Results for “politics isn't about policy” 53 found
Is Elon Musk Prepping for State Failure?
FuturePundit on twitter has an interesting theory of Elon Musk’s technology portfolio, namely a lot of it will be very valuable for living in a failed state.
Solar panels, for example, are a necessity when the state can’t deliver power reliably, as is now the case in California.
Solar panels plus the Tesla give you mobility, even if Saudi Arabia goes up in smoke and world shipping lines are shut down.
Starlink, Musk’s plan for 12,000 or more cheap, high-speed internet satellites, will free the internet from reliance on any terrestrial government.
Musk’s latest venture, the truck, certainly fits the theme and even if the demonstration didn’t go as well as planned isn’t it interesting that the truck is advertised as bulletproof. Mad Max would be pleased.
And what will you be carrying in your Tesla truck? One of these for sure.
Finally, the Mars mission is the ultimate insurance policy against failed states.
Who has led the most interesting life?
In recent times, that is. Devon Zuegel asks:
Who would you name as a contender for having led the most interesting life in the last 100 years?
Keynes pops to mind as one contender. He was a top-tier intellect and economist, he was closely connected to the arts, had plenty of brilliant Bloomsbury people to chat with, married a ballerina, played a major role in politics several times, and he participated in several critical and indeed formative moments of history (Treaty of Versailles, fiscal policy, Bretton Woods). He experienced both world wars (no one said “interesting” has to be good!). Still, he didn’t travel enough to be a slam dunk (I can’t quite bring myself to write “nor did he have the internet.”)
How about Bill Clinton? He was president twice, oversaw the 1990s, has indeed traveled the world, and known many of the most interesting people of his lifespan. He also has had rather, um…diverse…experiences in one realm of life. And he married Hillary.
Paul McCartney was a Beatle, wrote amazing songs and hung out with John Lennon, had domestic bliss with Linda for a few decades, raised lots of kids, was successful as a businessman, and also has a history of…um…diverse experiences. But did he smoke too much pot?
This list of “best lives” includes Hugh Hefner, Tyra Banks, and Elon Musk. Here is one Quora answer for “most interesting”:
Personally, I find the following people intriguing: Jesus Christ, Martin Luther King, Sir Isaac Newton, Galileo Galilei, Marie Curie, Diego Maradona, Michael Jordan, Socrates/Aristotle/Plato, Samori Toure, Nelson Mandela, Michel de Nostredame. It’s a long list. There are even some historical figures that I do not admire, but would like to know more about – people such as Joseph Stalin, Napoleon Bonaparte, Judas Isacriot, among so many others.
I hope you are not offended if I rule some of those lives out on grounds of insufficient length, or too much time spent in prison. Here is a list of interesting writers’ lives, topped by Ernest Hemingway.
Contrarian but not crazy answers would cite the person who raised the greatest number of children, the person who lived the longest in decent health, “whoever you are,” and the person who has traveled the most, at least adjusting for the quality of the trips (working on an oil tanker may not count).
Is it possible for a very famous person to win this designation? Their very fame limits the possible range of experiences they have, and perhaps at some margin the consumption of additional status and adulation, however fun (?) it may be, just isn’t all that interesting. Can Paul McCartney or Bill Clinton go out in public much? Is the real answer someone most people never have heard of?
Who is your nominee?
What it would take to change my mind on net neutrality
Keep in mind, I’ve favored net neutrality for most of my history as a blogger. You really could change my mind back to that stance. Here is what you should do:
1. Cite event study analysis showing changes in net neutrality will have significant and possibly significantly negative effects.
2. Discuss models of natural monopoly, and how those market structures may or may not distort product choice under a variety of institutional settings.
3. Start with a framework or analysis such as that of Joshua Gans and Michael Katz, and improve upon it or otherwise modify it. Here is their abstract:
We correct and extend the results of Gans (2015) regarding the effects of net neutrality regulation on equilibrium outcomes in settings where a content provider sells its services to consumers for a fee. We examine both pricing and investment effects. We extend the earlier paper’s result that weak forms of net neutrality are ineffective and also show that even a strong form of net neutrality may be ineffective. In addition, we demonstrate that, when strong net neutrality does affect the equilibrium outcome, it may harm efficiency by distorting both ISP and content provider investment and service-quality choices.
Tell me, using something like their framework, why you think the relative preponderance of costs and benefits lies in one direction rather than another.
