Expensive markets in everything
…testimony in the trial revealed that Google spent a total of $26.3 billion in 2021 to be the default search engine in multiple browsers, phones, and platforms.
That number, the sum total of all of Google’s search distribution deals, came out during the Justice Department’s cross-examination of Google’s search head, Prabhakar Raghavan.
$18 billion of that goes to Apple. Here is the full story.
Supply and demand, American style
Gas and milk both back under $3 per gallon at Sam's Club in Conway, Arkansas pic.twitter.com/zvfYGkyubk
— Jeremy 'adjusted for inflation' Horpedahl 📈 (@jmhorp) October 26, 2023
The culture that is Porirua (New Zealand)
The residents of a small city in New Zealand have been enduring sleepless nights for months due to drivers blasting Céline Dion songs from their cars in the early hours of the morning.
According to Agence France Press, car drivers in Porirua, a town of some 60,000 people, north of Wellington, have been loudly playing the singer’s tunes as late as 2 a.m.
They have been cranking up the volume on the Canadian songstress’s most famous ballads, including “My Heart Will Go On” and “It’s All Coming Back To Me Now,” according to AFP.
The nocturnal music-playing tends to begin as early as 7 p.m., continuing for many hours thereafter, Porirua Mayor Anita Baker told the news agency.
It’s part of the “siren battles” trend that has taken place in New Zealand for several years, which is particularly popular with indigenous people from the Pacific Islands.
These battles involve rival crews competing to blast the most powerful and clear sounds from loudspeakers attached to cars, or even bicycles, to win the title of “siren king.”
…They “love” Dion because they like “anyone with a high pitch and great tone in their voice,” the mayor explained to AFP.
Here is the full story, via the excellent Samir Varma. I have had very good fish and chips in Porirua.
Friday assorted links
1. The culture that was German.
3. More on GPT for time series.
4. My beloved Acapulco is in bad shape.
5. The Latecomer, new on-line periodical, lead article by Casey Handmer. And on Twitter.
What are markets telling us about the Middle Eastern war?
That is the topic of my latest Bloomberg column, here is one excerpt:
Despite the continuing war in the Middle East, most markets have been relatively calm. Stock exchanges have not plunged, while volatility appears manageable, indeed ordinary. If you were looking at just the markets (except for Israel’s), you might not even know there is a war on.
The question is what to make of such data. Allow me to make a daring inference: At least for the time being, the assumption is that the current conflict will not widen into a much larger war. It may pull in Syria, Lebanon, Yemen and other parties, but so far markets are indicating that the Israel-Hamas war will not much disrupt most of the world’s large economies.
There is one very important caveat: This is an ex-ante analysis. Markets are wrong all the time, but they are also often the best predictive tool available. Consider the Super Bowl. Before the game, the betting odds are usually the best indication of who is favored and by how much. Every single time, those odds end up being wrong: By the end of the game, one team is 100% likely to win, and the other team 100% likely to lose. Still, the odds were the best available predictor before the game started.
And:
It is not true that markets ignore war. For instance, the value of the Israeli shekel is down sharply since Oct. 7, reflecting that many parts of the Israeli economy have come to a standstill, and that the country will experience more serious fiscal problems in the future. Just after the Hamas attack, there was an immediate 4% spike in oil prices, which is significant but not a game-changer.
There is a lot of evidence suggesting that markets incorporate other consequences of war. For instance, the Iraq war had sizeable impacts on US travel stocks, as well as shares in the Turkish and Israeli markets. So don’t think markets are asleep at the moment. The marginal investor is watching — and deciding not to overreact.
Worth a ponder, but do note the overall news is still absolutely terrible in humanitarian and moral terms.
Thursday assorted links
1. MIE: Robinson Crusoe tourism.
2. “An estimated 500,000~ women in the United States between 18-24 are content creators on Onlyfans.”
3. New Freakonomics radio podcast series on how to succeed at failing.
4. “Celebrities made this mainstream.” Recommended.
5, Want to send a comment to the IRS about proposed new crypto tax reporting rules? The polity that is AI.
6. The world’s first wearable e-reader?
7. Robert Irwin, RIP (NYT).
8. Brian Albrecht on why Armen Alchian is the GOAT. And Peter Isztin on Gary Becker.
*George Harrison: The Reluctant Beatle*
By Philip Norman, a wonderful book of course. My “problem” (not with the book of course) is just how much John and Paul tower over the proceedings, from the very beginning. Here is one excerpt:
He [Hanton, an early drummer for the Quarrymen, a Beatles precursor] felt excluded from the others’ practice sessions at the art college and resented Paul, who was more than competent on drums as well as guitar and piano, for continually finding fault with his performances.
