Thursday assorted links
1. How to think about Chinese manufacturing data.
2. Paul Salopek walking through China/Yunnan.
3. AI policy recommendations from Anthropic.
4. Now I understand better why I have never enjoyed the works of Ngũgĩ wa Thiong’o.
5. “Man ‘faked his death before arriving to his funeral in a helicopter to teach family a lesson’”
Game theory and the First World War
By Nobel Laureate Roger Myerson:
Books by Scott Wolford and Roger Ransom show how economic theories of games and decisions can be fruitfully applied to problems in World War I. This vital application offers fundamental insights into the analytical methods of game theory. Public random variables may be essential factors in war-of-attrition games. An assumption that nations can coordinate on Pareto-superior equilibria may become less tenable when nations are at war. Interpreting a surprising mistake as evidence of an unlikely type can have serious consequences. The ability of leaders to foster consistent beliefs within a cohesive society can create inconsistency of beliefs between nations at war.
Just published in the (ungated) Journal of Economic Literature.
New Zealand’s great education decline
A growing proportion of children leave school unable to read an instruction manual or do basic maths. Over the last twenty years, our education system has slipped from being the envy of the world to barely mediocre.
Kiwi students once ranked near the top of international education league tables. In the latest results from the highly rated Progress in International Reading and Literacy Study, Year 5 students placed last among all English-speaking countries and 24th out of all 26 participating OECD countries. Students suffered similar slides in maths and science.
The New Zealand education system is also now one of the most unequal in the world. The gap between the educational “haves” and “have nots” eclipses all our English-speaking OECD peers. All this, despite Government spending per child increasing in real terms by more than 30% since 2001.
Here is more from Roger Partridge (2020). Here is a 2022 update:
Low attendance at school is another sign the country’s education system is slipping with children from lower socio-economic areas the worst affected, the executive director of the New Zealand Initiative says.
The New Zealand Initiative is a think tank which carries out research to help New Zealand plan for the future.
It has commented on new research by the Education Review Office that shows children are missing school more in New Zealand than other English-speaking countries.
The office found four in ten parents were comfortable with their child missing a week or more of school per term and a third of students did not see going to school every day as that important…
The education system had been declining for 25 years and data backed up his view, such as the Pisa study carried out by the OECD. As an example, in maths the knowledge of a 15-year-old New Zealand student equated to a student aged 13 and a half 20 years ago.
Also from 2022:
In the past 12-18 years, New Zealand’s scores had declined by 23 points for reading, 22 points for science and 29 points for maths. The OECD estimated that 30 points was equivalent to one-year of learning.
Here is the Kiwi establishment being vague about the causes of the literacy decline. What are the actual reasons for all this? There are plenty of regions of New Zealand without massive immigration, and they do not seem immune to these trends.
Here is some more circular blah blah blah, calling for a “holistic approach,” and so on. Does Kiwi culture work best when most of the citizens are more “tough-minded” than what is currently the case?
What should I ask Lazarus Lake?
Yes, ultra-marathons, here is Wikipedia:
Gary Cantrell, known as Lazarus “Laz” Lake, is an endurance race designer and director. His races include the Barkley Marathons, Big’s Backyard Ultra, the Barkley Fall Classic, Vol State 500K, A Race for the Ages, the Last Annual Heart of the South, and the Strolling Jim 40. In 2018, Lake covered the United States on foot, starting in Rhode Island and ending in Oregon.
A largely fringe figure known only within the world of ultrarunning, Cantrell gained worldwide recognition following a 2014 documentary called The Barkley Marathons: The Race That Eats Its Young.
His races are known to be especially grueling. Trail Runner magazine called him an “evil genius,” “The Leonardo da Vinci of pain,” “A master of sadomasochistic craft.” Yet, his races have developed an almost cult-like following. The Bitter Southerner magazine described Cantrell as a “Bearded Saint” and “The Godfather of the Woods.”
I will be doing a Conversation with him. So what should I ask?
