Why are folk songs such a poor guide to economics?

by  Tyler Cowen

Oliver Anthony (perhaps he should leave his town of per capita income 13k?) is the centerpiece of the column, but I’ll excerpt the bit of Springsteen:

When singers turn to economic issues, who plays the role of victim? Very often it is people who have lost their jobs, such as in Bruce Springsteen’s “My Hometown,” about a textile mill leaving the singer’s hometown. (Springsteen is not generally considered a folk singer, but many of his songs have folk roots and channel folk vibes.) That sounds terrible, and for many former workers it was.

But in fact the mill was relocated further south, where presumably it helped to create other jobs. Was this development an egalitarian way to help spread prosperity to a poorer part of the country? Did it help spur the transition of New Jersey to a service economy? That seems to have worked out: Average household income today in Freehold, Springsteen’s hometown, is more than $133,000. Or were more sinister forces at work? Was the factory closing a form of regulatory arbitrage against trade unions that protect worker interests?

No matter what your view, the song doesn’t clarify the issue very much. Nor should it be expected to.

As a general rule, music and the arts excel at pointing attention toward the seen — that is, identifiable victims or beneficiaries. In contrast, many of the most important insights of economics concern the unseen — that is, people who benefit in non-obvious ways, and sometimes many of them actually are unidentifiable. Automation, for instance, will throw some people out of work, but economics teaches us that in the longer run it usually benefits society, through both lower consumer prices and the creation of jobs in other, less visible sectors of the economy. You don’t hear many songs about that.

Not surprisingly, Bob Dylan is the hero of the story.

Is Bach the greatest achiever of all time?

by  Tyler Cowen in

I’ve been reading and rereading biographies of Bach lately (for some podcast prep), and it strikes me he might count as the greatest achiever of all time.  That is distinct from say regarding him as your favorite composer or artist of all time.  I would include the following metrics as relevant for that designation:

1. Quality of work.

2. How much better he was than his contemporaries.

3. How much he stayed the very best in subsequent centuries.

4. Quantity of work.

5. Peaks.

6. Consistency of work and achievement.

7. How many other problems he had to solve to succeed with his achievement.  For Bach, this might include a) finding musical manuscripts, b) finding organs good enough to play and compose on, c) dealing with various local and church authorities, d) migrating so successfully across jurisdictions, e) composing at an impossibly high level during the four years he was widowed (with kids), before remarrying.

8. Ending up so great that he could learn only from himself.

9. Never experiencing true defeat or setback (rules out Napoleon!).

I see Bach as ranking very, very high in all these categories.  Who else might even be a contender for greatest achiever of all time?  Shakespeare?  Maybe, but Bach seems to beat him for relentlessness and quantity (at a very high quality level).  Beethoven would be high on the list, but he doesn’t seem to quite match up to Bach in all of these categories.  Homer seems relevant, but we are not even sure who or what he was.  Archimedes?  Plato or Aristotle?  Who else?

Addendum: from Lucas, in the comments:

I’m not joking when I say I have thought about Bach in this light every week for the last 20 years.

His family died young, and his day job for much of his life was a school teacher! In addition to the daily demands on him to teach Latin and theology and supervise teenage boys and so on, there was the thousand small practical challenges of life in the eighteenth century. No electric lighting. Crappy parchment and quills. The cold, the disease, the lack of plumbing, the restricted access to information, talented players, and the manual nature of every little thing.

And, perhaps most of all, to continue such a volume of high-quality output when the world seemed not to care. Yes, he had a local reputation among those in the know, but there were never any packed concert halls or grand tours to validate his efforts. He seems to have been entirely internally driven by his genius and his commitment to the eternal and divine.

That was then, this is now, Budapest edition

by  Tyler Cowen in

Trains between the two cities [Budapest and Vienna] were fast — four and a quarter hours in 1896.  In 2022 it was three hours and thirty-five minutes.

And:

Budapest finance caught up and surpassed the growth of agricultural and industrial production.  By 1900 Budapest became the bankming centre of Central and Eastern Europe.  Between 1867, the date of the ‘Compromise’ which created the Dual Monarchy of Austria-Hungary, and 1914 the number of Hungarian banks grew from eleven to 160 and their capitalization increased fivefold.  A few of them — the First Hungarian Commercial Bank and the Hungarian Credit Bank — rivalled the biggest Viennese and German banks in size and prestige, as their palatial headquarter buildings in downtown Budapest, designed by the most renowned European and Hungarian architects, showed.  Their owners, such as the Wolianders, the Wahrmanns, Hatvany-Deutsch and Chorins, joined the European super-rich.