And:
John’s leadership remained unchallenged, but Paul was ever his zealous adjutant; convinced that they could be spotted by some talent scout at any moment, he called for maximum effort, however late the hour or sparse the audience. And Stu Sutcliffe’s bass playing, though now reasonably competent, was clearly never going to satisfy Paul.
Recommended, I will read every page. You can order here, Norman’s other bios are great too. And if you are wondering, a few of the most underrated George songs are the early instrumental “Cry for a Shadow,” “Don’t Bother Me,” and the much later “You.”
*GOAT* on Gary Becker
Written by me, from my new generative book:
Most of all, for me, Becker was a true “micro-machine,” a relentless, unstoppable thinker, analyst, and writer with the button always in the “on” position. Anything he did would be thought through to the maximum extent, at least relative to the conceptual tools at Becker’s disposal. And he never ever stopped. He died with his boots on, as one colleague of Becker’s once related to me.
Yet I don’t feel the need to give you a comprehensive analysis of Becker for the following reason: I can’t quite see putting him above Milton Friedman in the GOAT sweepstakes. And the purpose here is not to evaluate every wonderful economist, but to determine GOAT, and there Becker has to fall short.
I should add that much of Becker’s work has not aged well in the last ten to fifteen years. In recent times, economics has become more like sociology than sociology has become like economics. Behavioral economics has assumed greater importance, relative to the relative price effects and rational choice approaches that are so prominent in Becker’s work. His “economics of the family,” which seems to rationalize male breadwinner dominance, is now considered somewhat chauvinist or at least old-fashioned, though it fit the 1960s frame he wrote in. Even at the University of Chicago, new hires do not seem to be moving in the Beckerian direction. Hardly any current up and coming young economists seem to regard Becker as a critical influence or an inspiration, even if his indirect influence on them is immense. Becker’s breadth of topics has won out as a dominant approach, but not his modeling methods or his obsession with demonstrating the rationality of different social practices.
I don’t side against Becker on all of these questions, but as a simple description of where the profession is at, Becker has lost a lot of status and influence. That too removes him from the GOAT game, though in the meantime I will gladly aver that he is now significantly underrated.
I find Becker fairly boring to read, as the model does most of the work and, while he is perfectly clear, he is not a writer of wit or nuance. I don’t recommend his works to other people. His brilliance lies in a method and a machine of inquiry, and in his own relentlessness, and in the breadth of investigation he helped to create. Now that his presence has left the stage, his import will become less evident with time and I predict he will end up underrated all the more.
Here is the book itself (free), GOAT: Who is the Greatest Economist of all Time, and Why Does it Matter, here is an explanatory blog post.
Emergent Ventures Africa and Caribbean, fourth cohort
Sokhar Samb is a Data Scientist from Senegal. Her EV grant supports her work of drone mapping Senegalese cities and towns such as Dakar and Semone by capturing high-resolution aerial imagery and Light Detection.
Cesare Adeniyi-Martins is from Nigeria and founded Abelar to promote the special jurisdiction economics charter cities in Africa. His EV grant is for general career support.
Alecia McKenzie is a Jamaican author currently residing in France. Her EV grant supports her work at the Caribbean Translation Project to translate Caribbean literature (originally written in English, French, Spanish, or Dutch) into Mandarin Chinese.
Lorenzo Gonzalez is a Belizean currently residing in Canada. Lorenzo has a Masters degree in Economics from the University of Waterloo. His EV grant is to support his writing on tourism on Belize Adventure to promote economic growth in the country.
Keeghan Patrick, Graduate student at MIT; Shergaun Roserie, Mechanical Engineer at FAANG; and Dylan Paul, current MBA student at Harvard Business School. All three are from Saint Lucia. Their EV grant is to support their work through their organization, Obtronics, which, among other activities, offers robotics engineering educational programs to students in St. Lucia.
Raymer Medina is from the Dominican Republic. His EV grant supports his work on low-cost robotics design and development.
Thomas Aichele is multi-based in Chicago, Dakar, and Abidjan. Thomas works in the FinTech industry in West Africa. His EV grant supports his writing on technology infrastructure progress in West Africa.
Marla Dukharan is a Trinidadian Economist. Her EV grant is to support the production of a documentary on the causes and effects of the EU taxation blacklisting of Caribbean countries.
Mary Najjuma is a Ugandan Engineer and current PhD candidate at the London South Bank University. Her EV grant supports her research on rural efficient and optimal cooling hubs.
Andrew Ddembe, Ugandan social entrepreneur. This follow-on grant is to help support the work of his organization, Mobiklinic, in promoting medication care and education in rural Uganda.
Farai Munjoma was born and raised in Zimbabwe and resides in Edinburgh. He founded the Sasha Pathways Program, a virtual career accelerator for African youth. His EV grant is to support the career development program.
Stéphanie Joseph, originally from Haiti, is currently residing in the US. Stéphanie is a current MBA candidate at Harvard Business School. Her EV grant supports her project on land-mile financial inclusion in the Greater Caribbean.
