Monday assorted links
1. The beer pipe conditional public goods assurance game culture that is Belgium (NYT).
2. How meaning varies between speech and its typed transcript.
3. Dani Rodrik Op-Ed on how to do globalization right (NYT).
4. The classic books are making a commercial comeback.
6. Who favors free movement of labor within the EU? This tweet and graph makes a good point, but given status quo bias I don’t find the numbers as overwhelming as does O’Rourke. p.s. Luxembourg and Latvia are the top two in support.
Straight thinking about Bayer and Monsanto
That is my latest Bloomberg column, hardly anyone has a consistent and evidence-based view on this deal. Here is one bit:
Critics who dislike Monsanto for its leading role in developing genetically modified organisms and agricultural chemicals shouldn’t also be citing monopoly concerns as a reason to oppose the merger — that combination of views doesn’t make sense. Let’s say for instance that the deal raised the price of GMOs due to monopoly power. Farmers would respond by using those seeds less, and presumably that should be welcome news to GMO opponents.
Yet on the other side:
What does Bayer hope to get for its $66 billion, $128-a-share offer? The company has argued that it will be able to eliminate some duplicated jobs and expenses, negotiate better deals with suppliers and invest more funds in research and development. Maybe, but the broader reality is less cheery. There is a well-known academic literature, dating to the early 1990s, showing that acquiring firms usually decline in value after tender offers, especially after the biggest deals. Mergers do not seem to make companies more valuable or efficient.
And this:
The whole Bayer-Monsanto case is a classic example of how a vociferous public debate can disguise or even reverse the true issues at stake. If Bayer fails to close the deal for Monsanto, Bayer shareholders may be the biggest winners. The biggest losers from a failed deal may be its opponents, who will spend the rest of their lives in a world where misguided judgments of corporate popularity have increasing sway over laws and regulations.
Do read the whole thing.
Theory of the umpteenth best, a classic New York parable
In two separate cases, thieves snatching bags from city streets and train stations inadvertently helped law enforcement get the upper hand in an ongoing bomb spree that’s hurt dozens of people and spans both sides of the Hudson River, sources said.
The day Ahmad Khan Rahami allegedly planted two bombs in Chelsea — one of which detonated on West 23rd Street — two thieves accidentally helped to disable his second pressure cooker bomb left inside a rolling suitcase on West 27th Street, sources said.
The young men, who sources described as being well-dressed, opened the bag and took the bomb out, sources said, before placing the explosive into a garbage bag and walking away with the rolling suitcase.
In doing so, investigators believe they inadvertently disabled the explosive, sources said. That allowed investigators to examine the cellphone attached to the bomb intact and discover that it was connected to the family of Rahami.
From there, they were able to identify pictures on social media of Rahami’s family and of him, and they matched one of his photos to surveillance footage captured in Manhattan.
Here is the full story, via David Montgomery. This somehow relates to Hume’s Dialogues on Natural Religion and the watchmaker analogy, but I’m still pondering that one…
Robert Shiller on Open Borders
Nobelist Robert Shiller writes that the next revolution will be an anti-national revolution:
For the past several centuries, the world has experienced a sequence of intellectual revolutions against oppression of one sort or another. These revolutions operate in the minds of humans and are spread – eventually to most of the world – not by war (which tends to involve multiple causes), but by language and communications technology. Ultimately, the ideas they advance – unlike the causes of war – become noncontroversial.
I think the next such revolution, likely sometime in the twenty-first century, will challenge the economic implications of the nation-state. It will focus on the injustice that follows from the fact that, entirely by chance, some are born in poor countries and others in rich countries. As more people work for multinational firms and meet and get to know more people from other countries, our sense of justice is being affected.
Oddly, however, Shiller’s argument focuses not on immigration but on trade agreements. Trade agreements, he argues, will equalize wages through the factor price-equalization theorem but to do this we need a strengthening of the welfare state. The latter part of the argument and how it resolves with the former is, shall we say, underdeveloped.
Why do people hate the media so much?
Haven’t you noticed this?
I have a simple hypothesis. No matter what the media tells you their job is, the feature of media that actually draws viewer interest is how media stories either raise or lower particular individuals in status. (It’s a bit like “politics isn’t about policy.”) That’s even true for this blog, though of course that is never my direct intention.
But now you can see why people get so teed off at the media. The status ranking of individuals implied by a particular media source is never the same as yours, and often not even close. You hold more of a grudge from the status slights than you get a positive and memorable charge from the status agreements.
In essence, (some) media is insulting your own personal status rankings all the time. You might even say the media is insulting you. Indeed that is why other people enjoy those media sources, because they take pleasure in your status, and the status of your allies, being lowered. It’s like they get to throw a media pie in your face.
In return you resent the media.
A good rule of thumb is that if you resent the media “lots,” you are probably making a number of other emotional mistakes in your political thought.
What is wrong with African cities?
In Africa this process seems not to work as well. According to one 2007 study of 90 developing countries, Africa is the only region where urbanisation is not correlated with poverty reduction. The World Bank says that African cities “cannot be characterised as economically dense, connected, and liveable. Instead, they are crowded, disconnected, and costly.”
