Two simple points
1. In a basic Cournot-Nash model, as the number of firms increases, price falls and very often the pace of innovation increases.
2. The more competitive a market, the more likely that a more “conscientious” firm is only epsilon “better” than its competitors.
Think about it! #Strauss
*Holy Spider*
A very good Iranian movie, the first half feels like David Fincher but in Farsi. It is about a serial killer, so you must be able to tolerate some difficult scenes. The second half takes some brilliant and creative turns, concerning broader Iranian society. I dare not divulge those for fear of spoiling the suspense for you. The movie also bears on the current role of Iran in the Middle East conflict and has a definite Straussian side. Recommended, for those who can. On Netflix.
Friday assorted links
Africa fact of the day
COLUMN: Sub-Saharan Africa has lost another decade.
The region's GDP per capita peaked in 2014, and since has fallen ~10%. On current trends, it would not retain the 2014 level until 2033, implying a second lost decade.#Africa #commodities via @Opinion https://t.co/FYFobDnCtF
— Javier Blas (@JavierBlas) September 12, 2023
*Look Again*
The authors are Tali Sharot and Cass Sunstein, and the subtitle is The Power of Noticing What Was Always There. Excerpt:
The day is known as Högertrafikomläggningen, which translates to “the right-hand traffic diversion,” or H-day for short. It was the day Sweden changed from driving on the left side of the road to the right. The move was initiated to align Sweden with the other Scandinavian countries. The fear was that drivers would get confused, turning the wrong way or getting too close to other cars when attempting to overtake them. That would seem to be a perfectly reasonable fear. Surprisingly, however, the switch did not result in a rise in motor accidents, On the contrary, the number of accidents and fatalities plunged! The number of motor insurance claims went down by 40 percent.
A very interesting book, recommended, due out in February.
Bill Conerly at Forbes reviews GOAT
GOAT: Who is the Greatest Economist of all Time and Why Does it Matter? is an intriguing book by the well-known economist Tyler Cowen in which he tries to determine who is the greatest economist of all time. This book will be enjoyed not only by economists but also those interested in understanding the world of people and their interactions. Importantly, the book emphasizes the non-financial implications of economic analysis in areas such as friendship, community and aesthetics…
In a startling advance for book publishing, GOAT comes with a chatbot in which a user can ask the AI to answer questions related to the book. In writing this review, I used the chatbot to refresh my memory about Tyler’s criteria for greatness and for examples of non-financial concerns. The chatbot uses the same technology that enables AI to answer specialized questions for customer service by accessing a company’s owners’ manuals, returns policy and troubleshooting guides.
Here is the full review.
England is underrated, a continuing series
The UK has said it will refrain from regulating the British artificial intelligence sector, even as the EU, US and China push forward with new measures. The UK’s first minister for AI and intellectual property, Viscount Jonathan Camrose, said at a Financial Times conference on Thursday that there would be no UK law on AI “in the short term” because the government was concerned that heavy-handed regulation could curb industry growth.
Here is more from the FT. And also from the FT: “UK approves Crispr gene editing therapy in global first.“
America’s top one percent has not been seeing a rising income share
That is the topic of my latest Bloomberg column. The opener is this:
Can a single self-published paper really refute decades of work by three famous economists? If the paper is the modestly titled “Income Inequality in the United States: Using Tax Data to Measure Long-Term Trends,” then the answer — with qualifications — is yes.
And this:
Now, in their latest study, they arrive at a conclusion that will be startling to a lot of people: “Increasing government transfers and tax progressivity have resulted in rising real incomes for all income groups and little change in after-tax top income shares.”
More concretely, looking at pre-tax income, the share of the top 1% has gone up only 2.6 percentage points since the early 1960s. For after-tax income, top income shares haven’t changed much at all.
Auten and Splinter have a methodological explanation for why their results differ. The share of true income missing in tax data has increased over time, and they attempt to adjust for that discrepancy, as well as for how income is sheltered in corporations has changed. Auten and Splinter also include cash and in-kind transfers for the lower income groups, to better measure their true incomes.
Recommended.
Thursday assorted links
A Tax Puzzle
Analyze the following four images. For each image, guess what is being taxed. Use only the information in the image.
FYI ChatGPT was not able to solve this question directly, although it was very good at analyzing what was distinctive or odd about each image and thus suggesting some possible answers.
Hat tip: Lionel Page, via Shruti Rajagopalan, includes answers and some variants.
My Conversation with the excellent Jennifer Burns
Here is the audio, video, and transcript. Here is the episode description:
Jennifer Burns is a professor history at Stanford who works at the intersection of intellectual, political, and cultural history. She’s written two biographies Tyler highly recommends: her 2009 book, Goddess of the Market: Ayn Rand and the American Right and her latest, Milton Friedman: The Last Conservative, provides a nuanced look into the influential economist and public intellectual.
