The FT does Lunch with Tyler Cowen
I thought John McDermott did an excellent job, here was one part I liked:
There is no doubt Cowen is ruthlessly and admirably efficient; an infovore. I suggest he’s also, however, “phenomenally smart”. “I don’t know what that means,” he says. “I mean, I can absorb a lot of information about basketball. I like basketball but I’m not like being smart about it.” And then he’s off again … “Sports is remarkably cognitive. I think it’s underrated just how smart it is. Actually, if I had more time, I would spend more time with sports. Watching it, reading about it, I think it’s oddly underrated.”
The rest of the chat covers food, economics, the future of technology, my life history, and some other matters too. I also liked this sentence:
He looks up and breaks the news: “They don’t have any food.”
The interview took place on the hottest day in Virginia history. And please note that when I refer to the Free Democrats of Germany, I don’t mean the party circa 2012.
In Texas, not all joint products are legal (the value of pets)
Last May, the Texas Banking Commission, which regulates funerals and cemeteries [does that make sense to you?], deep-sixed burials of pets in cemeteries for homo sapiens. But Texas still welcomes human burials alongside animals in pet cemeteries.
Do not underestimate the power of arbitrage:
…some Texans are also opting for their own burials–sans Bootsie—in pet cemeteries. The cost of room and board, notes the clip, beats its counterpart in people cemeteries by a mile. So why not think outside the box?
For the pointer I thank Lou Wigdor.
Assorted links
Do interest groups reward politicians for their votes in the legislature?
That is the title of the job market paper of Sungmun Choi, here is the abstract:
Abstract: Interest groups lobby politicians in various ways to influence their policy decisions, especially, their voting decisions in the legislature. Most, if not all, of the studies on this issue examine “pre-vote” lobbying activities of interest groups that occur before politicians vote in the legislature. In this paper, however, I examine “post-vote” lobbying activities of interest groups that occur after politicians vote in the legislature. I first develop theoretical models to show how such post-vote lobbying can be sustained. Then, by using data on the amount of monetary contributions given by interest groups to the members of the U.S. House of Representatives who have served in the 109th (2005-06) through 111th (2009-10) Congress, I find evidence that the politicians who voted in favor of the Emergency Economic Stabilization Act (EESA) of 2008, one of the most significant pieces of legislation and possibly the biggest government bailout in U.S. economic history, received more monetary contributions from the interest groups in the financial sector after passage of the EESA.
Ideas and Political Entrepreneurs: Explaining Institutional Change
None of my entries this week has directly discussed Wayne Leighton’s and my new book, Madmen, Intellectuals, and Academic Scribblers. This post briefly conveys the book’s motivation and argument. A follow up post will illustrate the argument with the case of airline deregulation.
Alex describes Madmen as “revolution without romance,” analogous to Jim Buchanan’s account of public choice as “politics without romance.” It’s an apt comparison because although Madmen is rooted in public choice, we explain why public choice cannot account for political change without incorporating ideas and entrepreneurship.
To do so, we focus throughout the book on three questions:
1. Why do democracies generate policies that are wasteful and unjust?
2. Why do failed policies persist over long periods, even when they are known to be socially wasteful and even when better alternatives exist?
3. Why do some wasteful policies get repealed (for example, airline rate and route regulation) while others endure (such as sugar subsidies and tariffs)?
Traditional public choice answers question #1 (concentrated benefits & diffuse costs) as well as question #2 (transitional gains trap). Yet wasteful institutional arrangements do sometimes get repealed or reformed. In addition to airlines, other network industries such as trucking and energy pipelines were significantly deregulated in the 1970s, followed by income tax reform in the 80s, spectrum license auctions and welfare reform in the 90s, and more.
Madmen argues that better institutions derive from better ideas, through a political process that is driven by key players: madmen, intellectuals, and academic scribblers.
The academic scribblers originate ideas, which must then face off with vested interests and long-held beliefs in the status quo. The “intellectuals” (Hayekian traders in ideas) propagate the ideas they think are best. When political opportunity strikes, it then becomes in the interests of the madmen in authority (those who grip the levers of political power) to implement the new idea and change the rules of the game (that is, to change the institutions). New rules reshape people’s incentives, which in turn directs people’s decisions toward different outcomes—for better or worse.
The process can be revolutionary, creating new institutions through a crisis such as war or depression. Lenin and the Bolsheviks come to mind; so do the American Founders and Franklin D. Roosevelt. At other times, this process can be evolutionary, not born out of a crisis but emerging as part of a nonviolent battle of ideas.
At the end of the day, ideas do not surmount established interests on their own; nor do ideas automatically shape new institutions when political opportunity strikes. Instead, institutions change when political entrepreneurs notice areas of weakness in the structure of ideas, institutions, and incentives, and then find ways to implement different rules in those areas. The entrepreneurs in political change may be philosophers, opinion makers, political leaders, or other types of influencers. What they have in common is access to a stock of ideas, a knack for perceiving times when a different idea can take hold, and the grit to drive madmen in authority toward changing institutions accordingly.
