Monday assorted links
1. India’s central bank wants an outright ban on crypto.
2. Hanania interviews Joseph Henrich.
3. Victoria Chick has passed away.
4. Peter McLaughlin on Northern Ireland and demographic change.
5. Why the right-wing cannot beat ESG, good piece by Julius Krein. In the broader world, Julius remains undervalued.
6. “My prediction: #ChatGPT will make old-school competent human secretaries more important than ever.” Link here. In my model of this process, the competent quality operators will undertake more projects than before.
7. Programmer salaries in an age of LLMs. And cybercriminals starting to use GPT.
The decline of religion, and the rise of deaths of despair
In recent decades, death rates from poisonings, suicides, and alcoholic liver disease have dramatically increased in the United States. We show that these “deaths of despair” began to increase relative to trend in the early 1990s, that this increase was preceded by a decline in religious participation, and that both trends were driven by middle-aged white Americans. Using repeals of blue laws as a shock to religiosity, we confirm that religious practice has significant effects on these mortality rates. Our findings show that social factors such as organized religion can play an important role in understanding deaths of despair.
That is from a new NBER working paper by Tyler Giles, Daniel M. Hungerman, and Tamar Oostrom. Ross Douthat, telephone!
FT profile of me
By Henry Mance, mostly about me (as you might expect), here is the tale of when I first encountered Sam Bankman-Fried:
They played bughouse chess, a variation of the game. “He was good. He was better at bughouse than at chess. It’s a very important concept for understanding FTX. You have four people and two boards. If I take your piece on this board, I hand it to my partner, and my partner can plunk the piece down in lieu of making a move. You can be in this desperate situation, all of a sudden your partner hands you a queen. So there’s no balance sheet in bughouse chess. Things come out of nowhere to save you. You play desperately and take a lot of risk. If people play bughouse, that’s their core mentality.”
Here is the full profile.
Dominant Assurance Contracts for Book Reviews and Blog Posts
Arjun Panickssery at LessWrong is experimenting with dominant assurance contracts as a way to fund the public goods of blog posts and book reviews.
In theory, writers could kickstart posts using dominant assurance contracts. An example (this is a real offer): If you send $20 to arjun.panickssery at Gmail via PayPal by noon New York time on January 21st, I’ll send you back $25 if fewer than 10 people sent me money. If 10 or more people send me money, I’ll post a review of Steven Pinker’s The Sense of Style: The Thinking Person’s Guide to Writing in the 21st Century by the end of the month.
If you think this won’t work you should definitely send him some money.
Biometrics will become more important
One side effect of all the new AI developments is that biometrics will increase greatly in importance.
Captcha tests, for one thing, will become obsolete. To prevent bots from flooding a web site, biometric tests will be a ready option.
Passwords also will seem too risky. If you are using only a password to protect your relationships with your AIs, there will (over time) be too much value in there. The AI will be involved in your work routines, and it will be suited for you and you alone. You won’t want to risk it being harmed or destroyed or reprogrammed. Biometrics will provide superior protection.
It also will be harder to protect your passwords, because users will be more vulnerable to written and even voiced scams, run by AI and passing various Turing tests. Again, biometric entry tests are the natural alternative.
Here is the 2022 biometric year in review, there is much pending in the way of legislation. I already use facial recognition to access my iPhone, for better or worse expect much more of this.
The differential impact of GPT?
Happy New Year! I was trying to understand the impact of ChatGPT by zooming out a bit.
– any subject area has a core / fundamental area (the science) and an applied area (use of the technique or application repeatedly towards the same or different problems)
– My assertion is that ChatGPT will impact applied area of any topic but not the core area relatively much, where understanding of the underlying building blocks is very important
Regardless, it will greatly improve experimentation in both areas by bringing down costs of initial testing of ideas/cross domain experiments (e.g., biological concept in electrical/mechanical design)
That is from my email by Anjan.
Sunday assorted links
1. ” .”
2. One measure of the pervasiveness of corporate fraud — is this high or low?
3. “Someone suggested that the right tends to be morally relativist about the past and morally absolute about the present and the left tends to be the other way round” — Benedict Evans.