I say the one big problem is premature deindustrialization:
What ties them [African cities] together, and sets them apart from cities elsewhere in the world, according to the Brookings Institution, an American think-tank, is that urbanisation has not been driven by increasing agricultural productivity or by industrialisation. Instead, African cities are centres of consumption, where the rents extracted from natural resources are spent by the rich. This means that they have grown while failing to install the infrastructure that makes cities elsewhere work.
That is from The Economist, the article is interesting throughout.
The culture that is Texas high school football
After Texas high school builds $60-million stadium, rival district plans one for nearly $70 million
Need I say more? I will nonetheless:
In Frisco, which neighbors Allen and McKinney, the district will pay $30 million over several years to use the Dallas Cowboys’ new 12,000-seat practice field for high school football and soccer games, as well as graduation ceremonies.
Here is a nice bit of fiscal illusion:
In McKinney [one of the stadium-building districts], school taxes for property owners amount to $1.63 per $100 of assessed valuation. The tax rate had been higher in the recent past, but it fell 5 cents this year, partly because the district had dropped some old debt. Because of the 5-cent decrease, district officials repeatedly note, property owners will see their taxes go down, even as the new stadium goes up.
Jim Buchanan would be proud. And it’s a good thing we have the public sector to protect us from negative-sum status-seeking games!
The original pointer is from Adam Minter.
Sunday assorted links
1. “…we find that the real price of watches in nearly all categories falls steadily by 1.3 per cent per year, equivalent to a fall of 75 per cent over a century, showing that sustained innovation in the production of a highly complex artefact had already appeared in one important sector of the British economy by the early eighteenth century.” Here is the article.
2. Have tasting menus become too expensive? I say yes: ““It means D.C. is a town that has come of age, and that should worry us all.”
3. Garett Jones argues for a high-SAT immigration policy.
4. How to store your butterflies (photo).
5. My former student, Dr. Yonas Biru, who did his dissertation on the coup d’etat, is on a hunger strike.
6. Interview with Decius. Caveat emptor, I say he has been “played” by Trump. Still, the media of so much coverage of the “hillbilly” and “downtrodden” Trump supporters, I say let’s look at the intellectuals, anonymous though some of them may be.
7. Weiner is a splendid movie with many subtle points, including in the philosophical direction. It is about leadership, publicity, motivation, compulsion, and what a marriage really consists of, or not. In another life, Huma Abedin could have been a movie star. She has exactly the right mix of distance and involvement, and she dominates every scene she is in, even when just sitting quietly in the background. Um…I guess she is a movie star. Starlet. Whatever.
What I’ve been reading
1. Europe Since 1989: A History, by Philipp Ther. And yet it is all told through the vantage point of central and eastern Europe. Recommended, not just the usual and interesting to see “the West” treated as the periphery. Makes you wonder if eastern Europe ever had a chance.
2. Jeffrey Edward Green, The Eyes of the People: Democracy in an Age of Spectatorship. “The ocular model, by contrast, is grounded on the People’s eyes and its capacity for vision, rather than on the People’s voice and its capacity for speech.” Think of it as Exit, View, and Loyalty, for the contemporary age.
3. Naomi Duguid, Taste of Persia: A Cook’s Travels Through Armenia, Azerbaijan, Georgia, Iran, and Kurdistan. Not only an excellent cookbook, but a good regional study in its own right.
4. Paul Bloom, Against Empathy. “Singer goes further and argues that individuals like Kravinsky [an organ donor], motivated by their cold logic and reasoning, actually do more to help people than those who are gripped by empathic feelings…”
5. Christine Woodside, Libertarians on the Prairie: Laura Ingalls Wilder, Rose Wilder Lane, and the Making of the Little House Books. Fun and interesting, this gives you the real story behind those women and their connection to libertarianism. Here is a short essay by the author excerpted from the book. I cannot, however, say this book drove me to wish to read the original sources.
The new Coetzee and McEwan novels are OK but they don’t thrill me. There is also George J. Borjas, We Wanted Workers: Unraveling the Immigration Narrative, coming out soon.
Saturday assorted links
1. The geography of populist surges. This update tells us that rural income did OK.
2. Airbnb + clapped out taxi cab = NYC on $39 a night. This guy (NYT) pays $450 a month for a 40-square foot cubbyhole in Williamsburg. And the homes of New Yorkers on TV are looking worse (NYT).
3. “…the phenomenon of men opting out of work is limited to the native-born.” That is one reason why I don’t think it is just demand.
And here is Pleeps on the young men who do not wish to work. Two points: a) the gaps he finds are actually pretty large relative to the residual that needs to be explained, and b) a lot of those young men going to school never finish and in fact they are engaged in a kind of leisured unemployment, albeit at an especially high price. In fact, if you take non-completion seriously, the entire phenomenon becomes far more visible and obvious as a problem. The funny thing is, in these mood-affiliated times, generally you can get people to recognize the problem if you present it in the context of degree completion only and make sure to portrays the students as pure victims of circumstance. At lower tier schools, the completion rate is now about 38 percent. It would be shocking if there were not an analogous problem in the job market, yes shocking. Of course we live in shocking times.
