Results for “markets in everything” 1652 found
My commentary here is late to the party, but I had not visited a branch before. Here are my impressions, derived from the Columbus Circle outlet in Manhattan:
1. It is a poorly designed store for me, most of all because it does not emphasize new releases. I feel I am familiar with a lot of older titles, or I went through a more or less rational process of deciding not to become familiar with them. Their current popularity, as measured say by Amazon rankings, does not cause me to reassess those judgments. For me, aggregate Amazon popularity has no real predictive power, except perhaps I don’t want to buy books everyone liked. “A really smart person says to consider this again,” however, would revise my prior estimates.
2. For me, the very best bookstore and bookstore layout is Daunt, in London, Marylebone High St. You are hit by a blast of what is new, but also selected according to intellectual seriousness rather than popularity. You can view many titles at the same time, because they use the “facing out” function just right for their new arrivals tables. Some of the rest of the store is arranged “by country,” much preferable to having say China books in separate sections of history, travel, biography, and so on.
3. I am pleased that fiction is given so much space toward the front of the store. I do not see this as good for me, but it is a worthwhile counterweight to the ongoing tendency of American book markets to reward non-fiction, or at least what is supposed to be non-fiction.
4. I have mixed feelings about the idea of all books facing outward. On the positive side, books not facing outward tend to be ignored. On the downside, this also limits the potential for hierarchicalization through visual display. All books facing outwards is perhaps a bit too much like no books facing outwards.
Overall I am struck by how internet commerce is affecting Christie’s and Sotheby’s in a broadly similar fashion. The auction houses used to put out different genres, such as Contemporary, European Painting, 20th Century, and so on, for 3-4 day windows, and then they would display virtually everything up for auction. Now they have a single big display, with highlights from each area, and the rest viewable on-line. That display then shows for about three weeks. Like Amazon, they are opting to emphasize what is popular and to let on-line displays pick up the tails and niches. In all cases, that means less turnover in the displays. That is information-rich for infrequent visitors, who can take in more at once, but information-poor in relative terms for frequent visitors. As a somewhat infrequent visitor to auction houses, I gain, but for bookstores I would prefer they cater to the relatively frequent patrons.
5. I am most worried by the prominent center table at the entrance, which presents “Books with 4.8 Amazon stars or higher.” I saw a book on mixology, a picture book of Los Angeles, a Marvel comics encyclopedia, a book connected to the musical Hamilton, and a series of technique-oriented cookbooks, such as Harold McGee, a very good manual by the way. Isabel Wilkerson was the closest they had to “my kind of intelligent non-fiction.” Neil Hilbon represented poetry, of course his best-known book does have a five-star average, fortunately “…these poems are anything but saccharine.”
Unfortunately, the final message is that Amazon will work hard so that controversial books do not receive Amazon’s highest in-store promotions. Why not use software to measure the quality of writing or maybe even thought in a book’s reviews, and thereby assign it a new grade?: “Here are the books the smart people chose to write about”?
6. I consider myself quite pro-Amazon, still to me it feels dystopic when an attractive young saleswoman says so cheerily to (some) customers: “Thank you for being Prime!”
7. I suspect the entire store is a front to display and sell gadgets, at least I hope it is.
8. I didn’t buy anything.
Emailed to me:
What do you think would happen if we returned to a world where commercial bank leverage was much reduced? (E.g. 2X max.) Or, maybe equivalently, if central banks didn’t act as a lender of last resort? Is that “necessary” for a modern economy?
Asset prices would fall a lot (presumably). What else? How much worse off would current people become? (Future people are presumably somewhat better off, growth implications notwithstanding—they are less burdened with the other side of all these out-of-the-money puts that central banks have effectively issued.) > > How should we think about the optimization space spanning growth rates, banking capital requirements, and intergenerational fairness?
First, these questions are in those relatively rare areas where even at the conceptual level top people do not agree. So maybe you won’t agree with my responses, but don’t take any answers on trust from anyone else either.
