Graph of the Day
A remarkable graph pointed to by Phil Magness who writes:
China’s GDP per capita hit its lowest point in the past 300 years under Maoism. Twice.
The first time was during the civil war and the second was the Great Leap Forward. Wojtek Kopczuk comments:
Even taking into account that these historical measurements are notoriously problematic and difficult to make comparable, the fact that it is even in the ballpark is shocking.
Mexico fact of the day
In 2022 almost double the number of Mexicans reported having money extorted than did five years before (see chart). Only a tiny minority report.
From The Economist, here is more:
The big money comes, however, from “taxing” businesses in sectors such as agriculture and mining. Avocados, Mexico’s “green gold”, are a good example. The country provides almost a third of global supply, most of which is grown in the western state of Michoacán. The $3bn-worth of them exported every year to the United States is a huge source of income for the producers and also for gangs. For the past three years Erick Rodríguez, a farmer, has paid an annual “fee” of 10,000 pesos ($560) per hectare to Familia Michoacana, a local criminal group. Mr Rodríguez (not his real name) says the gang comes with data about the size of his farm and tells him to hold back stock to push up prices. Ms Felbab-Brown’s fieldwork in Mexico shows how gangs also force fishermen to sell their catch at a cut price, which they then sell for a profit to restaurants. They also dictate the terms of when and what they can fish.
I suppose the optimistic take is that if this ever can be stopped, Mexican economic growth will be especially high?
The Re-Emerging Suicide Crisis in the U.S.
The suicide rate in the United States has risen nearly 40 percent since 2000. This increase is puzzling because suicide rates had been falling for decades at the end of the 20th Century. In this paper, we review important facts about the changing rate of suicide. General trends miss the story of important differences across groups – suicide rates rose substantially among middle aged persons between 2005 and 2015 but have fallen since. Among young people, suicide rates began a rapid rise after 2010 that has not abated. We review empirical evidence to assess potential causes for recent changes in suicide rates. The economic hardship caused by the Great Recession played an important role in rising suicide among prime-aged Americans. We illustrate that the increase in the prevalence of depression among young people during the 2010s was so large it could explain nearly all the increase in suicide mortality among those under 25. Bullying victimization of LGBTQ youth could also account for part of the rise in suicide. The evidence that access to firearms or opioids are major drivers of recent suicide trends is less clear. We end by summarizing evidence on the most promising policies to reduce suicide mortality.
That is from a new NBER working paper by Dave E. Marcotte and Benjamin Hansen.
What should I ask Stephen Jennings?
I will be doing a Conversation with him:
Stephen Jennings is the Founder & CEO of Rendeavour, Africa’s largest urban developer, with over 12,000 hectares (30,000 acres) of satellite city developments near high-growth cities in Kenya, Ghana, Nigeria, Zambia and Democratic Republic of Congo.
Link here. I also know Stephen from his time working on reforms in New Zealand, way back when in the early 1990s. Here are various links about Stephen. So what should I ask?
Tuesday assorted links
1. To what extent can they pull your DNA from thin air? (NYT)
2. Accounting for chores, Americans have as much leisure time as do Swedes.
3. John Cochrane on Bob Lucas. And David Henderson on Bob Lucas (WSJ).
5. Daron Acemoglu on Turkey and the election.
6. Ezra Klein and Veronique de Rugy podcast, covering the debt ceiling (NYT).
7. Soon your iPhone will be able to speak in your own voice.
My tribute to Robert E. Lucas
For Bloomberg, here is one bit:
Lucas’s primary contribution was to insist that all assumptions about expectations be spelled out and tested to see if they were consistent with all other parts of the argument. For instance, if you wanted to assert that people would respond to one set of government actions but not another, you had to outline why that might be the case. In retrospect it seems simple, but Lucas (with co-authors, notably Nancy Stokey) was the person who showed how to do it. The end result was a reworking of virtually everyone’s macroeconomic arguments — monetarist, Keynesian or otherwise.