That is all from Victor Sebestyen’s interesting new book, Budapest: Portrait of a City Between East and West.

Sunday assorted links

by  Tyler Cowen

1. Ian Leslie on stories.

2. When and why did French fertility fall so rapidly?

3. Different accents in English.

4. Glimpse inside the Delhi punk scene.

5. Can you blame him?  A story of biryani.

6. Alas, GBD was not about protecting the vulnerable.  Sorry, people.

7. Is the standard model of the universe wrong? (NYT)

8. The invention of a new chess variant? (“Try as hard as you can to lose, and then win when your opponent resigns”?)

Proudhon: To be Governed

by  Alex Tabarrok in

To be GOVERNED is to be watched, inspected, spied upon, directed, law-driven, numbered, regulated, enrolled, indoctrinated, preached at, controlled, checked, estimated, valued, censured, commanded, by creatures who have neither the right nor the wisdom nor the virtue to do so. To be GOVERNED is to be at every operation, at every transaction noted, registered, counted, taxed, stamped, measured, numbered, assessed, licensed, authorized, admonished, prevented, forbidden, reformed, corrected, punished. It is, under pretext of public utility, and in the name of the general interest, to be place under contribution, drilled, fleeced, exploited, monopolized, extorted from, squeezed, hoaxed, robbed; then, at the slightest resistance, the first word of complaint, to be repressed, fined, vilified, harassed, hunted down, abused, clubbed, disarmed, bound, choked, imprisoned, judged, condemned, shot, deported, sacrificed, sold, betrayed; and to crown all, mocked, ridiculed, derided, outraged, dishonored. That is government; that is its justice; that is its morality.

Pierre-Joseph Proudhon, “General Idea of the Revolution in the Nineteenth Century,” first published in French 1851; translated by John Beverly Robinson (1923), pp. 293-294.

Hat tip: Robert Higgs.

The Dominican Republic is underrated

by  Tyler Cowen in

Despite being one of Latin America’s poorest countries in the mid-1960s, the Dominican Republic has made remarkable progress in terms of income convergence…

What is remarkable about the Dominican Republic’s progress is not just the level of convergence but also its speed compared to other countries in the region. By examining the average convergence velocity, or the rate of change in income convergence per decade, it is evident that the Dominican Republic has exhibited the highest average convergence velocity, or “blue shift,” in Latin America over the past 50 years. Panama and Chile have achieved equally meaningful but still lower positive convergence velocities, while the majority of countries in the region have experienced either very low (“green shift”) or negative (“red shift”) convergence velocities.

Here is the full IMF brief, retweeted by Matt Yglesias.  There is much more at the link.  I have been there twice, including as recently as last year (albeit briefly), and this accords with my intuitions.

Who Runs the AEA?

by  Tyler Cowen in

That is a new JEL publication (gated) by Kevin D. Hoover and Andrej Svorenčík, here is the abstract:

The leadership structure of the American Economic Association is documented using a biographical database covering every officer and losing candidate for AEA offices from 1950 to 2019. The analysis focuses on institutional affiliations by education and employment. The structure is strongly hierarchical. A few institutions dominate the leadership, and their dominance has become markedly stronger over time. Broadly two types of explanations are explored: that institutional dominance is based on academic merit or that it is based on self-perpetuating privilege. Network effects that might explain the dynamic of increasing concentration are also investigated.

And this:

The current paper is based on an extensive prosopographical database covering the entire leadership of the AEA over the
1950–2019 period, including all Presidents, Presidents-elect, Vice Presidents, ordinary members of the Executive Committee, as well as the losing candidates for all elective offices, and members of the Nominating Committee.

The results?:

The 14 institutions in the table account for almost more than 80 percent of the positions for the whole 1950–2019 period. Even within this select group, the distribution is highly skewed with Harvard, the top supplying institution over the period accounting for more than a fifth of the total, and the last five universities accounting for around 2 percent each. The top five institutions, Harvard, MIT, Chicago, Columbia, and Stanford, which we designate as the first tier, account for over half (57.1 percent) of the positions over the whole period…

The authors summarize their findings:

The most obvious lessons are, perhaps, hardly surprising: the AEA leadership is overwhelmingly drawn from a small group of elite, private research universities—in the sense that its leaders were educated at these universities and, to a lesser degree, employed by them. What is less well-known is that for much of the past 70 years, the AEA leadership has been drawn predominantly from just three universities—Harvard, MIT, and Chicago.