4. Short essay on the Jena set.
5. Emmanuel Todd on stuff. Interesting, but “French speculative,” so to speak.
Unexpected Inflation and the Redistribution of Wealth
We have a great new MRU video giving students some practice with unexpected inflation and the redistribution of wealth. As always, we like to teach a bit of history with our economics so you might also gets some perspective on William Jennings Bryan and the cross of gold. This video is part of a new Money & Inflation Unit Plan which has lots of excellent resources including lessons plans, interactive games and more on money and inflation for teachers of economics. All free, as always.
Of course, if you do teach principles of economics all of this wonderful material pairs beautifully with the best principles of economics textbook, Modern Principles.
The major revolutions I have seen in my lifetime
The nature, size of impact, and time horizons on all these vary greatly, but here is my list:
1. Moon landing, 1969. Most of the impact still not felt, except for satellites. My parents did let me stay up late at night to watch it.
2. The collapse of communism (1989-????). Poland is a lovely country to visit, Shanghai is amazing. I flew to eastern Europe once I could in 1989.
3. The rise of Asia. Japan and South Korea starting around the time of my birth. The rise of China for sure, and currently the rise of India is a likely addition.
4. Feminization, ongoing, no firm date. Impact plenty.
5. The realization of the internet. Hard to date, but I’ll say the 1990s and ongoing.
6. The smartphone — 2007. Impact in your face. Bought an iPhone the first day, was mocked by MR readers as an “Apple fan boy.”
7. Effective Large Language Models/AI. Impact still to be seen.
The “African population explosion” is perhaps next in line…
*The Kural*
Or Tiruvalluvar’s Tirukkural, translated with a preface by Thomas Hitoshi Pruiksma, just published by Beacon Press. This poem, a staple (the staple?) of Tamil literature, is believed to have been composed between the third and fifth centuries AD. The poem covers issues of wisdom, ethics, virtue, wealth, and love. I cannot compare this version to the Tamil original, but it reads nicely and is attractively placed on the page.
Excerpt:
Is she a siren a rare peacock a woman in jewels —
My heart quakes
As if on attack with an army of sirens — the look
She gives when I look
I did not know death but now I do —
Fierce feminine eyes
They don’t fit this young woman — these eyes
That kill those looking
Is it death an eye a deer — her gaze
Contains all three
There should be some extra indentation after each two lines. And does anyone has a link to the whole thing recited in Tamil, I cannot readily find this on YouTube.
Sprouting Cities: How Rural America Industrialized
We study the joint process of urbanization and industrialization in the US economy between 1880 and 1940. We show that only a small share of aggregate industrialization is accounted for by the relocation of workers from remote rural areas to industrial hubs like Chicago or New York City. Instead, most sectoral shifts occurred within rural counties, dramatically transforming their sectoral structure. Most industrialization within counties occurred through the emergence of new ”factory” cities with notably higher manufacturing shares rather than the expansion of incumbent cities. In contrast, today’s shift towards services seems to benefit large incumbent cities the most.
That is from a new paper by Fabian Eckert, John Juneau, and Michael Peters. A Jeffersonian might think that was a big part of what made America so great earlier in the 20th century? Whereas today, at least for the Jeffersonian…?
Why I think graduate programs should keep macro in the first-year sequence
I have heard that MIT is pushing macro out of their required first-year sequence, noting I am not sure what the ex post regime will look like. But in general I am macro-sympathetic, for the following reasons:
1. Many economics graduate students are from emerging (or retrogressing) economies, and macro issues are truly important for them.
2. Many graduate students are from “developed” economies (with apologies to Peter Thiel), and macro issues are truly important for them. In America we had a major financial crisis in 2008-2009 and rampant inflation more recently. It is hardly the case that all the problems have been solved.
3. Macro is the main vehicle for teaching people about economic growth, which is probably the most important topic in economics.
4. The Fed has a very good economics staff, and probably that tradition will be harder to continue if macro is taken out of first-year sequences.
