Maurice Allais
French physicist and economic Nobel Laureate Maurice Allais has died at age 99. Allais is best known among American economists for the Allais paradox but Allais was a polymath with contributions (and JSTOR here) in a huge number of areas many of which were often overlooked because his work was not translated into english (an unfortunate fact which is still true today).
One thing that few people know about Allais was that he was a big proponent of the gold standard and Austrian business cycle theory, even citing Mises and Rothbard in some of his work. See in particular his paper in English, The Credit Mechanism and its Implications (1987) in Feiwel (ed), Arrow and the Foundations of the Theory of Economic Policy. See also here for further citations in french.
As might be expected from a polymath, Allais's views are difficult to pigeonhole. He was a strong proponent of private property and the market economy, for example, but to create the consensus necessary to produce such a society he also favored immigration restrictions and protectionism.
Amazingly, Allais also conducted ground breaking experiments on pendulums which earned him the 1959 Galabert Prize of the French Astronautical Society and which may have revealed an anomaly in general relativity that physicists refer to as the Allais effect.
Assorted links
1. David Byrne selects photos of Detroit, and here is the decline of the Battersea Power Station.
2. Some Friedmanesqe themes in the arts, by me, through the Dallas Fed. At the end I discuss why the Friedmans (circa 1969) seemed to be more optimistic about the West Bank than about Bali.
3. Against (some) arbitrage (pdf).
Why do unions oppose merit pay?
Bryan Caplan asks:
I don't doubt that unions tend to oppose merit pay, but the reasons are unclear. Profit-maximizing monopolists still suffer financially if they cut quality; the same should hold for unionized workers. Why not simply jack average wages 15% above the competitive level, and leave relative wages unchanged?
Or to put the puzzle another way: Once you've secured a raise for all the workers in your union, why prevent employers from offering additional compensation for exceptionally good workers?
Earlier, Megan McArdle considered the topic. One simple model is to invoke the median voter as either ruling the union or constraining it. The implication is that most union members fear they will lose from greater accountability, even if the total size of the pie goes up. As Megan noted, unions are set up to favor the bottom 55 percent of the workers; furthermore productivity can be very unevenly distributed.
Presentation videos
By Glen Weyl, here are two talks, Imperfect Platform Competition and Concordance Among Holdouts. Each video is over an hour long and presents one of Glen's research papers.
Why doesn't every paper have one of these? Is it because most papers don't matter?
Greg Mankiw’s marginal tax rate
Without any taxes, accepting that editor’s assignment would have yielded my children an extra $10,000. With taxes, it yields only $1,000. In effect, once the entire tax system is taken into account, my family’s marginal tax rate is about 90 percent. Is it any wonder that I turn down most of the money-making opportunities I am offered?
By contrast, without the tax increases advocated by the Obama administration, the numbers would look quite different. I would face a lower income tax rate, a lower Medicare tax rate, and no deduction phaseout or estate tax. Taking that writing assignment would yield my kids about $2,000. I would have twice the incentive to keep working.
The full column is here. Perhaps Greg could do more to (legally) evade the estate tax, but that's hardly an argument for raising such a tax.
Alternatively, Dan Ariely asks:
Let’s say that your 1040 came with a little extra stuff: maybe a container with an alcohol content, or perchance something of the chocolate persuasion. What if your tax forms arrived in a gift box with some financial documents on the side? What if the instructions for filling out the form told you to type in your personal information and take a bite of chocolate, type in your W-2 information and drink some of the alcohol, add your deductions and try some of the nuts etc? What if we could live in a world where you actually looked forward filling out these forms?
Assorted links
The Charter 08 document
It helped Liu Xiaobo win a Nobel Peace Prize. Here is one good paragraph of many:
Protection of Private Property. We should establish and protect the right to private property and promote an economic system of free and fair markets. We should do away with government monopolies in commerce and industry and guarantee the freedom to start new enterprises. We should establish a Committee on State-Owned Property, reporting to the national legislature, that will monitor the transfer of state-owned enterprises to private ownership in a fair, competitive, and orderly manner. We should institute a land reform that promotes private ownership of land, guarantees the right to buy and sell land, and allows the true value of private property to be adequately reflected in the market.
Hat tip goes to Matt Yglesias.
How recognizable will humans be in five hundred years?
Alex reports:
Tyler and I argued recently about whether or not humans will be recognizably human in 500 years.
Let us assume that scientific progress continues. My view is that parents don't so much like "difference," unless it is very directly in their favor. Using technology, parents will select for children who are taller, smarter in the way that parents value, better looking, and perhaps also more loyal to their families. The people in the wealthy parts of the world will look more like models and movie stars, but they will be quite recognizable. These children may also be less creative and some of them will be less driven. It's a bit like the real estate market, where everyone wants their house to be special, but not too special, for purposes of resale or in this case mating and career prospects.
Assortative mating can increase the variance of appearance (and other characteristics), but a) assortative mating is not obviously a dominant effect, b) not necessarily doing much over the course of five hundred years, and c) future science is more likely to reverse the boost in variance than to support it. One short person could marry another short person, without having such short children because of genetic engineering.