Wednesday assorted links
1. The gender gap in commercializing science.
3. Jon Hartley is launching a de-dollarization facts website.
4. AI experimental church service in Germany, at least the first one drew a crowd.
5. Kenyan Luddites.
6. Claims about minimum wage and homelessness. I’ll say it again: the results on this question are swinging back in the neoclassical direction.
Nigeria floats its exchange rate
Nigeria has officially floated its naira currency after years of sticking with a hard peg that spooked investors and drained dollars from the economy.
The development means buyers and sellers of foreign currency in the official FX market are now allowed to quote rates they find comfortable in the FX market, as against previous practice where rates were dictated by the Central Bank of Nigeria (CBN).
The Investors & Exporters (I&E) window is now quoting a range of between N750 and N755/$, according to customers who cited emails received from their banks.
That implies a 21 percent decline in the naira compared to the previous rate of N463/$ which the Central Bank of Nigeria (CBN) is still quoting as the I&E rate on its website. However, the last time the CBN updated the rate was June 9.
Here is the full story, this is indeed big news and word on the street is that further important reforms are on the way.
GDP and temperature shocks
This is perhaps a not entirely welcome result:
We use local projections to estimate the cross-country distribution of real GDP per capita growth impulse responses to global and idiosyncratic temperature shocks. Negative growth responses to global temperature at longer horizons are found for all Group of Seven countries while positive responses are found for seven of the nine poorest countries. Global temperature shocks have negative effects on growth for around half of the countries and seemingly anomalous positive effects for the other half. After controlling for latitude and average temperature, positive growth responses to global temperature shocks are more likely for countries that are poorer, have experienced slower growth, are less educated (lower high school attainment), less open to trade, and more authoritarian.
That is from a new NBER working paper by Kimberly A. Berg, Chadwick C. Curtis, and Nelson Mark. I would rather see this contested than ignored, but perhaps I am expecting the latter?
Germany poll fact of the day
In Germany, the far-right party Alternative for Germany (AfD) party is gaining popularity, with a recent poll putting it in second place – ahead of Chancellor Olaf Scholz’s SPD.
A YouGov poll published on Friday (9 June) found that 20% of German voters would give their vote to the far-right AfD, making it the second-strongest party behind the CDU (28%) and ahead of Scholz’s SPD (19%)…
“We have a unique selling proposition. As opposed to everyone else, we say that sanctions don’t mean harm for Russia but for our own population,” Tino Chrupalla, co-chair of the party, told ZDF.
Do note this:
The number of asylum claims in Germany has increased by 80% between January and March 2023 compared to the same period last year, according to the Federal Office for Migration and Refugees.
And this:
The AfD, which disputes that human activity is a cause of climate change, has also tapped into concerns among some voters about the cost of the transition away from fossil fuels.
AfD leader Tino Chrupalla said more voters appreciated that the policies of the Greens, Scholz’s junior coalition partner which wants a swifter shift away from hydrocarbons, brought “economic war, inflation and de-industrialisation.”
Here is the full story. Have a nice day…
Tuesday assorted links
1. Further reason to discount Grusch. And commentary from Ross. Nonetheless here is a look at the more serious evidence.
2. How culture normalizes patriarchy.
3. The UK plans to lead on AI. Says Sunak. And a few of you have been asking for more Macca content, so here is Macca on AI, not the worst comments I have heard on the topic. Macca is still at the frontier, even at age 80 or so.
4. What do we know about corporate discount rates?
6. Dugin update.
Plagues Upon the Earth
Kyle Harper’s Plagues Upon the Earth is a remarkable accomplishment that weaves together microbiology, history, and economics to understand the role of diseases in shaping human history. Harper, an established historian known for his first three books on Rome and late antiquity, has an impressive command of virology, bacteriology, and parasitology as well as history and economics. In “Plagues Upon the Earth.” he explains all of these clearly and with many arresting turns of phrase and insights:
There are about seventy-three bacteria among major human pathogens–out of maybe a trillion bacterial species on earth. To imagine bacteria primarily as pathogens is about as fair as thinking of human beings as mostly serial killers.