I think of the liquidity transformation of banks in terms of two core activities:
a. Transforming otherwise somewhat illiquid activities into liquid deposits. That boosts risk-taking capacities, boosts aggregate investment, and makes depositors more liquid in real terms. Those are ex ante gains, though note that more risk-taking, even when a good thing, can make economies more volatile.
b. Giving private depositors more nominal liquidity, but in a way that raises prices and thus doesn’t really increase real, inflation-adjusted liquidity for depositors as a whole. There is thus a rent-seeking component to bank activity and liquidity production.
Less bank leverage, you get less of both. In my view a) is usually much more important than b). For those who defend narrow banking, 100% fractional reserves, or just extreme capital requirements, a) is usually minimized. Nonetheless b) is real, and it means that some partial, reasonable regulation won’t wreck the sector as much as it might seem at first.
There is however another factor: if bank leverage gets too high, bank equity takes on too much risk, to take advantage of bank creditors and possibly taxpayers too. Or too much leverage can make a given level of bank manager complacency too socially costly to bear. This latter factor seems to have been very important for the 2007-2008 crisis.
So bank leverage does need to be regulated in some manner, and the better it is regulated the more the system can dispense with other forms of regulation.
That said, the delta really matters. Requiring significantly less bank leverage, at any status quo margin, probably will bring a recession. The recession itself may make banks riskier than the lower leverage will make them safer. In this sense many economies are stuck with the levels of leverage they have, for better or worse. It is not easy to pop a “leverage bubble.”
I don’t find the idea of 40% capital requirements, combined with an absolute minimum of regulation, absurd on the face of it. But I don’t see how we can get there, even for the future generations. We’ll end up doing too many stupid things in the meantime; Dodd-Frank for all its excesses could have been much worse.
I also worry that 40% capital requirements would just push leverage elsewhere in the economy. Possibly into safer sectors, but I wouldn’t be too confident there. And reading any random few books on “bank off-balance sheet risk” will scare the beejesus out of anyone, even in good times.
Now, you worded your question carefully: “commercial bank leverage was much reduced.”
A lot of commercial bank leverage can be replaced by leverage from other sources, many less regulated or less “establishment.” Overall, on current and recent margins I prefer to keep leverage in the commercial banking sector, compared to the relevant alternatives. It may be less efficient but it is socially safer and held within the Fed’s and FDIC regulatory safety net, probably the best of the available politicized alternatives. That said, there is a natural and indeed mostly desirable trend for the commercial banking sector to become less important over time, in part because it is regulated and also somewhat static in basic mentality. (Note that the financial crisis interrupted this process, for instance Goldman taking up a bank charter. I would still bet on it for the longer run.)
Obviously, VC markets are a possible counterfactual. This all gets back to Ed Conard’s neglected and profound point that “equity” is what is scarce in economies, and how many troubles stem from that fact. Ideally, we’d like to organize much more like VC markets, partly as a substitute for bank leverage and the accompanying distorting regulation, and maybe we will over time, but there is a long, long way to go.
One big problem with attempts to radically restrict bank leverage is that they simply shift leverage into other parts of the economy, possibly in more dangerous forms. Should I feel better about commercial credit firms taking up more of this risk? Hard to say, but the Fed would not feel better about that, it makes their job harder. This gets back to being somewhat stuck with the levels of leverage one already has, until they blow up at least. There are pretty much always ways to create leverage that regulators cannot so easily control or perhaps not even understand. Again this bring us back to “off-balance risk,” among other topics including of course fintech.
I view central banks as “lenders of second resort.” The first resort is the private sector, the last resort is Congress. I favor empowering central banks to keep Congress out of it. Central banks are actually a fairly early line of defense, in military terms. And I almost always prefer them to the legislature in virtually all developed countries.
I fear however that we will have to rely on the LOLR function more and more often. Consider how it interacts with deposit insurance. If everything were like a simple form of FDIC-insured demand deposits, FDIC guarantees would suffice.