And this:
I recall Lucas giving a seminar at Harvard in 1984, during my graduate studies there. With his no-nonsense manner and dark suit, he reminded me of a character from a Chicago gangster movie. Yet he was also charming, in part because he could see so quickly where every argument or critical point was headed. Many of the graduate students showed up with a hostile attitude, protective of their more Keynesian approaches and convinced they could expose the simplistic assumptions of Lucas’s models. Ninety minutes later, it was clear that those assumptions were not so vulnerable after all.
Lucas survived that encounter unscathed, and perhaps made a few converts too. He will be missed, but his ideas and arguments will continue to thrive.
Recommended.
Two movies I forgot to tell you about
The first is Are You There, God?: It’s Me Margaret. In addition to being a good movie, it is pro-American, pro-family, pro-religious tolerance, pro-suburbs, and even pro-New Jersey, none of it done pedantically or with excess self-consciousness.
The second is Polite Society, a British comedy-action-Pakistani marriage film, with a South Asian kinetic feel but ultimately in the Western moviemaking tradition. One Pakistani younger sister is trying to stop the older sister from getting married, and she persists past a reasonable point. The whole plot only makes sense if you realize the younger sister has been sexually abused (is it a spoiler if your reader/viewer might not have seen the point in the first place?). Ultimately this movie is about the very limited range of options facing Pakistani women in British society, even with Western comforts and pseudo-freedoms.
Both are recommended.
The Dual U.S. Labor Market Uncovered
Maybe it is wrong to so frequently speak of “the labor market”?:
Aggregate U.S. labor market dynamics are well approximated by a dual labor market supplemented with a third, predominantly, home-production segment. We uncover this structure by estimating a Hidden Markov Model, a machine-learning method. The different market segments are identified through (in-)equality constraints on labor market transition probabilities. This method yields time series of stocks and flows for the three segments for 1980-2021. Workers in the primary sector, who make up around 55 percent of the population, are almost always employed and rarely experience unemployment. The secondary sector, which constitutes 14 percent of the population, absorbs most of the short-run fluctuations, both at seasonal and business cycle frequencies. Workers in this segment experience six times higher turnover rates than those in the primary tier and are ten times more likely to be unemployed than their primary counterparts. The tertiary segment consists of workers who infrequently participate in the labor market but nevertheless experience unemployment when they try to enter the labor force. Our individual-level analysis shows that observable demographic characteristics only explain a small part of the cross-individual variation in segment membership. The combination of the aggregate and individual-level evidence we provide points to dualism in the U.S. labor market being an equilibrium division of labor, under labor market imperfections, that minimizes adjustment costs in response to predictable seasonal as well as unpredictable business cycle fluctuations.
That is a new Federal Reserve Board paper by Hie Joo Ahn, Bart Hobijn, and Ayşegül Şahin. The next question, I suppose, is whether markets allocate too much or too little labor to the primary sector?
Monday assorted links
1. What Midjourney thinks professors look like, depending on department. Will convince any AI doubter!
2. EU craziness on AI regulation, including extraterritoriality.
3. Podcast on alignment: Leopold Aschenbrenner and Richard Hanania.
4. Is our universe inside a black hole? (speculative)
5. Good CEOs moving from the UK to the U.S., in part for higher pay (FT).
Alas, Bob Lucas has passed away
RIP, he was one of the great economists of our time…
My Russ Roberts podcast on AI risk
This was on Russ’s show, here is their episode description:
Economist Tyler Cowen of George Mason University talks with EconTalk’s Russ Roberts about the benefits and dangers of artificial intelligence. Cowen argues that the worriers–those who think that artificial intelligence will destroy mankind–need to make a more convincing case for their concerns. He also believes that the worriers are too willing to reduce freedom and empower the state in the name of reducing a risk that is far from certain. Along the way, Cowen and Roberts discuss how AI might change various parts of the economy and the job market.
Listen here, I do not know if a full transcript is coming. Russ as always is an excellent host.