Tyler and Jennifer start by discussing how her new portrait of Friedman caused her to reassess him, his lasting impact in statistics, whether he was too dogmatic, his shift from academic to public intellectual, the problem with Two Lucky People, what Friedman’s courtship of Rose Friedman was like, how Milton’s family influenced him, why Friedman opposed Hayek’s courtesy appointment at the University of Chicago, Friedman’s attitudes toward friendship, his relationship to fiction and the arts, and the prospects for his intellectual legacy. Next, they discuss Jennifer’s previous work on Ayn Rand, including whether Rand was a good screenwriter, which is the best of her novels, what to make of the sex scenes in Atlas Shrugged and The Fountainhead, how Rand and Mises got along, and why there’s so few successful businesswomen depicted in American fiction. They also delve into why fiction seems so much more important for the American left than it is for the right, what’s driving the decline of the American conservative intellectual condition, what she will do next, and more.
Here is one excerpt:
COWEN: What’s the future of Milton Friedman, say, 30, 40 years from now? Where will the reputation be? University of Chicago is no longer Friedmanite, right? We know that. There are fewer outposts of Friedmanite-thinking than there had been. Will he be underrated or somehow reinvented or what?
BURNS: Let me look into my crystal ball. I don’t think the name will have faded. I think there are still names that people read. People still read Keynes and Mill and figures like that to see what did they say in their day that was so influential. I think that Friedman has got into the water and into the air a bit. I do some work on tracing out his influence.
Within economics, no one’s going to say, “Oh, I’m a Friedmanite,” or fewer people are, but this is someone whose major work was done half a century or more ago, so I don’t think that’s surprising. It would be surprising if economics had been at a standstill as Friedman still called the tune. When you think about the way we accord importance to the modern Federal Reserve, of course, there were things that happened in the world, but Friedman’s ideas did so much to shape that understanding.
He’s still in policymakers’ minds. He’s still in the monetary policy establishment’s minds, even if they’re not fully following him. I think we’re in the middle of a big reckoning now. You saw all the debate about M2 and the pandemic and monetary spending. I don’t know where it’s all going to settle out. It’s a more complicated world than the one that Friedman looked at. I tend to think he is an essential thinker, that the basics of what he talked about are going to be known 50 years from now, for sure.
COWEN: Did Milton Friedman have friends?
Definitely recommended, and Jennifer’s new book Milton Friedman: The Last Conservative is one of my favorite books of the year. It will likely stand as the definitive biography of Friedman.
Quantity theory of money, or fiscal theory of the price level?
The rebel-controlled Yemeni rial is made up entirely of a fixed supply of notes printed prior to 2016. In the chart below you can see it appreciating in value (the blue line) against the dollar, issued by the world's most powerful state. pic.twitter.com/vioXHmz2wQ
— John Paul Koning (@jp_koning) November 15, 2023
Who is rising and falling in status in the NBA?
Falling:
Damian Lillard
Jordan Poole
Zion Williamson
Klay Thompson
Andrew Wiggins
Austin Reeves
Rising:
Embiid
Maxey
Porzingis
Haliburton
Curry (not Seth)
Dare I say Kyrie Irving?
Lebron, if that is even possible at this point, he is already GOAT
Greg Popovich
Wemby
Bam Adebayo
That is a lot of status reshuffling, but it seems to be happening pretty quickly and I suspect most of it will stick, with Kyrie Irving maybe still up for grabs. Others?
When I was over Auren Hoffman’s house, I bet (using play chips only) 70% that either Boston or Denver wins the title this year.
Wednesday assorted links
1. Teacher-driven changes in ideas during the Scientific Revolution at Oxford and Cambridge (Julius Koschnick of LSE is on the job market).
2. ChatGPT grey markets in everything.
3. Kiwi family goes to Walmart for the first time (video).
4. Zero-sum thinking and political divides.
5. The course of Brazil’s trade surplus.
6. Why are Canadian remote workers right across the border paid less?
7. Ross on religion (NYT).
The Amazing Vernon Smith
You can find Vernon Smith hard at work at his computer by 7:30 each morning, cranking out 10 solid hours of writing and researching every day.
His job is incredibly demanding — he is currently on the faculty of both the business and law schools at Chapman University. But the hard work pays off: Smith’s research is consistently ranked as the most-cited work produced at the school — a testament to his ongoing academic influence and success. He manages his job and research work while also coauthoring books and traveling around the country to deliver lectures.
It’s a remarkable level of productivity, made all the more remarkable by one simple fact: Vernon Smith is 96 years old.
Smith, who was awarded the Nobel Prize in Economic Sciences at the tender age of 75, says he feels the same passion as he did then, and even as he did when he embarked on his career more than seven decades ago.
That’s from the AARP on SuperAgers. In addition to all that, Vernon “is one of 1,600 participants in the University of California, Irvine’s 90+ Study, a research project examining both successful aging and dementia in people age 90 and older.”
Vernon was always one of our sharpest and most productive colleagues. He remains an inspiration.