But what if a demand deposit is no longer so well-defined? What about money market funds? Repurchase agreements? Derivatives and other synthetic positions? Guaranteeing demand deposits is a weaker and weaker protection for the aggregate, as indeed we learned in 2008. The Ricardo Hausmann position is to extend the governmental guarantees to as many areas as possible, but that makes me deeply nervous. Not only is this fiscally dangerous, I also think it would lead to stifling regulation being applied too broadly.
But relying more and more on LOLR also makes me nervous. So I view this as a major way in which the modern world is headed for recurring trouble on a significant scale, no matter what regulators do.
I am never sure how much of the benefits of banking/finance are “level effects” as opposed to “growth effects.” It is easy for me to believe that good banking/finance enables more consumption at a sustainably higher level, in part because precautionary savings motives can be satisfied more effectively and with less sacrifice. I am less sure that the long-term growth rate of the economy will rise; if so, that does not seem to show up in the data once economies cross over the middle income trap. That said, if there were an effect, since growth rates slow down with high levels in any case, I don’t think it would be easy to find and verify.
1. Who’s complacent?: wine-infused coffee exists.
2. “Across a range of policy settings, people find the general use of behavioural interventions more ethical when illustrated by examples that accord with their politics, but view those same interventions as more unethical when illustrated by examples at odds with their politics.” Link here.
6. David Brooks on Thaler (NYT).
Larry was in superb form, and we talked about mentoring, innovation in higher education, monopoly in the American economy, the optimal rate of capital income taxation, philanthropy, Hermann Melville, the benefits of labor unions, Mexico, Russia, and China, Fed undershooting on the inflation target, and Larry’s table tennis adventure in the summer Jewish Olympics. Here is the podcast, video, and transcript.
Here is one excerpt:
SUMMERS: Second, the VIX — people tend to underappreciate this. The volatility of the market moves very much with the level of the market. The reason is that if a company has $100 of debt and $100 of equity, and then the stock market goes up, it’s 50/50 levered.
If the stock market goes up by $100, then it has $100 of debt and $200 of equity and it’s only one-third levered. So when the stock market goes up, its volatility naturally goes down. And the stock market has gone way up over the last 10 months. That’s a factor operating to make its volatility go significantly down.
It’s also the case if you look at surprises. The magnitude of errors in the consensus estimates of company profits or the consensus estimates of industrial production or what have you, numbers have been coming in close to consensus to an unusual degree over the last few months.
I think all those things contribute to the relatively low level of the VIX, but those are more in the way of ex post explanations. If you had told me everything that was going on in the world and asked me to guess where the VIX would be, I would expect it to have been a little higher than it is right now.
COWEN: If there’s an ongoing demand shortfall, as is suggested by many secular stagnation approaches, does that mean monopoly cannot be a major economic problem because that’s from the supply side, and that the supply side constraint isn’t really binding if you think of there as being multiple Lagrangians. Forgive me for getting technical for a moment. Do you see what I’m saying?
SUMMERS: That wouldn’t have been the way I’d have thought about it, Tyler, but what you’re saying might be right. I think I’d be inclined to say that, if there’s more monopoly, there’s more money going to monopoly firms where there’s a low propensity to spend it, both because the firms don’t invest and because the owners of the firms tend to be rich or endowments that have a low propensity to spend.
So the greater monopoly power, to the extent that it exists, is one factor operating to raise savings and reduce investment which contributes to demand shortfalls and secular stagnation.
I also think that there’s likely to be less entry in competition in markets that aren’t growing rapidly than there is in markets that are growing rapidly. There’s a sense in which less demand over time creates its own lack of supply.
COWEN: What mental qualities make for a good table tennis player?
SUMMERS: Judging by my performance, qualities that I do not possess.
SUMMERS: I think a deft wrist, a certain capacity for concentration, and a great deal of practice. While I practiced intensely in the run-up to the activity, there were other participants who had been practicing intensely for decades. And that gave them a substantial advantage.
If you think you know someone who is very smart, Larry is almost certainly smarter.
The author is Doug Woodham, and the subtitle is Market Insights for Everyone Passionate About Art.
