Sri Lanka travel notes
Have you ever been to a perfect spot and wished “there should be an amazing hotel right there, except I want the hotel without any accompanying crowding or corruptions of tourism?”
If that is your desire, Sri Lanka is the country for you. (Who cares if that is an apparent violation of the laws of economics and location theory?) If you have visited Sri Lanka, likely you will know what I mean — it is simply so nice. So much the right blend of exotic and comfortable. It feels so unspoilt, so fresh, and so natural. So easy on the visitor, as if it were a well-run state of India with a big dose of Buddhism and a vaguely Caribbean vibe, and without the extreme population density.
Here was my Kandalama hotel, let the link rotate through all the images.
Here is my current hotel, only about 30 or 40 feet away from one of the world’s major Buddhist temple complexes, medieval and mostly dating from the 12th century. None of it is close to expensive, no matter how high the quality.
Galle, on the southern coast, is a lovely colonial city, largely intact, with notable Dutch, Portuguese, and British buildings, as well as mosques. It is ringed by an old fort, and has numerous good views of the ocean. Everything is walkable. Russians are the single largest tourist group there (no visa required), and yet the town does not feel overwhelmed, even on the cusp of August. Try Galle Fort Hotel, which is also a UNESCO heritage site.
There is an aesthetic look to so many things. If a farmer builds a tree house so he can monitor his crops at night without being stomped by elephants, the tree house will be pretty nice, even though the farmer is poor.
So much of Sri Lanka feels like the 1980s, in a way that is good for you but not good for them. On the plus side, education, literacy (92%), and social indicators are high. Life expectancy is higher than in the United States. You can drive around deep into the rural areas, and you just won’t see extreme poverty. Nor are the drivers crazy, so the travel isn’t stressful. The country never seems internet-obsessed.
The total fertility rate is currently about 2.0, a blessing in the short run but likely a disaster over time. At about 4k per capita income (about 14k PPP), Sri Lanka cannot afford to grow old before it becomes wealthy. And I can assure you, it is not on the verge of becoming wealthy.
The important buildings — and there are many of them — are all of earlier vintages. The hotels of Geoffrey Bawa — in a style sometimes called “tropical modernism” — are of special interest. Simply tracking down all of the Bawa hotels would be a good way of organizing your trip. Sri Lanka is one of the few countries in the world where the very nice old architecture and the very nice newer architecture bear some aesthetic relation to each other.
Did I mention this?:
In 2022, with its GDP contracting by 7.8%, Sri Lanka was one of the worst performing economies in the world. Annual inflation was around 60%, and the currency depreciated by over 80%. These quantifiable measures of pain were exacerbated by severe shortages and uncertainty in accessing fuel, gas and medicines. Daily power cuts became normalized.
Living standards remain lower, yet visible signs of those earlier troubles are gone. The infrastructure now works once again, yet the country feels psychically scarred by the recent economic collapse.
One Sri Lankan MR reader, with whom I chatted, argued that the country has no person or not even a group “in charge” at the wheel. So small problems drift and sometimes turn into major crises. The country’s “immune system” simply is not functioning.
It is striking that none of the major parties have good ideas, as there is mainly corrupt oligarchy or Marxists. Liberalism is nowhere to be seen. Behind the scenes, Sri Lanka is a country that outside parties (most of all China and India, earlier the colonial powers) have cared about far too much. It never feels like there is a stable political equilibrium upon which to build, because the outsiders have so much power.
Internally, they still have not generated a true consensus on what the country is about, and if they are all willing to live in peace with each other. As one of my drivers put it succinctly: “I don’t like the other religions.”
With textiles and tea as the major exports, the country shows no signs of moving up the value chain. Nonetheless Sri Lanka remains richer per capita than India. And easier to handle, albeit far less dynamic. Someone could write a very Sri Lankan version of “the complacent class.”
How good is Buddhism for economic growth anyway?
I will do a separate post on food in Sri Lanka.
Suicide rates
No, reported suicide rates are not rising everywhere – they are falling in many countries, but rising in the US.
And no, there is no big rise in teenage suicide rates in the US, the increase is concentrated in people over 19.
This makes global social media an unlikely cause. pic.twitter.com/K1COBitWMj
— Dina D. Pomeranz 🟣 (@DinaPomeranz) July 25, 2023
Friday assorted links
Scrap AML/KYC Laws
Bruce Fenton writing on twitter X:
It’s time to scrap AML / KYC entirely.
The idea that politicians should know how citizens spend their money is a new and deeply flawed idea.
