The bureaucratization of U.S. foreign policy

The NSC [National Security Council] was established in the 1947 National Security Act, which named the members of the council: president, vice president and secretaries of state and defense. The function of the council “shall be to advise the president with respect to the integration of domestic, foreign, and military policies relating to the national security.” The law required regular meetings…

Mr. Kissinger grew the council to include one deputy, 32 policy professionals and 60 administrators. By my count, alumni of his NSC include two secretaries of state, four national security advisers, a director of national intelligence, a secretary of the Navy, and numerous high-ranking officials in the State, Defense and Treasury departments as well as the Central Intelligence Agency.

But the NSC has only continued to expand. By the end of the Obama administration, 34 policy professionals supported by 60 administrators had exploded to three deputies, more than 400 policy professionals and 1,300 administrators.

The council lost the ability to make fast decisions informed by the best intelligence.

Here is more from John Lehman (WSJ).

Apply for Emergent Ventures

The application form is here, lists of previous cohorts of winners are here.  And please note there are two special tranches:

Progress Studies tranche, and a tranche for:

“advancing humane solutions to those facing adversity – based on tolerance, universality, and cooperative processes”

And might anyone be interested in working on the issue of why production speeds for infrastructure and so many other projects have slowed down so much?

There has been a very impressive group of winners to date.

Tuesday assorted links

1. Review of a new and apparently impressive biography of Frank Ramsey.

2. Arnold Kling on public intellectuals.

3. Update on the World Bank paper controversy.  And here is the paper.

4. “…the power costs less to generate in India than the cheapest competing fossil fuel—coal—even with subsidies removed and the cost of construction and financing figured in, according to the Indian government and industry trackers.”  (WSJ)

5. Is Tesla better off without a traditional supply chain?

6. Oren Cass starts new group to challenge free market fundamentalism.

Our Cyborg Future

The only way to beat the AIs is to join with them. Our cyborg future is well illustrated in this video from Bertolt Meyer who has an artificial arm that he has hacked to control other devices.

I am in the process of building a device (the “SynLimb”) that attaches to my arm prosthesis instead of the prosthetic hand. The SynLimb converts the electrode signals that my prosthesis picks up from my residual limb into control voltages (CV) for controlling my modular synthesizer. The SynLimb thus allows me to plug my prosthesis directly into my snythesizer so that I can control its parameters with the signals from my body that normally control the hand. For me, this feels like controlling the synth with my thoughts. I show the prototype(s), explain how we put it together and how it works, and do a little demo.

In one way this is obvious. There is very little difference between sending electrical signals from the brain to the hand and then using the hand to control the synthesizer and sending electrical signals from the brain through the artificial hand directly to the synthesizer. As Meyer notes the whole process feels very natural. The fact that it is obvious and natural will make adoption very quick.

Hat tip: John Backus

Does GDPR even boost privacy?

Maybe not:

This paper studies the effects of the EU’s General Data Protection Regulation (GDPR) on the ability of firms to collect consumer data, identify consumers over time, accrue revenue via online advertising, and predict their behavior. Utilizing a novel dataset by an intermediary that spans much of the online travel industry, we perform a difference-in-differences analysis that exploits the geographic reach of GDPR. We find a 12.5% drop in the intermediary- observed consumers as a result of GDPR, suggesting that a nonnegligible number of consumers exercised the opt-out right enabled by GDPR. At the same time, the remaining consumers are more persistently trackable. This observed pattern is consistent with the hypothesis that privacy-conscious consumers substitute away from less efficient privacy protection (e.g, cookie deletion) to explicit opt out, a process that would reduce noise on remaining consumers and make them more trackable. Further in keeping with this hypothesis, we observe that the average value of the remaining consumers to advertisers has increased, offsetting most of the losses from consumers that opt-out. Our results highlight the externalities that consumer privacy decisions have both on other consumers and for firms.

That is from a new paper by Guy Aridor, Yeon-Koo Che, William Nelson, and Tobias Salz, emphasis added by me.  Via the excellent Kevin Lewis.

Rooftops, and warm ones at that

Our best tool is to compare Labour’s 2019 manifesto against the Sanders’ economic platform. Doing so makes clear that Bernie is more radical than Corbyn on economics, both in absolute terms and relative to their countries’ respective politics.

Take the size of government. The Manhattan Institute’s Brian Riedl calculates that Sanders’ promises would add $97.5 trillion to spending over a decade, taking total annual US government spending to around 70% of GDP and more than doubling the size of the federal government. Even if climate investments prove a one-off, spending would settle at a massive 64% of GDP. That’s far higher than Labour’s planned 44% and even France’s current 57% (itself the highest in the OECD).