By the way, institutional concentration has become more pronounced over time, not less.  But since about eighty percent of U.S. students go to state schools, most of those large state schools, I guess we can reconfigure all these panels to have eighty percent state school representation, rather than 80 percent elite school representation.  Right?  Right?

You may or may not like these facts (I for one am willing to admit to more elitism than are many people), for the time being I will say only this: “Do not listen to what they say, watch what they do!”

Saturday assorted links

by  Tyler Cowen

1. The Howdy Doody longhorn steer car culture that is Nebraska, good video too (NYT).  Who needs an old-style NJ hood ornament?

2. Investment is booming in Ohio.

3. Markets in everything: buy a government surveillance van for 26k.

4. The political economy of the Magna Carta.

5. Become an expert in something specific and boring.

6. Parfitian, Kafkaesque insects (New Yorker).

7. New Melissa Dell et.al. data set from historical U.S. newspapers, now with LLMs far more valuable than they realized when they started constructing it.

Towards a Platform for Dominant Assurance Contracts

by  Alex Tabarrok in

Moyamo at LessWrong is committed to getting dominant assurance contracts, aka refund bonuses up and running.

Imagine a world with no ads or paywalls. A world where open-source software gets the same level of funding as proprietary software. A world where people can freely reuse ideas and music without paying royalties. A world where people get paid for writing book reviews. A world where Game-of-Thrones-quality shows are freely available on YouTube. A world where AI safety research gets the same-level of funding as AI capabilities research. Is this a fantasy world? No, this is the world where people use Dominant Assurance Contracts.

If you think this is a bad idea that no one will support, click on the donation link and make some money. If you think it’s a great idea with lots of potential, click on the donation link and be the one to make this public good a reality. Read the first link to find out more.

*All the Kingdoms of the World*

by  Tyler Cowen in

The author is Kevin Vallier, and the subtitle is On Radical Religious Alternatives to Liberalism.  This is an excellent and important book, starting with its defense of classical liberalism over Catholic integralism and indeed illiberalism more generally.  But do note that Kevin, although a professional philosopher is also a Christian (Eastern Orthodox), and he is writing from a Christian perspective.  This is also an excellent book simply for learning what integralism is.  Overall, perhaps this is analytic political theology!?

In the final chapter, Kevin considers illiberal strands within Chinese Confucianism and Sunni Islam as well.

To be clear, if you are interested in neither religion nor political philosophy, this is not for you.  But it is likely to be one of this year’s books that turns out really to matter.

Does China need more consumption?

by  Tyler Cowen in

I am repeatedly puzzled by this claim, which you will find in Michael Pettis, Paul Krugman, and others (WSJ), even Stephen Roach.  It might make sense for short-run matters, when prices are (maybe) sticky.  But as of late we are talking about how to restructure China for medium- and long-term growth.

Investment good prices are not sticky forever!  If rates of return are too low, those prices will fall, thereby restoring higher rates of return.  Somehow I never see that point mentioned.

Note that China is not in a liquidity trap, so weird liquidity trap results are not going to apply here.  If you are worried about some kind of downward spiral of everything, monetary policy can fill the gap.

Paul Krugman for one writes (NYT):

The result is that China has a huge quantity of savings all dressed up with no good place to go.

China needs investment in lots of things, starting with say health care?  There is a major doctor shortage and the quality of Chinese health care is abysmal.  It is true that China also needs more consumption of health care, rather than production of health care with no one consuming it.  But that is not what people mean when they say China needs more consumption.

It is plausible to argue that China has inefficiency wedges that favor some kinds of investment over consumption, such as massive subsidies for infrastructure construction.  But it is odd to conclude that China needs outright “more consumption,” which indeed will limit China’s prospects for the future.  What China needs is “both more consumption and more investment in the discouraged sectors.”  That would both boost growth and the welfare of Chinese citizens.

The policy differences here are quite concrete.  Don’t expect to get far by printing up lots of money, giving it to Chinese consumers, and telling them to spend it.  You might, however, help growth rates if you could free up or otherwise assist China’s numerous dysfunctional sectors, again with health care being one very obvious example.

The WSJ wrote:

…top leader Xi Jinping has deep-rooted philosophical objections to Western-style consumption-driven growth…

C’mon people!  Can I call it “Western-style production-driven growth”?  (Where do you think most real income for consumption comes from?)  The rebellion against Say’s Law has gone way too far.