The decline of private ownership in America

That is the topic of my latest Bloomberg column,.  After a discussion of Spotify, Netflix, Kindle, and Uber, I move to the more general point:

Each of these changes is beneficial, yet I worry that Americans are, slowly but surely, losing their connection to the idea of private ownership. The nation was based on the notion that property ownership gives individuals a stake in the system. It set Americans apart from feudal peasants, taught us how property rights and incentives operate, and was a kind of training for future entrepreneurship. Do we not, as parents, often give our children pets or other valuable possessions to teach them basic lessons of life and stewardship?

We’re hardly at a point where American property has been abolished, but I am still nervous that we are finding ownership to be so inconvenient. The notion of “possessive individualism” is sometimes mocked, but in fact it is a significant source of autonomy and initiative.

And as software continues to “eat the world,” we often have fewer ownership rights when it comes to revisions, upgrades, and repairs.  The piece closes with this:

Does that sound like something our largely agrarian Founding Fathers might have been happy about? The libertarian political theorist might tell you that arrangement is simply freedom of contract in action. But the more commonsensical, broad libertarian intuitions of the American public encapsulate a more brutish and direct sense that some things we simply own and hold the rights to.

Those are intuitions which are growing increasingly disconnected from reality, and no one knows what lies on the other side of this social experiment.

Do read the whole thing.

My preface to *Stubborn Attachments*, and why this book is especially important

Here it is:

One theme of Stubborn Attachments is that economic growth in the wealthier countries has positive spillover effects for poorer individuals around the world.  If you think of the publication of this book as a form of economic growth/gdp enhancement, I want to boost its positive global effects.  I also argue in Stubborn Attachments that we should be more charitable and altruistic at the margin.  That includes me!

So having written Stubborn Attachments, I now wish to live the book, so to speak.  I am donating the royalties from the book to a man I met in Ethiopia on a factfinding trip earlier this year, I shall call him Yonas [not his real name].

He is a man of modest means, but he aspires to open his own travel business.  He has a young and growing family, and also a mother to support.  He is also hoping to buy a larger house to accommodate his growing family.  In his life, he faces stresses – financial and otherwise — that I have never had to confront.  When I visited his home, his wife had just had a new baby girl, but Yonas’s income depends on the vicissitudes of tourist demand, and by American standards it is in any case low.

I met Yonas when he served as my travel guide around Lalibela.  I spent a full day with him, touring the underground, rock-hewn stone churches of that city.  He struck me as reliable, conscientious, well-informed, and I was impressed by the quality of his English, which he had acquired on his own.  He also took me by his village to meet his family, and they performed a coffee ceremony for me, cooking freshly ground coffee beans (it was delicious, something I had never imagined).  Based on my impressions from that day, I believe an investment in Yonas will help his entire family and perhaps his broader community as well.  Since then, he and I have kept in touch by email.

As another way of “living the content” of my book, I will be sending the funds via Stripe, Stripe Press being the publisher of this book.  Stripe, a payments company, really has made it easy to send money across borders, thereby helping to knit the whole world together.  I hope someday Yonas is able to apply for incorporation through Atlas, a Stripe service that helps entrepreneurs incorporate in Delaware, with his travel business, or with whatever else he may do.

I suppose this means I will remain stubbornly attached to Yonas.  And with the publication of this book, Stripe Press is now stubbornly attached to me.

Think of this book — due out in October — as my attempt to defend and explain why a free society is objectively better in terms of ethics, political philosophy, and economics.  No punches are pulled, this is my account of what I strongly believe you should believe too.  My bottom lines, so to speak.

But today I’d like to focus upon Yonas, in Ethiopia, rather than the content of the book.  All of my share of the income from the book goes to him and his family, I get nothing.  So if you order Stubborn Attachments: A Vision for a Society of Free, Prosperous, and Responsible Individuals, you are very directly contributing to economic development and human betterment and the multiplication of possibilities.  And perhaps you are also expressing some faith in the quality of my judgment as to who would put the money to good use.

I would like to see that you pre-order the book to make a difference for Yonas and his family.  And the earlier you order, the more attention the book will receive, the greater the chance of reviews and a further print run and further sales, and so on.

You can pre-order here.  By the way, what is your stubborn attachment?

Sunday assorted links

10 Things I Learned: Tyler Cowen

That is a short interview with me from Northern Virginia magazine, here is one excerpt:

When did you feel you had “made it”?