A look at certain individual spending areas also underlines just how radical the Sanders agenda is. Like Labour, he wants government-funded free public higher education. Unlike Labour, he’d also forgive all existing student debts. On climate change and infrastructure, Labour planned for £400 billion investment over 10 years (about 20% of current annual UK GDP). Sanders wants to invest $16.3 trillion over 15 years (about 75% of current annual US GDP.) On healthcare, both want government spending to expand to cover all medical treatment, prescription charges, long-term care for the elderly, and dentistry. But only Sanders would explicitly ban private health insurance (Labour did consider that proposal but held off in the end).

True, Corbyn and McDonnell favoured nationalising buses, railways, the energy sector, water, and parts of the broadband network. Corbyn even wanted free government-funded broadband for all. But even here the results of Sanders’ pledges would bring similar results. He would set up “publicly owned” and “democratically controlled” broadband networks. And his Green New Deal would bring most public transport under government control and deliver effective public ownership of energy production.

When it comes to financing their promises, Sanders is arguably more radical again. Labour planned to only borrow to invest, raising the deficit by about 2% of GDP per year. But Bernie’s tax plans get nowhere near fully funding his agenda. Absent further broad-based tax rises, Riedl calculates annual borrowing would soar to around 30% of US GDP if his spending plans were implemented…

Combined with national insurance, Labour’s top marginal income tax rate would have been 52%. Sanders’ top federal income tax rate alone would be 52%, bringing a top combined top rate of around 80% once state and payroll taxes are considered. Sanders wants a new wealth tax too, another option Labour shirked. And while Labour wanted to raise the UK’s main corporation tax rate to 26%, Bernie would opt for 35% with a broad base.

That is from Ryan Bourne of Cato, and yes there is more at the link.

I would put it this way: right now we are sampling the offer curve of left-wing intellectuals and activists for “prioritizing climate change” vs. “mood affiliation,” and…let us hope for the best!

Here is Daron Acemoglu on Bernie Sanders.

Tufts University’s Tisch College Launches Center for State Policy Analysis

Tufts University’s Jonathan M. Tisch College of Civic Life today announced the creation of a new, non-partisan Center for State Policy Analysis (cSPA) to ensure that lawmakers and residents in Massachusetts have access to the best information on effective public policy.

cSPA will conduct detailed, independent analyses of current legislative issues and ballot questions in Massachusetts and will widely share this research with the public. The Center aims to partner with experts at Tufts University and beyond to provide real-time analysis that informs legislative debates and helps voters better understand the stakes of ballot initiatives.

Former Boston Globe data-journalist Evan Horowitz will serve as cSPA’s executive director…

Horowitz is also an Emergent Ventures winner, congratulations on the new center!

How Japan avoided a bond market panic

This paper explores the history of Japanese fiscal policy over the past two decades with the aim of better understanding where previous forecasts have erred. As such, Japan provides an important case study of how a country facing intense fiscal pressures can avoid a hyperinflation or financial panic. We find that there were three key forces that likely improved Japan’s fiscal situation relative to more pessimistic predictions. First, the Japanese government has shown remarkable ability to hold down per capita expenditures on social pensions and healthcare. Second, the Japanese government has been able to raise taxes substantially. Third, the remarkable monetary policy pursued by the Bank of Japan has resulted in a dramatic decline in the amount of government bonds held by the private sector.

That is the abstract of a 2017 paper by Mark T. Greenan and David E. Weinstein.  You will note that the Japanese government just announced that the Japanese economy contracted at an annualized rate of -6.3% (not a typo) last quarter.  Of course, maybe they should have just kept on borrowing money forever.  As you can see from the recent tweet of Krugman, many of the Keynesians now favor stimulative policy all the time, even at full employment, with no need for eventual consolidation.

And the next time you see a calculation of a multiplier, ask yourself if the entire time horizon is being considered.  Usually not.

Via the excellent and reality-based Wojtek Kopczuk.

Monday assorted links

Pop Songs are Getting Sadder and Angrier

AEON: English-language popular songs have become more negative. The use of words related to negative emotions has increased by more than one third. Let’s take the example of the Billboard dataset. If we assume an average of 300 words per song, every year there are 30,000 words in the lyrics of the top-100 hits. In 1965, around 450 of these words were associated with negative emotions, whereas in 2015 their number was above 700. Meanwhile, words associated with positive emotions decreased in the same time period. There were more than 1,750 positive-emotion words in the songs of 1965, and only around 1,150 in 2015. Notice that, in absolute number, there are always more words associated with positive emotions than there are words associated with negative ones. This is a universal feature of human language, also known as the Pollyanna principle (from the flawlessly optimistic protagonist of the eponymous novel), and we would hardly expect this to reverse: what does matter, though, is the direction of the trends.