That’s stating things generally. Alex’s post gives flavor to the argument in the case of spectrum license auctions. And tomorrow I will follow up to show how Alfred Kahn and Teddy Kennedy were political entrepreneurs who revolutionized the airlines by implementing a different idea.
Some links for you
Good reads that haven’t been covered here on MR:
1. Institute for Justice on too much eminent domain discretion imparting bad incentives on redevelopment agencies.
2. The beginning of the end for corn ethanol?
3. My co-author Wayne Leighton on Bruce Yandle’s Bootleggers and Baptists: “it’s much more than a clever label for an interesting phenomenon; it’s serious political theory”.
4. Robert Sirico and Jeff Sandefur’s new book on how to be a hero.
5. Michael Makowsky and Stephen Miller on the effect of intelligence and education on the intensity of environmentalist beliefs.
Maxim Pinkovsky on managed care
This result is not a shocker, but I have never seen the actual work done on this point:
The Impact of Managed Care Backlash on Health Care Costs
During the late 1990s, there was a substantial cultural, media and legal backlash against the cost-containment practices of managed care organizations (particularly, HMOs). Most states passed a variety of laws in this period that restricted the cost-cutting measures that managed care firms could use. I exploit panel variation in the passage of these regulations across states and over time to investigate the effects of the managed care backlash, as proxied by this legislation, on health care cost growth. I find that the backlash had a strong effect on health care costs, and can statistically explain much of the rise in health spending as a share of U.S. GDP between 1993 and 2005 (amounting to 1% – 1.5% of GDP). I also investigate the effects of the managed care backlash on intensity of care, hospital salaries and technology adoption. I conclude that managed care was largely successful in keeping health care costs on a sustainable path relative to the size of the economy.
The paper is here, and it is Maxim’s job market paper from MIT. A number of his other papers, at the link, look interesting as well.
*India’s Tryst with Destiny*
The authors are Jagdish Bhagwati and Arvind Panagariya and it is the new book on the contemporary Indian economy. Self-recommending and absolutely excellent, full of useful details. It is not yet on U.S. Amazon, but it is available in India and perhaps elsewhere.
Vices and more vices
Lately a few people have been linking to 2006 posts on the vices of various political philosophies. If you are curious, here is my post on the libertarian vice. Here is my post on the liberal vice. Here is my post on the conservative vice. I still like these posts.
Since I have written these posts, several additional acts of vice have been committed.
Assorted links
1. The influence of Bork on antitrust.
2. James Wood on Knausgaard and others.
3. The nature of Australian worker’s compensation.
5. When women dare to outearn men (pdf), and summary here.
Constraining Predation: Formal and Informal Institutions
If a monopoly on legitimate force (government) is set up to prevent private predation, then what constrains government predation? This new paper presents intriguing results (a snippet of the abstract):
Previous findings suggest that informal, cultural rules underlie constraints on government predation. Following this logic, this study asks how contract enforcement is achieved – through formal or informal mechanisms? After controlling for reverse causality, the empirical results suggest that informal cultural mechanisms protect against private predation and support contracting institutions while the formal institutions are insignificant.
The author is Claudia Williamson and it follows on her article in Public Choice and her Journal of Law & Economics piece with Carrie Kerekes. While limited by the quality of available measures of informal rules, this work is building a case that cultural norms do much heavy lifting when it comes to constraining both private and government predation.
Whither Fashion Copyright?
The Innovative Design Protection Act (S.3523) would extend copyright protection for three years to fashion designs, including “undergarments, outerwear, gloves, footwear, and headgear; handbags, purses, wallets, tote bags, and belts; and eyeglass frames.” (Bill text.) Despite being introduced in every Congress since 2006, the bill has barely eked out of committee and no version has been brought to a floor vote.
On the surface, it seems that Congress should have done more with this proposal. It would make U.S. law commensurate with designer protections in France, Canada, and other countries. Supporters argue this would save U.S. jobs and constrain foreign pirates from stealing American ingenuity. Congress has previously carved out copyright protections for other useful articles. And there is a popular industry lobby behind the proposal. What’s more, the courts have recently protected fashion designs. So why haven’t the authors of the bill celebrated yet?
Bad politics?
1. Because fashion design in the U.S. is centered in a relatively few locales, it doesn’t yield political gains to a sufficient number of congressional districts or states. But this explanation is a false start because legislation like this gets logrolled all the time.
2. It is simply a bad idea and doesn’t pass even Washington’s sniff test. This ascribes much credit to Congress in sifting good ideas from bad.
3. The lobby, while part of it is popular and noticeable, is not unified behind the idea. High-end designers have been backing the idea from the start, but clothing and shoe makers dug in their heels early and later came on board nominally (they prefer reducing import tariffs).
Bad timing?
