will involve six autonomous autos, starting with the modified Audi Q5 the supplier used last year to travel from San Francisco to New York in self-driving mode. In Singapore, the cars initially will follow three predetermined routes and by 2019 will range freely based on customer requests, without a driver or a human minder, according to Glen DeVos, a Delphi senior vice president.
“We actually will have point-to-point automated mobility on demand with no driver in the car,” he said at a briefing with reporters at Delphi’s Troy, Michigan, operations base. “It’s one of the first, if not the very first, pilot programs where we’ll demonstrate mobility-on-demand systems.”
Here is more from Keith Naughton.
Some of the best news of this year Brazil estimate of the day
…the recovery, which could come as soon as the fourth quarter, will likely be plodding. Brazil’s gross domestic product is projected to expand by about 1% next year, following deep back-to-back contractions of 3.8% in 2015 and an estimated 3.3% this year, according to a recent survey of 100 economists by the nation’s central bank.
It is bad news that this is good news, but good news it is. Here is the longer WSJ piece, noting it still contains a fair amount of bad news.
Monday assorted links
1. Remember Walter Block’s “Murderer’s Park”? South African markets in everything.
2. A professional cook criticizes amateur cooks.
3. “Harper made the startling claim that we might see “an all-intersex podium in the 800 in Rio and I wouldn’t be surprised to see as many as five intersex women in the eight-person final.”” Link here.
4. In praise of Claudia Olivetti. And the economics of university presses.
Kindle pre-order for *The Complacent Class* is now possible
Here is the link, and my previous extra book offer still stands (for now!).
The economist whose ideas guide Trump the most
I say it is Peter Navarro, of UC Irvine, and here is my Bloomberg View profile of him. Excerpt:
Trump praised a Navarro book and documentary film critical of China, and while the economist has never met the candidate, he describes a campaign role as follows: “I now work closely with the campaign on issues related to the economy, trade, China, and foreign policy in Asia.” He endorsed and defended Trump in a March essay, and given that relatively few academic economists have embraced the Trump candidacy, Navarro is plausibly a leading candidate for a top job in a Trump administration.
…Navarro’s other writings on China have hovered between these extremes of tone, but in general he has been pushing the line that the U.S. should be tough on trade, crack down on intellectual property theft, tax Chinese exports, combat Chinese mercantilism, bring jobs home, and yes, make America great again. If you want to read one thinker to understand Trump on China, it is Navarro.
There is much more at the link, including a discussion of Navarro’s academic career (he has many good pieces in a Chicago School, public choice, law and economics vein), his writings on investing (unreliable and oversold), and how he is a significant transitional figure for the Republican Party on moving from a mostly pro-China attitude to extreme China skepticism. It is very easy for me to imagine the not-yet-on-the-radar-screen Navarro having one of the leading economic roles in a Trump Administration, do read the whole thing it may be (p = 0.3) our future.
Inconvenient questions
Statement: I think it is more than appropriate and indeed imperative to raise and indeed investigate questions about the suspicious ties between the Trump candidacy and Putin’s Russia.
Question: Given what is now an extensive and proven history of Communist spies in the United States government from 1933 to 1945, was it also appropriate for Joseph McCarthy to raise such questions about (lower-level) political officers in his day? If you insinuate or make the charge outright that Trump and/or staff might be Russian agents on the basis of incomplete evidence, not yet demonstrated in a court of law, shall we downgrade you or upgrade McCarthy? Or both?
Statement: I think it is more than appropriate to raise questions about whether Trump’s rather cavalier attitude toward the U.S. Constitution disqualifies him from the Presidency on those grounds alone. I consider myself a fairly strict Constitutionalist, most of all for the Bill of Rights.
Question: Do you feel the same way about FDR’s court-packing scheme and internment of Japanese-Americans? Were the Democratic Congressmen — wasn’t that just about all of them? — who stood with FDR on the latter issue better or worse than Paul Ryan for standing with Trump today? If FDR had offsetting virtues as President, because he did in fact “get a lot done,” and you in general support him for that, are Trump supporters allowed to have a similar belief today about their candidate, viewing him in the lineage of FDR? On the basis of this one FDR data point, is it possible that presidential achievement is positively correlated with presidential oppression? Or is that sheer coincidence and all Trump supporters ought to believe as such?
Question: To paraphrase Bill Easterly, if you agree that defeating Trump is a national emergency, do you also think the Democrats should be compromising more on actual policies? Raise your left hand if you have come out and said this. See in addition Ross Douthat’s column.
Statement: During the 1930s, a large number of New Deal Democrats admired the fascism of Mussolini’s Italy, and less commonly but still sometimes Hitler’s Germany in its earlier years.