The tempo and the tonality of the top-100 Billboard songs was also examined: Billboard hits have become slower, and minor tonalities have become more frequent. Minor tonalities are perceived as gloomier with respect to major tonalities.

The authors, Acerbi and Brand, have some speculation about why the change has occurred–negative emotions transmit more easily, random drift, changes in preferences, a change in music distribution but nothing definitive. Could rap explain the differences? The study looks at the production of new music but what about the consumption? Are we listening to sadder songs or brightening things up by listening to more songs from the past? It would be interesting to know whether this is true in other languages as well.

Hat tip: Paul Kedrosky.

Why is VC Twitter so peculiar?

Here is an email from an anonymous MR reader, on exactly that question:

– VCs are in the business of speculating about the future and identifying underestimated trends. They are subjective to evolutionary pressure that selects for heterodoxy.

– As capital supply increases, the importance of differentiation on other axes increases. VCs have a growing incentive to personally market their product.

– VCs lack conventional bosses who could sanction them if they say something ill-advised on Twitter.

– VCs face some of the most asymmetric return distributions of any profession. Two instances of being correct can outweigh being wrong in every other case.

– Much of what supposedly-controversial VCs say is not actually contrarian but widely shared but repressed since most people have a strong disincentive to attract opprobrium. This disparity heightens the oddity of VC twitter.

– Unlike many occupations that profess to be about ideas but often put form above substance, VCs in some substantial sense actually are. What can seem like naivete is often a genuine engagement with the basic questions.

– Therefore, in our shared pursuit of novel ideas, we should give thanks to VC Twitter. Which category of Twitter users is most similar?

Should we expect those seeking VC money to tweet in similarly idiosyncratic ways?  They too face long odds on particular projects and tend to end up in equity-heavy positions.  Should the most “conservative” tweeters be those with high perks but no job security, for instance still untenured professors?  Heads of philanthropic foundations?

Overall, I find it striking that most individuals use Twitter for “double down” strategies, rather than “portfolio diversification” insurance strategies.  For instance, people who pursue overall risky courses of career action don’t play it safe on Twitter as a kind of career fall-back or insulation.  Perhaps that means at the margin “marketing” is more scarce and valuable than “insurance,” and thus start-ups — and venture capitalists — should pay heed to that.

Is 5G underperforming?

…Samsung, which makes both handsets as well as 5G network equipment, told investors on its own call that it expects its 5G business in South Korea to “shrink somewhat compared to last year.”

That last revelation is sobering. South Korea was the first market to deploy 5G services on a wide basis. Service launched in April 2019, but by year’s end consumers already were complaining that it didn’t live up to the hype. Part of the problem is that services marketed under the 5G label can vary widely in terms of speed and availability. Some aren’t much faster than existing 4G networks. And the fastest—including those using millimeter wave technology—currently are available only in certain dense urban areas due to their signal limitations.

Meanwhile, 5G devices remain expensive. Samsung’s new 5G phones range in price from $999 to $1,399.

Here is more from Dan Gallagher at the WSJ.  All the more reason to make sure your 5G rollout has the right provider.

Sunday assorted links

1. “Burundi’s parliament has voted to pay $530,000 (£400,000) to President Pierre Nkurunziza and provide him with a luxury villa when he leaves office.

2. The Body Shop: “And there’s only three questions to get a job. It’s, ‘Are you authorized to work in the U.S.? Can you stand for up to eight hours? And can you lift over 50 pounds?’”

3. Here is a new NIMBY song, a kind of anti-recommended.  The tree song, people are calling in on Twitter.  A reflection of our time?

4. Elizabeth Bruenig on epilepsy (NYT).

5. The Get Smart “cone of silence” is now a commercial reality (NYT).

6. How to donate a piece of your brain to science — while you’re still alive.

7. Six hundred U.S. citizens right now quarantined on 15 military bases in this country.

Does political polarization limit corruption?

Using panel data from the US states, we document a robust negative relationship between state-level government corruption and ideological polarization. This finding is sustained when state polarization is instrumented using lagged state neighbor ideology. We argue that polarization increases the expected costs of engaging in corruption, especially deterring marginal low-level corruption. Consistent with this thesis federal prosecutorial effort falls and case quality increases with polarization. Tangible anti-corruption measures including the stringency of state ethics’ laws and independent commissions for redistricting are also associated with increased state polarization.

That is from a new paper by Michael Melki and Andrew Pickering.  Via the excellent Kevin Lewis.