Jan. 21, 1962 (his birthday). That was a turning point of sorts for me.

How do you define success?

Learning something new all the time, and staying healthy. Getting paid. Interacting with smart people. Having the chance to pass something along to others.

And:

What do you do after a disappointment?

Bid higher next time.

Give us an idea of your work/life balance philosophy.

Do I even try to do balance? For me they are more or less the same. I know that makes me difficult. But I’ve ended up writing about what were once hobbies, and using so-called “leisure” time to prepare for research, writing, speaking and so on. My social life is pretty closely tied to my work life.

And at the end:

Any advice for those who are going into your field?

Listen also to the advice of people who are not in your field. A lot of budding academics listen too much to their advisor and don’t receive enough feedback and mentoring from a broader set of sources.

Self-recommended!

*Prohibition: A Concise History*

That is a new and truly excellent book by W.J. Rorabaugh.  It is a perfect 116 pp. of text and a model for what many other books should be.

From 1825 to 1850, the per capita consumption of alcohol in the United States dropped by half, due largely to religious influence.

As late as 1914, alcohol taxes accounted for 35 percent of the revenue of the federal government.

The Russian government moved to prohibition during WWI, and the resulting loss of revenue was a significant factor contributing to the downfall of the regime.

Note that “per capita consumption of alcohol was reduced for a very long time.”  If you were born in 1900, for instance, you could not legally drink until 1933, at the age of thirty-three, a relatively late age for this habit to form.

Today “more than half of Mexican American women are teetotalers.”  And: “African Americans continue to be light drinkers, and more than half of black women do not drink.”

Strongly recommended.  If all books were like this, it would be hard for me to tear myself away from them.

Saturday assorted links

PreFab Housing

A four-story building built in four days with apartments that include closets, a kitchenette, a sofa that converts to a queen-size bed, and a flat-screen TV? We are used to seeing that kind of thing in China but this development was in, of all places, Berkeley.

Berkeleyside: This new 22-unit project from local developer Patrick Kennedy (Panoramic Interests) is the first in the nation to be constructed of prefabricated all-steel modular units made in China. Each module, which looks a little like sleekly designed shipping containers with picture windows on one end, is stacked on another like giant Legos.

Cost savings on the housing itself were significant but local assembly was still expensive. Organized labor isn’t very happy:

Organized labor also dislikes that these MicroPADs are manufactured abroad.

“We’d rather they be constructed here instead of China so they don’t undercut wages and conditions,” said Michael Theriault, secretary-treasurer of the San Francisco Building and Construction Trades Council, in 2016 to the San Francisco Chronicle. “And we want them built under local building code and inspected by local inspectors.”

Cost savings won’t be passed on to consumers if the quantity of housing supplied isn’t increased so this isn’t a solution to high-prices in quantity-constrained cities. Nevertheless, construction costs rather than land supply are an important constraint elsewhere in the country. Moreover, it’s good to see experiments in improving construction productivity, one of our most important but productivity lagging sectors.

That was then, this is now, a continuing series

This is part of a letter from Miss Howe to Miss Clarissa Harlowe, from Samuel Richardson’s Clarissa [1748].

You and I have often retrospected the faces and minds of grown people; that is to say, have formed images for their present appearances, outside and in, (as far as the manners of the persons would justify us in the latter) what sort of figures they made when boys and girls. And I’ll tell you the lights in which HICKMAN, SOLMES, and LOVELACE, our three heroes, have appeared to me, supposing them boys at school.

Solmes I have imagined to be a little sordid, pilfering rogue, who would purloin from every body, and beg every body’s bread and butter from him; while, as I have heard a reptile brag, he would in a winter-morning spit upon his thumbs, and spread his own with it, that he might keep it all to himself.

Hickman, a great overgrown, lank-haired, chubby boy, who would be hunched and punched by every body; and go home with his finger in his eye, and tell his mother.

While Lovelace I have supposed a curl-pated villain, full of fire, fancy, and mischief; an orchard-robber, a wall-climber, a horse-rider without saddle or bridle, neck or nothing: a sturdy rogue, in short, who would kick and cuff, and do no right, and take no wrong of any body; would get his head broke, then a plaster for it, or let it heal of itself; while he went on to do more mischief, and if not to get, to deserve, broken bones. And the same dispositions have grown up with them, and distinguish them as me, with no very material alteration.