Question: Does this history cause you to have a more positive view of Trump and his supporters? Or do you instead significantly downgrade your sympathy for the Democrats of the New Deal era, now that you have lived through the Trump phenomenon? Does the Trump phenomenon now seem to you more in accord with traditional and historic American values? (I haven’t even mentioned slavery or race until now, nor Nagasaki nor Native Americans. And oh — did I mention that the New Deal coalition signed off on a lot of bigotry and segregation to keep the party together and get the core agenda through? Or how about the forcible repatriation of perhaps up to 2 million Mexicans, without due process of law, and many being American citizens, during the 1930s?)
Final question(s): Would American history have taken a better or worse course if none of our Presidents had had significant authoritarian tendencies? Or do you insist that is the wrong question to ask, instead preferring to stress the issue of “our authoritarians” vs. “their authoritarians” and stressing the relative virtues of the former and the evils of the latter? And if that is indeed the case, do you now understand why Trump has come as far as he has?
File under: Nothing New Under the Sun, That was Then This is Now, Authoritarianism for Me but Not For Thee, Why We Can’t Have The Good Things in Life, Asking for a Friend, other.
Sunday assorted links
1. Mountains May Depart is an excellent Jia Zhangke movie, hat tip Scott Sumner. I also very much like The Innocents, still in some theaters around you.
2. Model this: Indian baby-tossing (NYT). And here is Luke Aikins-tossing, I note that a number of action movies with plunging heroes just became more plausible.
3. What people collect (NYT).
4. “There is no comprehensive data on U.S. Olympic athlete pay, but information collected by a nonprofit last year from 150 track and field athletes ranked in the top 10 in the country in their events found an average income of $16,553.” Link here. The coaches and bureaucrats typically make much more.
5. Is the “better camera” the main reason why we are all so worried? Not my view, but always happy to put contrasting opinions before you.
6. What a “left wing” British debate looks like. Don’t even click on or read that highly intelligent yet train wreck of a link, just return to my earlier claim “…the important European thinkers of the next generation will be religious, not left-wing and secular.”
There is a thirty percent chance Ray Fair rises considerably in status
The weak Friday gdp report reminded me of this March column by Jeff Sommer (NYT):
Professor Fair has been tracking and predicting elections in real time since 1978 with a good deal of success, using an approach that continues to be provocative. He ruthlessly excludes nearly all the details that are the basic diet of conventional political analysts — items like the burning issues of the day, the identities, personalities and speeches of the candidates and the strength of their campaign organizations. In fact, his model pays no attention whatsoever to the day-to-day fireworks of the political campaigns.
Instead, he considers only economics, finding that economic factors usually correlate well with political outcomes…
In November 2014, he did his first projection for the 2016 election and found that the odds favored the Republican candidate — whoever that may be. The Republican side has been leading consistently ever since, and the margin has increased as he has fed in new data.
Here is Reihan Salam on Trump and pessimism.
The culture that is Virginia (D.C.)
Charlotte: He’s writing a graphic novel that has superheroes in it. We have the same favorite superhero. I like Batman because his only power is being super rich. That’s more realistic than the others. And he agreed with me.
Don: She was a little less adventurous than I was when it came to food.
Charlotte: He said he was from Vienna and I was like, Austria? I had to dial that back a second to not sound completely stupid. That’s the type of thing that only a diplomat brat would accidentally say. I don’t have a car, and I don’t go to Virginia very much for anything, really. So it seems very far.
That is from Washington Post Date Lab, an object lesson in both behavioral economics and the limitations of the Coase theorem.
The youth culture that is Poland
The young are more hostile to refugees than their parents: over 80% of Poles aged 18-34 oppose taking them in, compared with 52% of those over 65. They are also more in favour of border controls within the EU. Many of the teenage pilgrims in Krakow say they fear a wave of “Islamisation” or “secularisation” from western Europe. (Oddly, they sometimes conflate the two.) The Pope is “great on faith but not on politics”, says a young street sweeper from Nowa Huta, an industrial area of Krakow.
That is from The Economist, the article is interesting more generally. I’ve said it before, I’ll say it again: the important European thinkers of the next generation will be religious, not left-wing and secular.
Saturday assorted links
3. There is a great Dulles mobile lounge stagnation indeed retrogression.
4. How the Thaad deployment is strangling South Korean politics.
5. Cynthia Ozick’s poem about the marketplace, a response to a critic of her volume.
6. A short Japanese baseball meditation on status in America; “…what I’ve noticed is that in America, when people feel like a person is below them, not just in numbers but in general, they will kind of talk you up. But then when you get up to the same level or maybe even higher, they get in attack mode; they are maybe not as supportive.”
7. Gender Matters: An Economist’s Perspective, a new blog and by rising, well-regarded female economist S Anukriti.