Sentences of the Day
The Washington Post on the plan to refurbish Union Station in DC:
The federal environmental review of the project, which began in 2015, is at least three years behind schedule. Once the federal approval process is complete, a design phase is likely to take several years, project officials said, possibly followed by 13 years of construction.
A good example of the Ezra Klein point about the costs of everything bagel liberalism. By the way, the push to eliminate more than a thousand parking spots at the station seems counter-productive. I’m not a fan of parking minimums but in typical liberal fashion that has been turned into an anti-parking, anti-car crusade regardless of context. In fact, a railroad station is precisely where you do want parking to avoid the last mile(s) problem and encourage rail use.
U.S.A. fact of the day
The US federal budget is haemorrhaging money. The non-partisan Congressional Budget Office calculates that in the first seven months of the 2023 fiscal year, underlying government revenues are down 10 per cent with spending up 12 per cent. This leaves the federal budget deficit more than three times larger than in the same months of the 2022 fiscal year.
Weak receipts reflected lower realised capital gains than the CBO expected in late 2022, the transformation of the Federal Reserve’s quantitative easing programme from a cash cow to a significant burden and the possibility that the underlying recovery was not quite as healthy as initial statistics showed. Expenditure has risen sharply in almost all large federal budget areas.
Here is more from Chris Giles at the FT.
*Transformer: The Deep Chemistry of Life and Death*
By Nick Lane, here is one excerpt:
Should NASA and other space agencies back missions to Mars, or to the icy moons of Saturn and Jupiter, Enceladus and Europa? If light is essential for the origin of life, then Enceladus is the last place to look, as those who favour warm ponds are quick to assert. But if life emerges from deep-sea hydrothermal vents, then Enceladus is an ideal place to look, as beneath its icy crust is a liquid ocean bubbling with hydrogen gas and small organic molecules, to judge from the plumes that jet hundreds of miles into space through cracks in the ice. It’s the first place I’d look.
Arguably even more important are the practical connotations for metabolism and our own health today. Is the Krebs cycle at the heart of metabolism because life was forced into existence that way, by thermodynamics — fate! — or was this chemistry invented later by genes, just a trivial outcome of information systems that could be rewired, if we are smart enough? Is the difference between ageing and disease an tractable outcome of metabolism, written into cells from the very origin of life, or a question for gene editing and synthetic biology to come? That in turn boils down to genes first or metabolism first? The thrust of this book is that energy is primal — energy flow shapes genetic information. I will argue that the structure of metabolism was set in stone (perhaps literally in deep-sea rocky vents) from the beginning.
Among the other things I learned from this book are the importance of Otto Warburg, why men get mitochondrial diseases more than women do (there is some speculative component here), why respiration is suppressed with age, why the brain prefers to burn glucose, what it might mean to think of cancer as “growth-based” rather than genes-based, and most of all the importance of the Krebs cycle and reverse Krebs cycle for a broader array of biological questions. The final section considers why chloroform seems to rob fruit flies of their “consciousness.”
I can’t pretend to evaluate the more controversial claims of the author, but at the very least I learned a great deal reading this book and it has stimulated my interest in the topic areas more generally. You can buy it here.
Model this upper atmospheric infrasound
A solar-powered balloon mission launched by researchers from Sandia National Laboratories carried a microphone to a region of Earth’s atmosphere found around 31 miles (50 km) above the planet called the stratosphere. This region is relatively calm and free of storms, turbulence and commercial air traffic, meaning microphones in this layer of the atmosphere can eavesdrop on the sounds of our planet, both natural and human-made.
However, the microphone in this particular study also heard strange sounds that repeat a few times per hour. Their source has yet to be identified. The sounds were recorded in the infrasound range, meaning they were at frequencies of 20 hertz (Hz) and lower, well below the range of the human ear. “There are mysterious infrasound signals that occur a few times per hour on some flights, but the source of these is completely unknown,” Daniel Bowman of Sandia National Laboratories said in a statement.(opens in new tab)
No, I don’t think it is “UFOs,” but perhaps by now it should be clear we really don’t know what is going on up there? And it really would e good if we did. Here is the full story.