An entire generation has been fooled into thinking this is a necessary part of finance and the world continues to double down on an unworkable system.
Only 30 years ago when I started my career as a stockbroker/ financial advisor I could call you on the phone and sell you MSFT or IBM stock and I did not need your DOB or your social security number. You didn’t even need to have money in the account.
The 1990s to the post 9-11 Patriot Act (which was a horrible law) saw a radical increase in AML /KYC requirements. These seem to get worse every year.
In my office when we were first required to take a drivers license, the older brokers were incredulous: “What do you mean we need an ID for someone buying stocks?!? What’s next, you need an ID to buy gas or groceries?”
Now, just 25 years later an entire generation thinks this is normal or how it should be. Worse yet, some think the system won’t work without it. The opposite is true — the compliance gums up the works and adds friction where it should not exist.
While the regulator class arrogantly acts as if AML KYC is their birthright and ending it is some sort of untouchable rail, the justifications are weak. Why do we have these regimes? To stop “money laundering”? What is that? Who is the victim? Is it to stop “human trafficking” or “terrorism”? If so, how? Is it to “stop” the 12,000 entities on the OFAC list by messing with the 2,000,000,000 people not on the list?
Are major criminals somehow stopped by this? Has it stopped crime? Even if it did, is it worth burdening millions of firms and billions of people with paperwork and procedures that slow down commerce? Shouldn’t efforts be made to go after the actual criminals rather than encumbering the entire world with an inefficient compliance regime?
Money must be able to flow and move. People must be able to take risks and make investments as they choose. This is the lifeblood of a solid economy and the jobs, growth, prosperity and peace that comes with it. The US (and by extension much of the world due to our influence) is sacrificing jobs, innovation and opportunities by chasing an extremely ineffective and indirect compliance regime.
The entire idea belongs back in the dumpster of history. Let the investigators chase terrorists & human traffickers for those actual crimes and let the other billions of us use and move our money as we wish.
Fenton is correct. As I pointed out earlier, the AML/KYC laws costs about $300 billion a year and recover perhaps $3 billion a year in illicit funds (a tiny, tiny fraction of the amount of illicit revenues). Indeed, AML/KYC laws have probably increased crime because they require so many companies to store personal information which is then vulnerable to hackers. More importantly, it’s absurd that the government forces you to show ID to buy a stock.
Why aren’t Barbie tickets more expensive?
That is the theme of my latest Bloomberg column, as for mamny showings there is excess demand and long waits to see the movies. Here are some of the reasons why markets are not clearing:
A more relevant factor behind the static pricing has to do with social networks. Both the movie theater and the studio want to attract customers who will talk about the movie afterwards, whether directly to their friends or on social media. They also want customers who will want to see the movie multiple times, and generate a kind of cult following.
For the most part, younger audiences better serve these functions than do older audiences. Younger people have on average more friends and see them on a more regular basis, and are more likely to text friends or post on TikTok. They generally have greater enthusiasms. Older people are more likely to have more limited social networks, filled with other older people, and if they have children at home, less likely to go out.
In other words, in terms of publicity at least, a younger moviegoer is more valuable than an older moviegoer. (It is a painful admission for an older moviegoer like myself.) So if theaters raised their prices, the audience would skew older and wealthier. It would be harder for the movie to generate much buzz, and what buzz it did generate would have less impact.
Keeping the price low, on the other hand, favors those willing to scour the internet for tickets, or those who can commit to a scheduled movie date and time in advance. This is typically a younger group.
A second reason for keeping prices low is that moviegoers might feel ripped off if they had to pay a higher price for every movie they really wanted to see. In the short run, the theater would pull in more money, but over time moviegoing could become less popular. Customer goodwill matters.
A third reason that the price does not rise is concession income. A movie theater earns much of its income — it can be almost one-third of revenue for some chains — from selling soda, popcorn and other items, and typically it does not share that money with the studios. That makes revenue from ticket sales a smaller share of the overall profit.
I am looking forward to the rest of this year in movies.
Emergent Ventures winners, 27th cohort
Tanner Greer and The Center for Strategic Translation, to fund translation into English of important Chinese works, so that Westerners may understand China better.
Nabeel Qureshi, New York City, to support his next project.
Matthew Adelstein, Ann Arbor, for the study of utilitarianism and to become a public intellectual.
Kris Gulati, UC Merced, CA and Cambridge, Mass., to support his work in the economics of science.
Amos Wollen, Oxford Freshman, philosophy. General career development, podcasting, and travel.