Evalyn Sintoya Mayetu is a Kenyan guide on the Greater Maasai Mara. She is the country’s first female safari guide to achieve Silver Level certification. Her EV grant is for general career development.
Dr. Collin Constantine, born and raised in Guyana, is an Assistant Professor of Economics at Girton College, University of Cambridge. His EV grant supports his research on integrating income distribution and the balance of payments constraint into macroeconomics, focusing on the Caribbean.
I am very thankful for the leadership of Rasheed Griffith here, he also wrote those descriptions.
New data on founder personalities and firm success
Here, we show that founder personality traits are a significant feature of a firm’s ultimate success. We draw upon detailed data about the success of a large-scale global sample of startups (n = 21,187). We find that the Big Five personality traits of startup founders across 30 dimensions significantly differ from that of the population at large. Key personality facets that distinguish successful entrepreneurs include a preference for variety, novelty and starting new things (openness to adventure), like being the centre of attention (lower levels of modesty) and being exuberant (higher activity levels). We do not find one ’Founder-type’ personality; instead, six different personality types appear. Our results also demonstrate the benefits of larger, personality-diverse teams in startups, which show an increased likelihood of success. The findings emphasise the role of the diversity of personality types as a novel dimension of team diversity that influences performance and success.
That is from a new paper by Paul X. McCarthy, et.al..
Via Nabeel.
Wednesday assorted links
1. Is it racist to have this policy, or racist to cancel it?
2. Mark Skousen argues for Carl Menger as GOAT.
3. Benjamin Yeoh reviews GOAT. Excellent piece.
7. And “It is the height of the cyborg Theocracy.” NB: I don’t actually recommend clicking on the link.
8. Max Corden has passed away (FT).
AI Worship
i expect ai to be capable of superhuman persuasion well before it is superhuman at general intelligence, which may lead to some very strange outcomes.
Sam Altman on Twitter. Clearly true.
I predict AI driven religions. At first these will begin as apps like, what would Jesus say? But the apps will quickly morph into talk to Jesus/Mohammed/Ram. Personal Jesus. Personal Ram. Personal Tyler. Then the AIs will start to generate new views from old texts. The human religious authorities will be out debated by the AIs so many people will come to see the new views as not heretical but closer to God than the old views. Fusion and fission religions will be born. As the AIs explore the space of religious views at accelerated pace, evolution will push into weirder and weirder mind niches.
What strange outcomes do you predict?
Google searches for inequality (from my email)
From Jared Sleeper:
I was surprised to see this magnitude of effect. Google searches for “inequality” are twice as high during the academic year as they are during the summer. They double in September vs. August and then collapse by 50% in June vs. May.
What is it we do and do not know about macroeconomics?
That is the topic of my latest Bloomberg column, here is one excerpt:
Another episode frequently cited as evidence against economists is the Great Recession of 2007-2009. Economists did make some mistakes on that one — but they are not the ones you usually hear about.
When real estate prices started to slow down and then fall, many economists declared there was a real estate bubble. The theory quickly developed that the market crash was due to a real estate bubble bursting, followed by a sharp fall in aggregate demand, followed by a decline in employment and output.
The last part of that explanation is correct. In retrospect, however, it is not clear that the housing prices of 2006-2007 represented a bubble. By today’s metrics those prices appear prescient, if slightly premature. The market was suddenly realizing that a lot of real estate assets were going to be worth much more — and the recent evolution of real estate valuations seems to have confirmed that judgment.
In 2009, however — and following a lot of foreclosures and the emergence of troubled banks — the market was far from ready to accept that the high real estate prices had been justified. The market was too skeptical when it should have been less panicked. A lot of economists got this wrong too, along with many pundits. All of this made the resulting panic worse because the talk was so pessimistic about real estate valuations. Instead, the real problem was that the market had lost faith in a set of high real estate prices that has since been largely validated. Maybe not in Las Vegas and Orlando, but for the nation as a whole, most of all on the coasts.
Economists should have been less quick to judge what is or is not a bubble. The real-estate-bubble explanation appeared to be correct in the short run, but economists should have been more modest about their ability to second-guess the market. The good news is that, with hindsight, we can piece together what happened. Policymakers and market participants made a series of overlapping mistakes related to monetary policy, the shadow banking system and panic about real estate.
There is a good picture of trends in real estate prices at the link, or ungated here.
Rooftops, people
We find that consumer surplus is the primary component of social impact (dwarfing profits, worker surplus, and externalities), suggesting that consumer impacts deserve more attention from impact investors. Existing ESG and social impact ratings are essentially unrelated to our economically grounded measures.
That is from a new NBER working paper by Hunt Allcott, Giovanni Montanari, Bora Ozaltun, and Brandon Tan.