Only that all men are monkeys more or less, or else that you and I should have such baboons as these to choose out of, is a mortifying thing, my dear.

I am enjoying this splendid book for the first time, and yes it is OK to read an abridged edition.

Using NPR’s Planet Money Podcast in Principles of Macroeconomics

From William J. Luther:

Unfamiliar with aggregate concepts like gross domestic product and inflation, many introductory students struggle to understand the big ideas in macroeconomics. Macroeconomic educators typically respond with boring lectures aimed at bringing students up to speed; or, by jumping to the interesting topics their students are not yet prepared to consider. In an effort to combat this problem, I have incorporated NPR’s Planet Money podcast into my Principles of Macroeconomics course. I describe the podcast and provide a list of episodes others might find useful. In my experience, the Planet Money podcast is well received. Students enjoy listening to the assigned episodes. They report that it made them more interested in the principles course, helped them understand the relevance of macroeconomics, and increased their understanding of many macroeconomic issues. Most students also feel more comfortable discussing macroeconomic issues having listened to the podcast. And nearly half of those students surveyed say they will continue listening to the podcast after the course ends.

Here is the SSRN link, via Mike Dariano

YIMBY-NIMBY sentences to ponder

Sadly, these sentences help NIMBY:

….we find that buying a home leads individuals to participate substantially more in local elections, on average. We also collect data on local ballot initiatives, and we find that the homeowner turnout boost is almost twice as large in times and places where zoning issues are on the ballot. Additionally, the effect of homeownership increases with the price of the home purchase, suggesting that asset investment may be an important mechanism for the participatory effects.

That is from a new paper by Andrew B Hall and Jesse Yoder (pdf).

Friday assorted links

1. Earnings announcements have increasing explanatory power for share prices.

2. Interview with the Spotify CEO.

3. What the West is becoming, and why.  An interesting piece.

4. Ludwig and Rogoff on the economics of obesity.

5. “I’m a lifelong Angeleno and, in this life, I’ve come to know two versions of the city: One I’ve seen from the car and another I understand as a pedestrian. It’s that second version of the city that’s closest to me.”  Link here.

How does your personality correlate with your paycheck?

That is the topic of my latest Bloomberg column, here is one excerpt:

Gensowski revisits a data set from all schools in California, grades 1-8, in 1921-1922, based on the students who scored in the top 0.5 percent of the IQ distribution. At the time that meant scores of 140 or higher. The data then cover how well these students, 856 men and 672 women, did through 1991. The students were rated on their personality traits and behaviors, along lines similar to the “Big Five” personality traits: openness to experience, conscientiousness, extraversion, agreeableness and neuroticism.

One striking result is how much the trait of conscientiousness matters. Men who measure as one standard deviation higher on conscientiousness earn on average an extra $567,000 over their lifetimes, or 16.7 percent of average lifetime earnings.

Measuring as extroverted, again by one standard deviation higher than average, is worth almost as much, $490,100. These returns tend to rise the most for the most highly educated of the men.

For women, the magnitude of these effects is smaller…

It may surprise you to learn that more “agreeable” men earn significantly less. Being one standard deviation higher on agreeableness reduces lifetime earnings by about 8 percent, or $267,600.

There is much more at the link, and no I do not confuse causality with correlation.  See also my remarks on how this data set produces some results at variance with the signaling theory of education.  Here is the original study.

The current state of macroeconomics

From Philip Glandon, Kenneth N. Kuttner, Sandeep Mazumder, and Caleb Stroup:

We document eight facts about published macroeconomics research by hand collecting information about the epistemological approaches, methods, and data appearing in over a thousand published papers. Macroeconomics journals have published an increasing share of theory papers over the past 38 years, with theory-based papers now comprising the majority of published macroeconomics research. The increase in quantitative models (e.g., DSGE methods) masks a decline in publication of pure theory research. Financial intermediation played an important role in about a third of macroeconomic theory papers in the 1980s and 1990s, but became less frequent until the financial crisis, at which point it once again became an important area of focus. Only a quarter of macroeconomics publications conduct falsification exercises. This finding contrasts with the year 1980, when these empirical approaches dominated macroeconomics publishing. Yet the fraction of empirical papers that rely on microdata or proprietary data has increased dramatically over the past decade, with these features now appearing in the majority of published empirical papers. All of these findings vary dramatically across individual macroeconomics field journals.

Here is the SSRN link.