People will in various ways be cyborgs, but more or less invisibly from the outside at least.
Dogs look different than they did five thousand years ago, but that is because humans controlled their breeding and opted for some extremes. How would they look today if the dogs themselves had been in charge of the process?
Potential markets in everything business plans to bet against
The Lithuanian company Olialia, pronounced "ooh-la-la", is planning a holiday resort in the Maldive islands.
The firm hopes to pull in the tourists by employing only blonde staff, and offering direct flights to the island crewed entirely by blondes, including the pilots.
The article is here and for the pointer I thank Leonard Monasterio.
The culture that is Japan
…a new breed of automated seller has smarts, too–these machines can detect your age and gender and offer drink suggestions accordingly.
The new machines under the Acure brand were recently installed in Tokyo's Shinagawa Station and they're about the size of two refrigerators.
Run by a company under the JR East railway group, the "next-generation drink machines" are imposing enough, but fortunately they don't talk to you. They have cameras that use facial-recognition algorithms to match customers' faces to a database of people types.
When you stand in front of the machine, it takes a second to process your image. It will then recommend some of the roughly 35 drinks displayed on its large touch-screen panel by showing little cartoonish speech bubbles next to them…
At one machine on the main concourse of Shinagawa, I saw a Japanese businessman being offered Coke as a suggested beverage, while a Japanese woman was offered a water-like vitamin drink.
The full story is here and for the pointer I thank Steve Silberman.
Assorted links
The Singularity is Near: Robot with Rat Brain
Tyler and I argued recently about whether or not humans will be recognizably human in 500 years. Some data is provided in this video from Wired Science and more discussion in this paper.
Perhaps most important to note is that the robot with rat brain was created by a proto-cyborg.
Catch a thief from your armchair and win cash
Here is the latest from the UK:
Anyone who owns a laptop computer can now fight crime from the safety of their home and win cash prizes for catching thieves red-handed, under a new British monitoring scheme that went live this week.
The service works by employing an army of registered armchair snoopers who watch hours of CCTV footage from cameras in stores and high street venues across the country.
Viewers can win up to 1,000 pounds ($1,600) in cash a month from Devon-based firm Internet Eyes, which distributes the streaming footage, when offenders are caught in the act.
For the pointer I thank Michael Rosenwald, who has just published a new book on the sports writing of Gay Talese.
From another front, S.S. sends me this link for "the culture that is Britain."
Why don’t people rock the boat in early on-line dating encounters?
Well, some of them do. But many don't. Dan Ariely writes:
We picked apart emails sent between online daters, prepared to dissect the juicy details of first introductions. And we found a general trend supporting the idea that people like to maintain boring equilibrium at all costs: we found a lot of people who may, in actuality, have interesting things to say, but presented themselves as utterly insipid in their written conversations. The dialogue was boring, consisting mainly of questions like, “Where did you go to college?” or “What are your hobbies?” “What is your line of work?” etc.
…What we learned from this little experiment is that when people are free to choose what type of discussions they want to have, they often gravitate toward an equilibrium that is easy to maintain but one that no one really enjoys or benefits from.
First, email is a bad medium for making and negotiating outrageous claims. You can't communicate subtleties of tone and teasing and you can't easily do "repair work" if you offend the audience, even assuming you can notice the offense or keep the dialog going after an offense.
More generally, when I see cautious behavior I ask if some kind of threshold incentive is in place. Imagine a process where both the writing man and the writing woman have inferred they are above the other's minimum standard for a personal meeting, perhaps for having demonstrated looks, money, status, etc. Given that a relatively impressive credential already puts each person in the running, on the written exchange each is simply hoping to "break even" for the time being and avoid dismissal. Draw your own implications as to what attracts people in the on-line dating world.
Addendum: Robin Hanson offers related comment.
CA Organ Donor Law
California has a new law creating a live donor registry for kidney transplants and requiring California drivers to say yay or nay on whether they want to be organ donors when they renew their drivers' licenses. The law was passed with the prodding of Steve Jobs who last year had a liver transplant.
The live donor registry is very good. The required declaration is mixed but I hope it works. I see it as follows. The benefit is that if a potential donor has said yes to organ donation then next of kin almost always agree to their wishes so if more people positively affirm that is good. The cost, however, is that now "no" really means "no" and next of kin will presumably agree to that as well. Previously, next of kin might have said yes to non-signatories. Let's use some back of the envelope figures:
100 potential donors
20 signed organ donor cards
80 do not sign but, among these, half the families say yes so 40.
Total: 60 donors.
So with declaration you need more than 60 to agree to be organ donors, i.e. a huge increase in those saying yes. It could happen if what people say on surveys about supporting organ donation is true but I would have been much happier with even a small incentive to sign. How about a free iPhone for signatories? Or at least some more minutes!
See here for more on incentives and organ donation.
Addendum: Nudge blog has some helpful comment–the law appears to be closer to mandated ask than mandated choice.