4. A version of the fashion copyright bill was first introduced in the House in 2006, just as the housing bubble was going pop. With Washington focused on the financial crisis, terrorism, and unemployment, and with a growing public furor over economic inequality, the deck has been stacked against distributing rents to high-end designers.
5. Increased party polarization over the past decade has made it difficult to establish winning coalitions for bills like these. A few days ago I asked Chris Sprigman (co-author of “The Piracy Paradox”) about this. He said, “That’s generally true, but hasn’t been true of copyright. Copyright has mostly been bipartisan.” While he and Kal Raustiala predicted after the recent election that the GOP could potentially take a more reluctant stance on copyright: “then as if on cue, the whole Republican Study Committee fracas over the “anti-copyright” report erupted.” Chris elaborates here.
In sum: It’s conceivable the bill could just hang around long enough and a political opportunity will emerge. Yet having barely made it out of committee, and with no floor vote in either chamber, the proposal hasn’t been put to a serious political test. So it could just be too politically risky. Everyone buys clothes and shoes, and they presumably like that they’re spending less and less on apparel. Plus, through their regular shopping experiences, they can also see vividly that knockoffs are the reason they have inexpensive options. Do elected officials really want to test those waters? It’s difficult to see a winning coalition forming against the potential backlash that fashion copyright would generate.
More on these issues from MR:
Alex covered the rapid cameo of the Republican Study Committee’s “radical but sensible position paper on copyright.”
Tyler covered “The Piracy Paradox” in his February 2006 entry, “How does the fashion industry work without copyright?” See also his: “Can we do without digital rights management?” and why the economics of food recipes resists copyright (“Food relies so much on execution…”); and why the French prioritize copyright.
Is there a great stagnation in action movies?
Chris MacDonald asks me:
Should we expect stagnation, or continued improvement, in the action film genre? The new Bond flick, Skyfall, is getting rave reviews, with some calling it the best Bond film ever. Hyperbole aside, it is indeed very good. Should we expect the next Bond film to be less good (regression to the mean) or is this one of the fields — like baseball management — where mechanisms exist to facilitate further improvement on a fairly reliable basis?
I was less crazy about Skyfall (“M, pull out your cell phone and call for aid!”) but that’s neither here nor there.
As for the stagnation issue, there are two main developments. The first is a resurrection of sorts, namely 3-D, which is a very real gain, but in my view it is a significant plus for fewer than ten movies, most notably Avatar.
CGI is a gain for some movies (e.g, Troy, Life of Pi, Lord of the Rings), though it often makes action scenes less visceral and more distant.
The main drawback for Hollywood action movies has been globalization, which leads to too many explosions and not enough subtle dialogue and characterization. The other main drawback has been high marketing costs, which encourages tent pole franchises with prior name recognition with a core audience. That often means too much clunky plot exposition, too many comic book characters, too great a need to heed the wishes of the hard core audience base, and too few surprises about the characters. There is one very good Spiderman movie but overall I call this trend a negative.
Still, there has been major progress in action movies, at least if we are willing to accept a particular semantic switch. I much prefer Goldfinger to the newer Bond movies, but I also don’t think of it as an action movie. It doesn’t have much action, although I don’t think people at the time felt that way. By my possibly distorted standards, the Bond movies start being action movies only with Diamonds are Forever.
King Solomon’s Mines is a very good movie, under-watched these days, as is Thief of Baghdad. Nonetheless prior to the 1970s I think of the action genre as virtually non-existent. I was stunned when I first (1981) saw the opening scene of Raiders of the Lost Ark, though these days it isn’t especially impressive, just well-executed.
One possibility is that each generation thinks it is the first to have had action movies.
To sum up, for all of the contemporary excess, we have been living in a Golden Age of Action Movies. Even a scorned movie such as Lara Croft is pretty awesome on the big screen. And Asian action movies have reached their peaks only in the last twenty years, including early John Woo. Call that the plus side of the globalization equation.
That said, a few impressive 3-D movies aside, the last five years have brought more negatives than positives, a’la “Transformers” and various overinflated, noisy, character-stuffed, and self-important Hollywood monstrosities. We’ll get over it, but in reality stagnation is something we might have wished for instead.
Here is one list of the greatest action movies of all time. Not many pre-70s movies can stand up to these for action.
The next trend will be RCT-like audience studies to find out exactly which action tricks, with which timings, thrill us and which do not. Great directors have an intuitive sense for this but it could be made much more scientific.
Markets in everything
Our ballistic backpack provides built-in ballistic protection in a backpack that weighs just ounces more than a non-armored backpack. RynoHide carbon nanotube armor is lined in the back panel of the backpack. Sewn into the rear of the pack, you can always be confident that the armor hasn’t been accidentally left at home and that you or your child are protected in case of the unthinkable. The backpack can be quickly brought to the front as a shield or can serve as center of mass protection while fleeing the scene of the shooting.
Maybe it is some kind of sorry joke but still a sign of an especially bad year for mass shootings. For the pointer I thank FM.
Addendum: These seem to be real, and also fairly popular.