Despite the tingling fear we still feel in the face of large animals, fire made predators a negligible factor in human population dynamics. The warmth, security and mystic peace you feel around the campfire has been instilled by almost two million years of evolutionary advantage given to us by the flames.
Mosquitos are vampires with wings….The blood heist itself is an amazing feat. Following contrails of carbon dioxide that lead to her mark, the female mosquito lands and starts probing. Once she reaches her target, she inserts her tube-like needle, as flexible as a plumber’s snake, into the skin. She pokes a dozen or more times until she hits her mark. The proboscis itself is moistened with compounds that anesthetize the victim’s skin and deter coagulation. For a tense minute or two, she pulls blood into her gut, taking on several times her own weight, as much as she can carry and still fly. She has stolen a valuable liquid full of energy and free metals. Engorged, she unsteadily makes her getaway, desperate for the nearest vertical plane to land and recuperate, as her body digests the meal and keeps only what is needful for her precious eggs.
What I like best about Plagues Upon the Earth is that Harper thinks like an economist. I mean this in two senses. First, his chapters on the Wealth and Health of Nations and Disease and Global Divergence are alone worth the price of admission. In these chapters, Harper brings disease to the fore to understand why some nations are rich and others poor but he is well aware of all the other explanations and weaves the story together with expertise.
The second sense in which Harper thinks like an economist is deeper and more important. He has a model of parasites and their interactions with human beings. That model, of course, is the evolutionary model. To a parasite, human beings are a desirable host:
Just as robbers steal from banks because that is where the money is, parasites exploit human bodies because there are high rewards for being able to do so…. for a parasite, there is now more incentive to exploit humans than ever…look at human energy consumption…in a developed society today, every individual consumer is the rough ecological equivalent to a herd of gazelles.
That parasites are driven by “incentives” would seem to be nearly self-evident but in the hands of a master simple models can lead to surprising hypothesis and conclusions. Harper is the Gary Becker of parasite modeling. Here’s a simple example: human beings have changed their environments tremendously in the past several hundred years but that change in human environment created new incentives and constraints on parasites. Thus, it’s not surprising that most human parasites are new parasites. Chimpanzee parasites today are about the same as those that exploited chimpanzees 100,000 years ago but human parasites are entirely different. Indeed, because the human-host environment has changed, our parasites are more novel, narrow, and nasty than parasites attacking other species.
It’s commonly suggested that one of the reasons we are encountering novel parasites is due to our disruptions of natural ecosystems, venturing into territories previously unexplored by humans, thereby releasing ancient parasites that have lain dormant for millennia. Like the alleged curse of Tutankhamun’s tomb we are unleashing ancient foes! Similarly, concerns are voiced that climate change, through its effect on permafrost melt, may liberate “zombie” parasites poised for retaliation. But ancient parasites are not fit for human hosts as they have not evolved within the context of the contemporary human environment. So, while I don’t trivialize the potential consequences of melting permafrost, I think we should fear much more relatively recent diseases such as measles, cholera, polio, Ebola, AIDS, Zika, and COVID-19. Not to mention whatever entirely new disease evolution is bound to throw in our path.
Indeed, one of the most interesting speculation’s in Plagues Upon the Earth is that “global divergences in health may have reached their maxima in the early twentieth century.” The reason is that urbanization and transportation turned the new diseases of the industrial era, like cholera, tuberculosis and the plague (the latter older diseases but ideally primed for the industrial era) into pandemics (also a relatively recent word) at a time when only a minority of the world had the tools to combat the new diseases.
Science, of course, is giving us greater understanding and control of nature but our very success increases the incentives of parasites to breach our defenses.
[Thus,] the narrative is not one of unbroken progress, but one of countervailing pressures between the negative health feedback of growth and humanity’s rapidly expanding but highly unequal capacities to control threats to our health.
The new public library?