I liked everything in this book, note that the author is a Ph.d economist, has been a partner for McKinsey and also held a major position for Christie’s.
That said, I felt it should have done much more to explain how art is used for money laundering, and also tax arbitrage through donations at inflated prices, based on corrupt appraisals. Those are big reasons why art prices for highly liquid works have boomed so much over the last few decades. Arguably art markets are some of the most corrupt markets in the Western world today.
Measured by the number of Instagram followers, the three biggest artists in the world today are Banksy, JR, and Shepard Fairey.
For deceased artists, the Twitter hashtags game is won by Warhol, Picasso, Dali, and van Gogh, with da Vinci, Monet, and Michelangelo coming next.
Of the 25 highest priced artists in the world today, as measured by auction sales, 8 of them are Chinese. How many of them can you say you are familiar with? On that list are Cui Ruzhuo, Fan Zeng, Zhou Chunya, Zhang Xiaogang, He Jiaying, Huang Yongyu, Liu Wei, and Ju Ming.
Here is more by Zhou Chunya.
Oscar Wilde once said: “When bankers get together for dinner, they discuss art. When artists get together for dinner, they discuss money.”
I can gladly recommend this book, noting it tells only part of the story.
The syringe slides in between the thumb and index finger. Then, with a click, a microchip is injected in the employee’s hand. Another “cyborg” is created.
What could pass for a dystopian vision of the workplace is almost routine at the Swedish startup hub Epicenter. The company offers to implant its workers and startup members with microchips the size of grains of rice that function as swipe cards: to open doors, operate printers, or buy smoothies with a wave of the hand.
The injections have become so popular that workers at Epicenter hold parties for those willing to get implanted.
“The biggest benefit I think is convenience,” said Patrick Mesterton, co-founder and CEO of Epicenter. As a demonstration, he unlocks a door by merely waving near it. “It basically replaces a lot of things you have, other communication devices, whether it be credit cards or keys.”
John V. writes to me:
In your podcast with Ezra Klein, you said your number 1 rule for growing up in New Jersey is “Leave”. I’d encourage you to modify the rule to “Leave…but then Return!”
I grew up in Morris County, lived in the San Francisco area for 10 years after college, and moved back to NJ 3 years ago. I now live just a few towns over from where you grew up in Bergen County.
A few observations from my time back here:
1. More Affordable Than You Think
Given the access to labor markets and the available cultural amenities, Northern New Jersey is surprisingly affordable. It’s still possible to find a reasonable home in a reasonable location for ~$200k, which is close to the national median.
I lived in Palo Alto for most of my time in California. The cheapest 4-bedroom house in Palo Alto right now is $2.6M (https://www.redfin.com/CA/Palo-Alto/687-Florales-Dr-94306/home/1666194).
I live in what is perhaps the most “Palo Alto-like” of Bergen County towns, and my 4-bedroom house cost over 3x less and is almost 2x larger than the Palo Alto house above. I also can walk to the train, a Whole Foods, library, YMCA, town pool, third-wave coffee shop, etc. Not too shabby for the price!
Here’s a nice 4-bedroom house on a 1/3 of an acre for under $500k with a Walk Score of 83, train access to NYC, and good schools:
Yes, property and income taxes are high, but isn’t that really just a form of consumption?
2. Quick Access to World-Class Everything
Some travel time anecdotes from my house:
– 35 minutes to Lincoln Center or Central Park on a Saturday
– 20 minutes to this water fall: http://www.teterboro-online.com/images/scenic/falls1/falls02.jpg
– Just over an hour to this beach: https://i.ytimg.com/vi/lpET7nMihwo/maxresdefault.jpg
The food is good too!
