America is now pulling away from Western Europe

That is the topic of my latest Bloomberg column, the energy discussion is obvious so here is the segment on health care systems:

The pandemic revealed years of capital underinvestment in many of European health-care systems. Many Americans used to admire the UK’s National Health Service, but right now the whole system is ailing. There has been a labor and capital shortage, and a collapse of emergency health care services, which may be costing up to 500 excess (non-Covid) deaths a week. Similar problems exist throughout Europe, though they seem to be worst in the UK.

The American hospital and health care system long has been good — too good — at making expensive, long-term investments in care and technology. Often this meant excess prices and not much of an improvement in basic care. But in the pandemic and post-pandemic environment, that feature of the system has kept US health care up and running. All that capital investment turns out to have been pretty useful in a major crisis.

The longstanding charge that the US does not have universal health care now is less relevant. Obamacare is highly imperfect along a variety of dimensions, but US health care coverage has never been higher — the percentage of the uninsured population is now 8%. Keep in mind that many of those uninsured may have decided not to purchase health insurance, instead preferring to spend their money in other ways. That might be a personal mistake, but that is not the same thing as a systemic failure of the entire US health care regime.

America actually has something pretty close to universal coverage, at least as an option. And remember that some of the European systems, most notably in Switzerland, also require significant out-of-pocket expenditures. Other parts of those systems are paid through relatively regressive systems of a value-added tax, so they are not as “free” as they might seem.

Recommended.

Kin-based institutions and economic development

Though many theories have been advanced to account for global differences in economic prosperity, little attention has been paid to the oldest and most fundamental of human institutions: kin-based institutions—the set of social norms governing descent, marriage, clan membership, post-marital residence and family organization. Here, focusing on an anthropologically well established dimension of kinship, we establish a robust and economically significant negative association between the tightness and breadth of kin-based institutions—their kinship intensity—and economic development. To measure kinship intensity and economic development, we deploy both quantified ethnographic observations on kinship and genotypic measures (which proxy endogamous marriage patterns) with data on satellite nighttime luminosity and regional GDP. Our results are robust to controlling for a suite of geographic and cultural variables and hold across countries, within countries at both the regional and ethnolinguistic levels, and within countries in a spatial regression discontinuity analysis. Considering potential mechanisms, we discuss evidence consistent with kinship intensity indirectly impacting economic development via its effects on the division of labor, cultural psychology, institutions, and innovation.

That is a new and very important paper by Duman Bahrami-Rad, Jonathan Beauchamp, Joseph Henrich, and Jonathan Schulz, the two Jonathans being my colleagues at GMU.

Thursday assorted links

1. Why so few economies of scale in construction?

2. Salem Center/CSPI forecasting tournament.

3. Play Magnus Group receives Chess.com offer.

4. A Hollywood insider’s guide as to what to do in Belfast.

5. Megan McArdle on student loan forgiveness.

6. “We have created the first example of an engineering material that can simultaneously sense, think and act upon mechanical stress without requiring additional circuits to process such signals,” Harne said. “The soft polymer material acts like a brain that can receive digital strings of information that are then processed, resulting in new sequences of digital information that can control reactions.”  Link here.

On the Internet Nobody Knows You Are a Dog

Bitcoin.com: A set of hackers managed to impersonate Binance chief communications officer (CCO) Patrick Hillmann in a series of video calls with several representatives of cryptocurrency projects. The attackers used what Hillman described as an AI hologram, a deepfake of his image for this objective, and managed to fool some representatives of these projects, making them think Hillmann was helping them get listed on the exchange.

It’s wild how good fake and synthetic video are becoming. Synthesia, for example, uses synthetic AI video instead of actors for training videos and similar–see the example below. Tyler and I could write econ scripts and then use AIs to create video–much cheaper and less time consuming than hiring a video director. Presumably, we could even create synthetic AIs in our own image.

Notice also that Synthesia reads text but could presumably also repeat text that it hears. Thus, the future of Zoom meetings is avatars. Fake faces on fake backgrounds. Choose your race, gender, age, species and so forth. No discrimination possible! Some people won’t be happy.

 

My Conversation with Cynthia L. Haven

Here is the audio and transcript, here is part of the summary:

…those two interests converged as they led her to interview and write books about three writers and thinkers whom she also came to call mentors: René Girard, Czeslaw Milosz, and Joseph Brodsky.