Max Thilo, London, to travel to Singapore and study their health care system.
Juliette Sellgren, University of Virginia and Arlington, to attend a Civic Future conference in Cambridge, general career development.
Olutoba Ojo, Nigeria/Newark, Delaware, 17, computational biology, general career development.
Maggie Li, University of Toronto, physiological changes in brain vasculature with aging, and conference attendance. Personal website here.
Jordan Dworkin, Federation of American Scientists, NYC, a pledge toward a metascience experimentation prize.
Anna Claire Flowers, George Mason University, travel grant to Civic Future conference in Cambridge, UK, general career development.
Julia Pamilih, starting at Harvard Kennedy School, formerly Westminster, to become a leading expert on Indonesia.
Lada Nuzhna, San Francisco (originally Ukraine), for patent-related efforts, related to her work on gene expression.
Adithya Chakravarthy, Toronto, for his YouTube channel for advanced math videos.
Rebecca Lowe, Oxford, political philosopher, to support her writing of a book on the philosophy of freedom, Twitter here.
Ukraine tranche
Viktoriia Schcherba, Kyiv, now Harris School, Chicago, to study economic and political reconstruction.
Dmytro Semykras, Ukraine and Graz, Austria, to develop his career as a pianist.
Congratulations to all! Here are previous cohorts of EV winners.
The Rise in American Pain
A significant literature has documented trend increases in pain among Americans over the last two or three decades. There is no single explanation seeming to work well for the increase. We show that, rather than resulting from a smooth upward trend, the increase was almost entirely concentrated in the 2007-2010 period, the time of the Great Recession, a result not uncovered in prior work. The disproportionate increase in pain among the less educated is also shown to have occurred primarily at the time of the Recession, with either little or no trend before or after. The Recession jump occurred only at older ages and, by cohort, primarily only at the ages when they experienced the Recession. However, the jump is difficult to explain, for while there was a temporary decline in employment during the Recession, it is unclear why there it should be followed by a permanent increase in pain. We assess a number of explanations related to family structure, the deterioration of family life, hysteresis, and biopsychosocial channels. While some factors have potential explanatory power, the rise in pain continues to be mysterious and deserves further research in light of our new findings.
Very important in my view. That is from a new NBER working paper by Sneha Lamba and Robert A. Moffitt.
Thursday assorted links
1. Hawaii is going to build more homes.
2. When did people stop being drunk all the time?
3. “Tom Sowell himself designs the cover jacket of just about every one of his books (and often uses just 3 colors: black, white, and red)” Link here. With a photo.
4. Over the last year, Japan’s population fell by about 800,000.
5. Okie-dokie!
6. Sinead O’Connor obituary RIP (NYT).
The Merger Guidelines
Gus Hurwitz (a former student) and Geoffrey Manne have an excellent piece in the WSJ discussing the FTCs new merger guidelines. First, what are these guidelines?
Since 1968, Justice and the FTC have issued guidelines to help companies understand when a proposed merger might raise antitrust concerns. The guidelines are a nonbinding public statement that describes how the agencies will approach the enforcement of merger laws. They have been updated from time to time to reflect changes in the law and improved economic understanding about the likely effect mergers will have on competition. They are neither a definitive statement of law nor binding on courts.
Over time the guidelines have nevertheless shaped U.S. courts’ understanding of merger law because past updates have striven to state what the law, as applied by courts, is, and have developed analytical tools faithful to that interpretation.
The new guidelines, however, are very different as they attempt not to summarize the law but to create new policy in the absence of legislation from Congress or rulings by the courts, in other words to subvert the rule of law.
…the proposal states what the agencies’ current leadership wishes the law to be and reflects a desire to change merger law by administrative fiat rather than through successful litigation or an act of Congress. Look at the antitrust agencies’ string of recent losses in major merger cases, including Microsoft’s acquisition of Activision and Meta’s acquisition of Within, to see that their views of antitrust law differ substantially from those of the courts.
Judicial acceptance of prior guidelines was a result of the agencies’ reputation as honest brokers of judicial precedent. The proposed guidelines jeopardize that reputation by selectively interpreting the law, relying on outdated precedents, and disregarding more-recent case law.
…This selective bias toward outdated judicial opinions and economic knowledge isn’t likely to impress the courts. The disconnect will lead to deep skepticism, casting a pall over all arguments (even sound ones) made by the Justice Department and FTC antitrust attorneys. The agencies might discover that it would have been better to go to court without guidelines rather than with a contentious interpretation of the law.