– Korean: http://www.saveur.com/korean-food-restaurants-fort-lee-nj
– Hot Dogs: http://www.seriouseats.com/2010/08/hot-dog-of-the-week-rutts-hut.html
– Turkish Bread: http://www.saveur.com/taskin-bakery-turkish-paterson-nj
– Sliders: http://www.seriouseats.com/tags/white%20manna
– Colombian: https://www.yelp.com/biz_photos/villa-de-colombia-hackensack?select=1qyI6IIONUaXi0673YgkkA
3. Extremely Diverse Middle-Class
Want to see what a successful American future could look like? Go here on a Wednesday or Saturday afternoon: https://en.wikipedia.org/wiki/Westfield_Garden_State_Plaza
Things you’ll see and hear: Five or six different languages being spoken. Russian grandmothers going for a walk. Packs of teenage girls wearing Hijabs. Orthodox Jewish moms pushing strollers. And many more groups, all reflecting the diversity and success of the surrounding towns:
Northern New Jersey has undergone a lot of ethnic change and international immigration over the last 30 years. There are problems of course, including plenty of segregation. But it’s still working pretty well. The rest of the country could learn a thing or two.
Cliff Asness reports:
Maybe it’s just me but a lot of end-of-year commentary about financial markets in 2016, implicitly and sometimes explicitly, makes it sound as if it was a crazy year. It wasn’t. In fact, it was amazingly normal. This is true of at least the S&P 500 (I’m not going to be more ambitious here) which is what I think many of these commentators are talking about.1,2
Annualized daily volatility during 2016 came in at 13.1%. Based on rolling same-length periods going back to 1929 this falls at the 47th percentile.3 You say you don’t want to compare to the craziness of the Great Depression? Maybe that leads to everything else looking calm and you don’t think that’s meaningful. That’s reasonable. Well, that same value of 13.1% is at the 54th percentile since WWII and the 42nd percentile since 1990. Pretty darn normal. Maybe people are comparing to very recent times (I would argue in error) and have been lulled into a false sense of calmness now shattered by 2016? Nope, it’s still only at the 54th percentile when compared to the last five years. Realized daily volatility simply was not high in 2016 compared to pretty much any prior period (it certainly wasn’t exceptionally low either).
The S&P 500 was +9.5% in price return in 2016.
Here is the source, there is further evidence and discussion of the metrics at the link.
I will second Bryan Caplan’s post:
In 1999, when internet commerce was still in its infancy, Klein published Reputation: Studies in the Voluntary Elicitation of Good Conduct. Seventeen years later, e-commerce towers before us, resting on a foundation of reputational incentives – everything from old-fashioned repeat business to two-sided smartphone reviews.
In 2003, long before Uber, Airbnb, or serious talk of driverless cars, Klein published The Half-Life of Policy Rationales: How New Technology Affects Old Policy Issues. This remarkable work explores how technological change keeps making old markets failures – and the regulations that arguably address them – obsolete. (Here’s the intro, co-authored with Fred Foldvary). Fourteen years later, the relevance of Klein’s thesis is all around us. Transactions costs no longer preclude peakload pricing for roads, decentralized taxis and home rentals, or full-blown caveat emptor for consumer goods. So why not?
I’m not going to say that Klein caused these amazing 21st-century developments. But he did foresee them more clearly than almost anyone. Hail Dan Klein!
Some of Dan’s work, and later work (much of which is covered at MR), you will find here and here. For instance, his later work on academic bias also was well ahead of its time and prefigured subsequent events, so this is actually a running streak.
1. “But in our situation we’re all powerless. I mean, we pretend we’re run by people. We’re not run by anybody. The secret of modern Britain is there is no power anywhere.” Some commentators, he says, think we’re run by an oligarchy. “But we’re not. I mean, nobody can see power in Britain. The politicians think journalists have power. The journalists know they don’t have any. Then they think the bankers have power. The bankers know they don’t have any. None of them have any power.” That is Rory Stewart, who is more interesting than most American politicians.
6. Margalit Fox obituary for John Gruen (NYT).
7. A marketing perspective on why Leave beat Remain. Recommended.
A non-relative male paying for a meal was once so anomalous that it was considered — and not always incorrectly — prostitution, says Moira Weigel, a Yale University PhD student and the author of the just-published “Labor of Love: The Invention of Dating,” with police officers staking out bars and restaurants and even arresting daters.