Cynthia joined Tyler to discuss what she’s gleaned from each of the three, including what traits they have in common, why her biography of Girard had to come from outside academia, Milosz’s reaction to the Berkley Free Speech Movement, Girard’s greatest talent — and flaw — as a thinker, whether Brodsky will fall down the memory hole, why he was so terrible on Ukraine, why Cynthia’s early career was much like The Devil Wears Prada, the failings of Twitter, and more.

And one excerpt:

COWEN: What is your philosophy of what is missing in most other people’s interviews?

HAVEN: I don’t know that it’s a philosophy.

COWEN: You must think you’re adding something, right?

HAVEN: I’m interested in big questions. I think a lot of people aren’t. A lot of interviewers aren’t. It’s not an era for big questions, is it?

COWEN: 2022? I’m not sure.

HAVEN: Really?

COWEN: Maybe the questions are either too big or too small and not enough in between.

HAVEN: That’s an interesting point of view.

COWEN: There’s plenty of ideology in the world and in this country. It doesn’t have to be a good thing, but —

HAVEN: Ideology is different than big questions, I think.

Interesting throughout.

*Of Boys and Men*

…I was shocked to discover that many social policy interventions, including some of the most touted, don’t help boys and men.  The one that first caught my eye was a free college program in Kalamazoo, Michigan.  According to its evaluation team, “women experienced large gains,” in terms of college completion (increasing by 50%), “while men seem to experience zero benefit.”  This is an astonishing finding.  Making college free had no impact on men…So not only are many boys and men struggling, they are less likely to be helped by policy interventions.

And:

In the U.S. for example, the 2020 decline in college enrollment was seven times greater for male than for female students.

And:

The bottom line is that Finland’s internationally acclaimed educational performance is entirely explained by the stunning performance of Finnish girls.

That is from the forthcoming Richard V. Reeves book, one of the most important of this year, perhaps the most important.

Who are the richest athletes in the world?

These numbers are surely inexact, but still this piece makes for interesting reading.  Excerpt:

4. Anna Kasprzak

Net Worth: $1 Billion

Anna Kasprzak is a Danish dressage rider who has represented Denmark in the Summer Olympics in 2012 and 2016. Kasprzak is considered to be one of the best dressage riders in the world and she has won multiple medals throughout her career.

As of August 2022, Anna Kasprzak’s net worth is estimated to be $1 billion.

Was not on my Bingo card.  Nor was Vinnie Johnson, who clocks in at $400 million!  The Human Microwave to be sure…

Jason Abaluck on the minimum wage

Here is his critique of Bryan Caplan, noting that “Bryan” in Jason’s dialogue is of course not the actual Bryan.  (It is Jason’s somewhat imaginary view of how he thinks a dialogue actually ought to proceed, with satirical elements interjected, to show that Bryan’s account is too simple.)  It is a better analysis than what Bryan offered, but I am not altogether happy with it and I think it shows the same defects as Bryan’s treatment, albeit at a higher level of detail.

A few broad points:

1. Public choice considerations should be paramount!  To be clear, this could in principle favor minimum wages over alternative interventions, but if public choice considerations are not first and foremost this is more of a dialogue for a 12-year-old than a 13-year-old.

The reality is that America has one political party — currently in control of the Federal government — that is very much beholden to organized labor, an interest group that has a strong desire for a minimum wage that is too high.  Often they don’t get their way, but that is precisely because of the curmudgeons and their objections.  I fear a world in which minimum wage hike advocates really take over policy discourse, as they would end up serving the interests of organized labor, not economic optimization.

The true choice is between a minimum wage that is too low and a minimum wage that is too high.  I prefer the former.  An optimized minimum wage does not usually appear on the menu at all, and that should be one of the first points we teach.

As a side note, if you read anyone criticizing the “Econ 101” approach to minimum wage hikes, run the other way.  If only Econ 101 could spend more time on such public choice considerations.

2. Any policy decision is also a decision by governments to communicate particular economic lessons to the citizenry.  Which are the lessons carried by deployment of a minimum wage hike?

a. Price controls work.

b. A world of high wages, high prices, and doing stuff to “create jobs” is how to boost prosperity.  Therefore protectionism can make sense too, and we need to stuff the Davis-Bacon Act into every government bill we can, as has been done with the new climate projects.  Those are also forms of minimum wages.  And it is OK if infrastructure costs a lot to build, because that means high wages too.

Those lessons may not be what you intend, but those are what you will end up getting and indeed we have ended up getting them.  You do not get to teach voters the scope and limits of labor market monopsony models.  Instead, you get bad economic reasoning writ large.