5. You might argue that standards in macro are looser, by the nature of the field. I would suggest it is easier to advance a new idea in macro, perhaps for the same reason? Along related lines, macro still has more singly-authored papers, a sign that the field requires less conformity of ideas.
6. If you write down a short list of the candidates of “Greatest Economist ever,” did they not all do macro? Doesn’t that tell us something?
That all said, I would make macro sequences “more practical,” more about economic growth, more about economic history, and less about dynamic programming than is often currently the case.
Saturday assorted links
1. When is impulsive behavior adaptive?
2. Robert Colville on the morality of economic growth.
3. Do “fairy circles” come from plant competition and self-organization?
4. “YouTubers said they destroyed over 100 VHS tapes of an obscure 1987 movie to increase the value of their final copy. They sold it on eBay for $80,600.” Link here.
5. Transcript of my St. Andrews talk on EA. Recommended. And Nietzsche on EA, as done by GPT.
6. Who self-identifies as Native American?
7. Alas Melvyn Krauss has passed away, RIP. He was generous enough to let me sit in on his NYU class way back when.
8. Ross D. on euthanasia, more than just his prior column (NYT).
Should we now conclude that the euro is just fine?
No, and that is the topic of my latest Bloomberg column:
The core difficulties of the euro arise when two circumstances coincide: There are deflationary pressures, and economic conditions vary greatly among the nations of the euro zone. The good news is that neither of these circumstances currently prevails. That is also the bad news.
Inflation rates have been high, especially in the euro zone, and are expected to be higher than 9% for December 2022. Inflation brings problems of its own (more about that later), but in the short run it does not lead to huge unemployment and loan defaults. If anything, it helps out some debtors.
During the 2011 crisis, there was massive deflationary pressure on the Greek banking system, endangering its solvency. The Greek government’s deposit guarantees were not entirely credible either, so many people withdrew their deposits, increasing pressure on both the government and the banks. Whatever problems euro zone nations may have today, they are not those.
A second issue in 2011 was that some nations were doing much better than others. Germany had a relatively strong economy, while Greece and Italy’s were relatively weak. Greece, Italy and some of the other “periphery” nations would have preferred a weaker euro, to boost their exports, but the strength of Germany and some of the other more prosperous euro-zone nations limited euro deprecation.
Today, problems in the euro zone are more evenly distributed. Current data indicate a shallow rather than deep recession, but countries such as Germany still face real challenges. The euro, in turn, has been relatively weak, which has limited some of the downside risk faced by the euro-zone economies…
Unfortunately, those mechanisms postpone but do not eliminate the core problems with the euro zone. First, if the zone works better in inflationary times, politicians committed to it will become more attached to higher rates of inflation. That will make it harder for the European Central Bank to achieve its goal of price stability.
And:
The second problem is this: High inflation eventually brings a process of disinflation, and during those disinflations real interest rates are often high. The ECB hikes nominal interest rates, and as inflation diminishes those rates rise in real, inflation-adjusted terms. In other words, some deflationary pressures are brought to bear on the system.
Those deflationary pressures are exactly what the euro zone does not handle well. Italy in particular faces ongoing fiscal problems, and if its government had to borrow at much higher real rates of interest, its current fiscal path may not prove sustainable. It might be forced to cut government spending and/or raise taxes, which would lead to the kind of downward spiral that characterized the earlier euro-zone crisis.
Diverging economic fortunes for euro zone nations may reemerge as well…
So I think people are being a bit too optimistic about Croatia joining the eurozone.
The Pile of Talent test
The economist Tyler Cowen suggests a thought experiment to illustrate this point.
Take out a piece of paper. In one column, list all of the major problems this country faces—inequality, political polarization, social distrust, climate change, and so on. In another column, write seven words: “America has more talent than ever before.”
Cowen’s point is that column B is more important than column A. Societies don’t decline when they are in the midst of disruption and mess; they decline when they lose energy. And creative energy is one thing America has in abundance.
Here is the full Atlantic piece from David Brooks, mostly about reason to be optimistic about America. Of course there is even a stronger version of The Pile of Talent test that you could run for the world as a whole.