4. “I tell her just marry anyone. Whatever. All the San Francisco guys seem like the same guy to me.” Link here.
Hail GMU’s visionary, Dan Klein
I will second Bryan Caplan’s post:
Last week, my colleague Dan Klein kicked off the Public Choice Seminar series. During the introduction, I recalled some of his early work. But only after did I realize how visionary he’s been.
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.
The economic decline of bowling the culture that was America
Bowling alone and for peanuts too:
In 1964, “bowling legend” Don Carter was the first athlete in any sport to receive a $1 million endorsement deal ($7.6 million today). In return, bowling manufacturing company Ebonite got the rights to release the bowler’s signature model ball. At the time, the offer was 200x what professional golfer Arnold Palmer got for his endorsement with Wilson, and 100x what football star Joe Namath got from his deal with Schick razor. Additionally, Carter was already making $100,000 ($750,000) per year through tournaments, exhibitions, television appearances, and other endorsements, including Miller, Viceroys, and Wonder Bread.
…Of the 300 bowlers who competed in PBA events during the 2012-2013 season, a select few did surprisingly well. The average yearly salary of the top ten competitors was just below $155,000, with Sean Rash topping the list at $248,317. Even so, in the 1960s, top bowlers made twice as much as top football stars — today, as the highest grossing professional bowler in the world, Sean Rash makes significantly less than a rookie NFL player’s minimum base salary of $375,000.
In 1982, the bowler ranked 20th on the PBA’s money list made $51,690; today, the bowler ranked 20th earns $26,645.
The article, by Zachary Crockett, suggests numerous hypotheses for the economic decline of bowling, but ultimately the answer is not clear to me. I would suggest the null of “non-bowling is better and now it is better yet.” A more subtle point is that perhaps bowling had Baumol’s “cost disease,” but under some assumptions about elasticities a cost disease sector can shrink rather than ballooning as a share of gdp.
For the pointer I thank Mike Donohoo.
China facts of the day
Total outstanding mortgage loans rose more than 30 percent and new mortgage growth clocked in at 111 percent in the past year. Since June 2012, outstanding mortgage loans have grown at an annualized rate of 30 percent. Predictably, that’s pushed prices higher and higher.
In urban China, the average price per square foot of a home has risen to $171, compared to $132 in the U.S. In first-tier cities such as Beijing and Shenzhen, prices have increased by about 25 percent in the past year. A 100-city index compiled by SouFun Holdings Ltd. surged by a worrisome 14 percent in the last year. Developers are buying up land in some prime areas that would need to sell for $15,000 per square meter just to break even.
That is from Christopher Balding, there is more at the link. Might as much as 70% of Chinese household wealth be in housing? Here is some follow-up analysis.
It matters where robots live, robot nationalism next to come?
Labor Force Participation and Video Games
Here is more from Erik Hurst discussing his new research:
On average, lower-skilled men in their 20s increased “leisure time” by about four hours per week between the early 2000s and 2015. All of us face the same time endowment, so if leisure time is increasing, something else is decreasing. The decline in time spent working facilitated the increase in leisure time for lower-skilled men. The way I measure leisure time is pretty broad; it includes participating in hobbies and hanging out with friends, exercising and watching TV, sleeping, playing games, reading, and so on.
Of that four-hours-per-week increase in leisure, three of those hours were spent playing video games! The average young, lower-skilled, nonemployed man in 2014 spent about two hours per day on video games. That is the average. Twenty-five percent reported playing at least three hours per day. About 10 percent reported playing for six hours per day. The life of these nonworking, lower-skilled young men looks like what my son wishes his life was like now: not in school, not at work, and lots of video games.
How do we know technology is causing the decline in employment for these young men? As of now, I don’t know for sure. But there are suggestive signs in the data that these young, low-skilled men are making some choice to stay home. If we go to surveys that track subjective well-being—surveys that ask people to assess their overall level of happiness—lower-skilled young men in 2014 reported being much happier on average than did lower-skilled men in the early 2000s. This increase in happiness is despite their employment rate falling by 10 percentage points and the increased propensity to be living in their parents’ basement.
It’s hard to distinguish “push” unemployment that is made more pleasant by video games from “pull” unemployment created by video games. I’m not even sure that distinction matters very much, at least if we aren’t talking about banning video games to increase employment. If elderly people started playing a lot of video games (as soon they will) would we worry that this was making retirement too much fun?
I’d be interested in knowing how much video games have displaced television. I watch more television than my kids, who play more video games. It’s not obvious that this is to their detriment.
Perhaps the issue is that video games like slot machines are so enticing that young people discount the future too heavily or don’t recognize the future cost of not being in the workforce. Maybe. Perhaps what we really need is a 3D, virtual reality, total sensory simulation, awesome video game that is so expensive that it encourages people to work.
Overall, the video game worry is a bit too reminiscent of the Dungeons and Dragons panic, or the earlier panics that books and radio were ruining children’s minds, for me to jump on board.