This article is set in Canada, but some of these developments are more general:
Vicky Varga, a twenty-four-year veteran of Edmonton Public Library, described how the city had moved toward fully integrating social work into the activities of its main library branch. “People really do seek this out, because it’s the last truly public space, as I’m sure everybody in this room knows,” she said…
Every library branch in every city has its own specific issues, but in conversations with workers across the country, the broad strokes of the crisis are the same. Librarians say they’re seeing more people with more complex needs than ever before. In Toronto, the number of recorded “incidents,” a term which includes violent, disruptive, or threatening events, spiked from 7.16 per 100,000 visits in 2012 to 35.74 in 2021. In Edmonton, where librarians are offered training to administer naloxone, 2022 saw ninety-nine opioid poisonings across the system. On Vancouver Island, some workers went on strike for nearly two months over workplace concerns and a lack of wage growth. In a letter to library trustees, they argued that “management has refused to agree to many important proposals—including solutions to workplace violence and mental health impacts.” Library workers across the country report being attacked, spat on, threatened, sexually assaulted. They describe the emotional toll that results from not having the necessary resources to help the people who come to them, day after day. They talk about picking up the phone to call for help and realizing that nobody’s coming.
Here is the full piece by Nicholas Lune-Brown and Dorothy Leung, in The Walrus, and interesting throughout. Via (the excellent) The Browser.
The Confederate Diaspora
This paper shows how white migration out of the postbellum South diffused and entrenched Confederate culture across the United States at a critical juncture of westward expansion and postwar reconciliation. These migrants laid the groundwork for Confederate symbols and racial norms to become pervasive nationally in the early 20th century. Occupying positions of authority, former slaveholders played an outsized role in this process. Beyond memorializing the Confederacy, migrants exacerbated racial violence, boosted novel forms of exclusion, and compounded Black disadvantage outside the South. Moving West, former Confederates had larger effects in frontier communities lacking established culture and institutions. Over time, they continued to transmit norms to their children and non-Southern neighbors. The diaspora legacy persists over the long run, shaping racial inequities in labor, housing, and policing. Together, our findings offer a new perspective on migration, elite influence, and the interplay between culture and institutions in the nation-building process.
That is a new NBER working paper by Samuel Bazzi, Andreas Ferrar, Martin Fiszbein, Thomas P. Pearson, and Patrick A. Testa. Deep Roots!
*The Economic Government of the World, 1933-2023*
By Martin Daunton, retired economic historian from Cambridge. 1024 pp., and full of information, so yes many people should read this book. It is a major achievement, but somehow I wanted something with more economics and a sharper framework? Here is a very positive Adam Tooze FT review, who describes the narrative as “postheroic and disillusioned.” Multilateralism is covered in great detail.
You can pre-order it here, I picked up my copy in London at Daunt.
Monday assorted links
1. Brian Chau on how economists see AI.
2. Misha Saul reviews Louise Perry on sex and agency.
3. MIE: “Enter Gensyn, a blockchain-based marketplace protocol connecting developers (anyone who is able to train a machine learning model) with solvers (anyone who wants to train a machine learning model). By tapping into the long tail of idle, machine-learning-capable compute around the world — such as in smaller data centers, personal gaming computers, M1 and M2 Macs, and eventually even smartphones — Gensyn can potentially 10-100x the available compute power for machine learning.” Link here.
4. Fortune 500 CEO colleges, as of 2019.
Lookism on the rampage
Beauty has its privileges. Studies reliably show that the most physically attractive among us tend to get more attention from parents, better grades in school, more money at work and more satisfaction from life. A study published in January in the Journal of Economics and Business found that good-looking banking CEOs take in over $1 million more in total compensation, on average, than their lesser-looking peers. “Good looks pay off,” the authors write.
New research from Shanghai Advanced Institute of Finance similarly finds that comely managers of mutual funds lure more investments and enjoy more promotions than their homelier counterparts, even though their funds don’t perform as well. The researchers suggest this performance gap may be because handsome managers approach risk with hubristic levels of confidence.
Here is more from the WSJ, with further evidence at the link. Via the excellent Daniel Lippman.