My Conversation with the excellent Noam Dworman
I am very pleased to have recorded a CWT with Noam Dworman, mostly about comedy but also music and NYC as well. Noam owns and runs The Comedy Cellar, NYC’s leading comedy club, and he knows most of the major comedians. Here is the audio, video, and transcript. Here is the episode summary:
Tyler sat down at Comedy Cellar with owner Noam Dworman to talk about the ever-changing stand-up comedy scene, including the perfect room temperature for stand-up, whether comedy can still shock us, the effect on YouTube and TikTok, the transformation of jokes into bits, the importance of tight seating, why he doesn’t charge higher prices for his shows, the differences between the LA and NYC scenes, whether good looks are an obstacle to success, the oldest comic act he still finds funny, how comedians have changed since he started running the Comedy Cellar in 2003, and what government regulations drive him crazy. They also talk about how 9/11 got Noam into trouble, his early career in music, the most underrated guitarist, why live music is dead in NYC, and what his plans are for expansion.
Here is one excerpt:
COWEN: If you do stand-up comedy for decades at a high level — not the Louis C.K. and Chris Rock level, but you’re successful and appear in your club all the time — how does that change a person? But not so famous that everyone on the street knows who they are.
DWORMAN: How does doing stand-up comedy change a person?
COWEN: For 25 years, yes.
DWORMAN: Well, first of all, it makes it harder for them to socialize. I hear this story all the time about comedians when they go to Thanksgiving dinner with their family, and all of a sudden, the entire place gets silent. Like, “Did he just say . . .” Because you get used to being in an atmosphere where you could say whatever you want.
I think probably, because I know this in my life — and again, getting used to essentially being your own boss, you get used to that. Then it just becomes very, very hard to ever consider going back into the structured life that most people expect is going to be their lives from the time they’re in school — 9:00 to 5:00, whatever it is. At some point, I think, if you do it for too long, you would probably kill yourself rather than go back.
I’ve had that thought myself. If I had to go back to . . . I never practiced law, but if I had to take a job as a lawyer — and I’m not just saying this to be dramatic — I think I might kill myself. I can’t even imagine, at my age, having to start going to work at nine o’clock, having a boss, having to answer for mistakes that I made, having the pressure of having to get it right, otherwise somebody’s life is impacted. I just got too used to being able to do what I want when I want to do it.
Comedians have to get gigs, but essentially, they can do what they want when they want to do it. They don’t have to get up in the morning, and I think, at some point, you just become so used to that, there’s no going back.
Recommended, interesting throughout.
Sinead O’Connor, RIP
Sinead O’Connor was a great singer–never more evident than in her collection of standards, Am I Not Your Girl? The entire album is wonderful. So sad to hear of her passing. Here on the painful decline of a marriage, Success Has Made a Failure of Our Home. Kills me every time I hear it.
From Faith and Courage, I love The Lamb’s Book of Life.
Out of history we have come
With great hatred and little room
It aims to break our hearts
Wreck us up and tear us all apart
But if we listen to the Rasta man
He can show us how it can be done
To live in peace and live as one
Get our names back in the book of life of the lamb
Here to cheer me up is Sinead in happier times, Daddy I’m fine, also from Faith and Courage.
Amazingly, her album of reggae songs Throw Down Your Arms, is very good. Who else could have pulled that off?
One more, from the Chieftain’s Long Black Veil–many great songs but none better than Sinead’s Foggy Dew, now the definitive version.
And back through the glen, I rode again
And my heart with grief was sore
For I parted then with valiant men
Whom I never shall see n’more
But to and fro in my dreams I go
And I kneel and pray for you
For slavery fled, O glorious dead
When you fell in the foggy dew
RIP Sinead. Thank you for the great music.
Wednesday assorted links
The Economics of Export Bans
India recently banned the export of non-Basmati rice. What are the economics of export bans? An export ban will tend to decrease the world supply thereby raising world prices but some of the previously exported goods will flow to the domestic market reducing domestic prices, which is the typical reason for an export bans.
FT: India’s ministry of consumer affairs said on Thursday it would prohibit exports to “lower the price as well as ensure availability in the domestic market”. Rice prices in India have risen 11.5 per cent over the past year and 3 per cent over the past month, according to the ministry, reflecting a 35 per cent year-on-year surge in export volumes between April and June.