5. Will Wilkinson on social justice. A very good piece.
6. The economics of Elsevier. And more here. The upside is this: such services become obsolete over time, and if SSRN received lots of money from Elsevier, that is an incentive for someone else to do better, with an eye toward an eventual buy out. We will see how big the lock-in effect is, but I am not convinced it is enormous, if a better system were to come along. See Joshua Gans.
Many of us think this diagram shows there has been some kind of structural break in the labor market, and/or that recovery is proceeding slowly. Paul Krugman, very recently, suggests that structural factors play little role because the measured unemployment rate is now below five percent.
But in fact labor market indicators are quite mixed, and furthermore the best and latest research out of MIT indicates the structural story does indeed carry real weight. See also Alan Krueger’s work, or recent research from the AER. And there are plenty of markers of a more persistent shift in economic activity, as reflected in CBO markdowns of expected productivity growth, based partly on trends which preceded the recession. That all might be wrong, but the mere citation of the current 4.9 unemployment rate doesn’t persuade me otherwise.
Let’s not forget what Krugman wrote in 2012:
My current favorite gauge of the jobs picture is the employment-population ratio for prime-age adults (25-54). EP ratio instead of unemployment rate, because U may be distorted by workers dropping out…Everything else is just noise.
At least as of yesterday, the preferred labor market indicator was once again the unemployment rate, no mention of 2012. That was then, this is now, I suppose.
The rest of Krugman’s history on recovery is curious. Very early on he predicted a rapid recovery (if not right away), then he predicted for several years a long-standing secular stagnation, now he seems to be citing “a recovery of demand.” I don’t see anything wrong with such a change in emphasis, as the facts change, and Krugman himself makes this meta-point fairly frequently. Still it is odd for him to be criticizing the predictive record of others on these issues. He’s been through what appears to be three distinct positions on recovery, and two distinct positions on which labor market indicators really matter, and we are still not sure exactly which views are correct.
Bryan Caplan is pleased that he has won his bet with me, about whether unemployment will fall under five percent. I readily admit a mistake in stressing unemployment figures at the expense of other labor market indicators; in essence I didn’t listen enough to the Krugman of 2012. This shows there were features of the problem I did not understand and indeed still do not understand. I am surprised that we have such an unusual mix of recovery in some labor market variables but not others. The Benthamite side of me will pay Bryan gladly, as I don’t think I’ve ever had a ten dollar expenditure of mine produce such a boost in the utility of another person.
That said, I think this episode is a good example of what is wrong with betting on ideas. Betting tends to lock people into positions, gets them rooting for one outcome over another, it makes the denouement of the bet about the relative status of the people in question, and it produces a celebratory mindset in the victor. That lowers the quality of dialogue and also introspection, just as political campaigns lower the quality of various ideas — too much emphasis on the candidates and the competition. Bryan, in his post, reaffirms his core intuition that labor markets usually return to normal pretty quickly, at least in the United States. But if you scrutinize the above diagram, as well as the lackluster wage data, that is exactly the premise he should be questioning.
As I’m the only one in this exchange fessing up to what I got wrong, and what I still don’t understand, and what the complexities are, in a funny way…I feel I’m the one who won the bet.
Addendum: Here is the graph of the ratio for prime age workers only, it too shows partial but by no means complete recovery. And note this: the more optimistic you are about interpreting the labor market side, the more pessimistic you ought to be about the productivity picture, a conclusion which is anathema to Caplan at least. Given recent configurations of data, it really is hard to avoid carving out room for structural factors as a significant part of the story.
3. Markets (hierarchies) in everything, IBM style.
5. China’s municipal debt problems (NB: boring link, pdf too). And what is wrong with Chinese gdp and inflation measures?, by Christopher Balding, plus David Keohane on same here. And more Keohane here, an overview, skip this stuff at your peril it is the most important economics in the world right now. All are excellent pieces.
6. Stereotyping diners — “Southern dad is always a winner.”