2b. As a general observation, if an analysis does not cover #1 and #2 in some fashion, I don’t view it as very sophisticated.  It almost has to be misleading.

3. It should be stressed there is good evidence that we have alternative policies — namely investing in infants — that have pretty clear benefits for both distribution and efficiency.  In contrast, the efficiency benefits of minimum wages are murky.  So minimum wages probably are a dominated policy option, once we start comparing alternative methods of redistribution, as the thread suggests we do.  You could add the deregulation of hearing aids to that list, and literally thousands of other deregulatory options as well, noting many of them may involve some upfront costs and thus pursuing them does fall into the realm of analyzing trade-offs.

In the dialogue you also will read: “But as a starting point, we should note that redistribution *always* has a shadow cost, so we want to compare the minimum wage to other policies like a negative income tax that redistribute at some efficiency cost.”  I would stress that many redistributions have a shadow benefit, not cost.  And once you recognize that, minimum wage hikes, like many other “progressive” policies, suddenly look a lot worse in relative terms.  Why not focus your energies on those areas where distribution and efficiency move together?  Are we supposed to think that such areas are so few and far between?  If so, the pro-minimum wage hike view is truly a bleak and negative-sum one and let us all describe it as such.

4. How about some words on the interaction between the minimum wage and (still-welcomed) illegal immigration?

5. More narrowly, I would pick a few nits on the descriptive analytics.  For instance in this discussion “Someone has to pay for wage increases for inframarginal workers. The gain to min wage workers comes from capital holders, non min-wage workers and consumers who indirectly pay for wage increases.”  Might not some of the gains come from those who end up unemployed?  Maybe not a priori, but I worry when this is overlooked altogether.  There do seem to be some negative employment effects, even if you think they are overrated.  The discussion then follows: “Those groups will have higher income-today than non-wage workers.”  That doesn’t follow either.  Some of the distributional consequences from minimum wage hikes can be very bad for poorer teenagers, for instance.

The end remarks on feminism are I think simply a misrepresentation of Bryan’s actual views, and an example of the kind of thing that is not well expressed on Twitter (you can blame the same on Bryan too, to be clear, all the more so).

In general, when I am being served a more “sophisticated” take on minimum wage laws, I end up being disappointed every single time.

Model this newsroom estimator

The New York Times’s performance review system has for years given significantly lower ratings to employees of color, an analysis by Times journalists in the NewsGuild shows.

The analysis, which relied on data provided by the company on performance ratings for all Guild-represented employees, found that in 2021, being Hispanic reduced the odds of receiving a high score by about 60 percent, and being Black cut the chances of high scores by nearly 50 percent. Asians were also less likely than white employees to get high scores.

In 2020, zero Black employees received the highest rating, while white employees accounted for more than 90 percent of the roughly 50 people who received the top score.

The disparities have been statistically significant in every year for which the company provided data, according to the journalists’ study, which was reviewed by several leading academic economists and statisticians, as well as performance evaluation experts.

…Management has denied the discrepancies in the performance ratings for nearly two years…

And from the economists:

Multiple outside experts consulted by the reporters consistently said the methodology used in the Guild’s most recent analysis was reasonable and appropriate and that the approach used by the company appeared either flawed or incomplete. Some went further, suggesting the company’s approach seemed tailor-made to avoid detecting any evidence of bias.

Rachael Meager, an economist at the London School of Economics, was blunt: “LMAO, that’s so dumb,” she wrote when Guild journalists described the company’s methodology to her. “That’s what you would do if you want to obliterate signal,” she added, using a word that in economics refers to meaningful information.

“This is so stupid as to border on negligence,” added Dr. Meager, who has published papers on evaluating statistical evidence in leading economics journals.

Peter Hull, a Brown University economist who has studied statistical techniques for detecting racial bias, also questioned the company’s approach and recommended a way to test it: running simulations in which bias was intentionally added. The company’s method repeatedly failed to detect racial disparities in those tests.

Here is the full article, prepared by the NYT Guild Equity Committee, including Ben Casselman.  Of course we now live in a world where very few people will be surprised by this.  Where exactly does the moral authority lie here for making editorial judgments about content concerning race?

Tuesday assorted links

1. Cultural intelligence” as a factor behind your talent, and talent-spotting?  From 2017.

2. The Physiognomy Theory of Revolutionary History (speculative).

3. Changing Congressional lingo on UFOs.  Don’t worry, though, it is just the stupid bureaucracy.

4. Car seat laws as contraception.

5. Lance Taylor has passed away.

6. “Using US tax return data, we find that support for the incumbent president crowds out charitable donations.