As noted, in the very short run, an export ban will reduce domestic prices as export stocks flood the domestic market (although even here we have to be a bit careful as a temporary ban could lead to distributors storing–“hoarding”–grain in the expectation of a lifting of the ban). As producers adjust to the lower price and start to produce less, however, the quantity supplied will decrease and domestic prices will rise from Psr to Pban, as shown in the diagram.
Even in the long run the domestic price (Pban) will be below the free trade price (Pft) so the export ban helps domestic rice consumers, i.e. increases their consumer surplus (the green area). India has a lot of rice consumers who vote so the goal here is obviously political. The export ban, however, hurts rice producers, i.e. producer surplus declines (the hatched area). Moreover, producer surplus declines by more than consumer surplus rises so the net effect of the export ban is to reduce domestic welfare.
Rice producers in India are often small family farmers and the government tries to help these farmers with other policies like subsidies so the export ban goes against the grain of other government policy. Moreover, the decline in rice producer incomes will hurt rural incomes more generally. Thus, the export ban protects urban consumers at the expense of typically poorer rural farmers and is likely to increase inequality.
In the long run, an export ban means a smaller farm sector. An export ban is like prohibiting a hotel from raising prices during seasons of high demand. That’s nice if you can get a room but it means fewer hotels. In other words, more hotels will enter the market if they know that they can offset low profits in periods of low demand with high profits in periods of high demand. In the same way, preventing farmers from selling at high prices reduces farmer profits which reduces long run entry and production.
The United States had an export ban on crude oil for 40 years. It’s sometimes said that the export ban was non-binding because the US was a big oil importer. I suspect, however, that the export ban reduced the speed of the fracking revolution. The US export ban also lead to a lot of bizarre mispricing. The ban didn’t apply to refined oil products, for example, so the US went more heavily into refineries and over-produced refined oil products even when (on the margin) exporting crude oil at market prices would have been more profitable.
The Indian government does hold buffer stocks of rice. Strategic reserves have their own problems but it might have been better to draw on the strategic reserve rather than ban exports. Rice and circuses for the capital city at the expense of rural farmers is not a good long run strategy for economic development.
The Amy Finkelstein and Liran Einav health care plan
I am away from my review copy, so I am pleased that Matt Yglesias has offered ($) a good “standing on one foot” summary of the plan, as outlined in the new book We’ve Got You Covered: Rebooting American Health Care, by Amy Finkelstein and Liran Einav:
They call for:
- A universal basic insurance system, covering both catastrophic and routine care but at a bare bones/no frills level of service.
- A global budget, set by Congress, to determine how much money the basic plan has to spend on meeting the public’s basic needs, paired with expert panels to decide which services to cover.
- An additive system of private top-up insurance that people could (and they anticipate mostly would) buy into to secure access to shorter wait times and more creature comforts.
The book offers a “think it through using first principles” approach, so perhaps the authors will be frustrated by my invocation of a “how has politics been going lately?” kind of response. Nonetheless I see that Obamacare cost the Democrats dearly in more than one election, it had to be defanged (the mandate) to survive, it was supposed to be the new comprehensive framework that actually could pass (it did), and the most influential Americans just love their employer-provided private health insurance.
Whether you think those facts are good or bad, I take them as my starting point for health care reform. This book does not.
I observe also that Obamacare passed, and American life expectancy fell. I do not blame Obamacare for that, but I do notice it. As a result, I have grown increasingly interested in “how can we boost biomedical scientific progress?” and increasingly less interested in “how can we reform health insurance coverage again?” All the more because we seem to be living in a biomedical progress of science golden age.
One of the Democratic Party frustrations with conservatives during the ACA debates was witnessing them tolerate or even support Romney’s Massachusetts plan, but oppose Obamacare. That I can understand. One of the conservative frustrations with ACA was the fear that it would just be the first step in a never-ending, upward-ratcheting series of efforts to spend ever more on health insurance coverage, which has positive but only marginal implications for health itself. After all, where exactly do the moral arguments for spending more on health insurance coverage stop?
Is there a politically feasible version of the Finkelstein and Einav plan that can spend less or the same? Is there a politically feasible version of the plan period? How much trust will there be in the promise that if I give up my private health insurance coverage, it will be replaced by something better? How much trust should there be?
But again, the authors here have a very different perspective on the sector and how to do health care policy.
Claims about room temperature superconductivity
Today might have seen the biggest physics discovery of my lifetime. I don't think people fully grasp the implications of an ambient temperature / pressure superconductor. Here's how it could totally change our lives.
— Alex Kaplan (@alexkaplan0) July 26, 2023
I am eager to learn more and to see how (if?) this holds up. Here are a few caveats.