7. Why is it so difficult for Carlsen to achieve a rating of 2900?

As Goes India, so Goes Democracy

We lost China. It is imperative that we not lose India.

By we, I mean the West and liberal democracy broadly speaking. Many of us thought that China would liberalize naturally as the Chinese people grew rich and demand followed Maslow’s hierarchy. Many other countries had followed this path. But China doesn’t have a liberal history, technology provided irresitible tools for social control, and democracy no longer looks to be as important for riches as it once did. With China lost and the United States in relative decline, the liberal world very much needs India as a large, multi-ethnic, and free democracy. Liberal democracy is also India’s best hope and bulwark against being ripped apart by internal divisions. But much remains in the balance. Suketu Mehta has a very good essay on this issue:

…Indian democracy is one of the 20th century’s greatest achievements. Over 75 years, we built, against great odds, a nation that for the first time in its 5,000-year history empowered women and the Dalits, people formerly known as untouchables. We largely abolished famine. We kept the army out of politics. After independence, many people predicted that we would become Balkanised. Yugoslavia became Balkanised, but India stayed together. No small feat.

But I write this today to tell you: things in India are more dire than you realise. India is a country that is majority Hindu, but it is not officially a Hindu state. The people who are in power in India today want to change this. They want India to be a Hindu ethnocratic state, where all other religions live by Hindu sufferance.

This has practical consequences: people of other religions are actively harassed, even lynched on the streets; their freedom to practice their religion in their own way is circumscribed. And when they protest, they are jailed and their houses bulldozed. Most worrying, much of the judiciary seems to be sympathetic to the Hindu nationalist agenda, and issues its verdicts accordingly.

There is also sustained and systematic harassment of writers, journalists, artists, activists, religious figures – anyone who questions the official narrative. We who have attached our names here are taking great personal risk in writing this: our citizenship of India could be revoked, we could be banned from the country, our property in India seized, our relatives harassed.

There are many others who think like we do but have told us they cannot speak out, for fear of the consequences. I never thought I’d use the word “dissident” in describing myself and my friends who have compiled this document. I thought that word only applied to the Soviet Union, North Korea, China.

It is crucial that India remains a democracy for all its citizens. India is not Pakistan, Iran, Afghanistan. Not yet. A lot of India’s standing in the world – the reason we are included in the respectable nations, the reason our people and our tech companies are welcome all over the world – is that we are seen, unlike, say, China, as being a multi-ethnic democracy that protects its minorities.

With over 200 million Indian Muslims, India is the third largest Muslim country in the world. There are 30 million Indian Christians. There are Sikhs, Buddhists, Jains, Zoroastrians, Atheists. They are as Indian as I am – a Hindu who’s proud of being a Hindu, but not a Hindu as Prime Minister Narendra Modi and the Bharatiya Janata Party seek to define me.

…The alienation of Indian Muslims would be catastrophic, for India and the world. They are being told: you are invaders, this is not your country, go back to where you came from. But Indian Muslims did not come from elsewhere; they were in the country all along, and chose which God to worship. After the Partition of India and Pakistan in 1947, they voted with their feet; they chose to stay, and build a nation.

…The country also has an enormous, restive, and largely unemployed youth population – half of its population is under 25. But only 36% of the working-age population has a job. To meet these challenges, it is crucial that the country stay united, and not fracture along religious lines, spend its energies building a brighter future instead of darkly contemplating past invasions.

In this time when country after country is turning its back on democracy, India has to be an example to countries around the world, this beautiful dream of nationhood expressed in the Hindu scriptures as “Vasudhaiva Kutumbakam” – the whole earth is a family. We should all be rooting for this incredible experiment in multiplicity to work. As goes India, so goes democracy.

Are chess players worse when playing remote?

During the COVID-19 pandemic, traditional (offline) chess tournaments were prohibited and instead held online. We exploit this unique setting to assess the impact of remote work policies on the cognitive performance of individuals. Using the artificial intelligence embodied in a powerful chess engine to assess the quality of chess moves and associated errors, we find a statistically and economically significant decrease in performance when an individual competes remotely versus offline in a face-to-face setting. The effect size decreases over time, suggesting an adaptation to the new remote setting.

That is from a new Economic Journal piece by Steffen Künn, Christian Seel, and Dainis Zegners.  I wonder if similar results might hold for Work from a Distance?

Via the excellent Samir Varma.