Consider Litan and Singer from the Progressive Policy Institute, they favor case-by-case adjudication, tell me why they are wrong.
Or read this piece by Nobel Laureate Vernon Smith, regulatory experts Bob Crandall, Alfred Kahn, and Bob Hahn, numerous internet experts, etc.:
In the authors’ shared opinion, the economic evidence does not support the regulations proposed in the Commission’s Notice of Proposed Rulemaking Regarding Preserving the Open Internet and Broadband Industry Practices (the “NPRM”). To the contrary, the economic evidence provides no support for the existence of market failure sufficient to warrant ex ante regulation of the type proposed by the Commission, and strongly suggests that the regulations, if adopted, would reduce consumer welfare in both the short and long run. To the extent the types of conduct addressed in the NPRM may, in isolated circumstances, have the potential to harm competition or consumers, the Commission and other regulatory bodies have the ability to deter or prohibit such conduct on a case-by-case basis, through the application of existing doctrines and procedures.
4. Consider and evaluate other forms of empirical evidence, preferably not just the anecdotal.
5. Don’t let emotionally laden words do the work of the argument for you.
6. Offer a rational, non-emotive discussion of why pre-2015 was such a bad starting point for the future, and why so few users seemed to mind or notice as the regulations switched several times.
7. Don’t let politics make you afraid to use your best argument, namely that anti-NN types typically develop more faith in an assortment of government regulators in this setting than they might express in a number of other contexts. That said, don’t just use this point to attack them, live with and consistently apply whatever judgment of the regulators you decide is appropriate.
If you are wondering why I have changed my mind, it is a mix of new evidence coming in, experience over the 2014-present period, relative assessment of the arguments on each side moving against NN proponets, and the natural logic of the embedded trade-offs, whereby net neutrality typically works in a short enough short run but over enough time more pricing is needed. Of course it is a judgment call as to when the extra pricing should kick in.
Here is what will make your arguments less persuasive to me:
1. Respond to discussions of other natural monopoly sectors and their properties by saying “the internet isn’t like that, you don’t understand the internet.” If someone uses the water sector to make a general point about tying and natural monopoly, commit internet error #7 by responding: “the internet isn’t like water! You don’t understand the internet!”
2. Lodge moral complaints against the cable companies or against commercial incentives more generally, or complain about the “ideology” of others. Mention the word “Trump” or criticize the Trump administration for its failings. Call the recent decision “anti-democratic.”
3. Cite nightmare or dystopian scenarios that are clearly illegal under other current laws and regulations. Cite dystopian scenarios that would contradict profit-maximizing behavior on the part of the involved companies. Assume that no future evolution of regulation could solve or address any of the problems that might arise from the recent switch. Mention Portugal as a scare scenario, without explaining that full internet packages still are for sale there, albeit without the discounts for the partial packages.
Are you up to the challenge?
If I read say this Tim Wu Op-Ed, I think it is underwhelming, even given its newspaper setting, and the last two paragraphs are content-less, poorly done emotive manipulation. Senpai 3:16 is himself too polemic and exaggerated, but he does make some good points against this piece, see his Twitter stream.
Net neutrality defenders, as of now you have lost this battle. I’d like to hear more.
Nobel Prize awarded to Richard Thaler
This is a prize that is easy to understand. It is a prize for behavioral economics, for the ongoing importance of psychology in economic decision-making, and for “Nudge,” his famous and also bestselliing book co-authored with Cass Sunstein.
Here are previous MR posts on Thaler, we’ve already covered a great deal of his research. Here is Thaler on Twitter. Here is Thaler on scholar.google.com. Here is the Nobel press release, with a variety of excellent accompanying essays and materials. Here is Cass Sunstein’s overview of Thaler’s work.
Perhaps unknown to many, Thaler’s most heavily cited piece is on whether the stock market overreacts. He says yes this is possible for psychological reasons, and this article also uncovered some of the key evidence in favor of the now-vanquished “January effect” in stock returns, namely that for a while the market did very very well in the month of January. (Once discovered the effect went away.) Another excellent Thaler piece on finance is this one with Shleifer and Lee, on why closed end mutual funds sell at divergences from their true asset values. This too likely has something to do with market psychology and sentiment, as the same “asset package,” in two separate and non-arbitrageable markets, can sell for quite different prices, sometimes premia but usually discounts. This was one early and relative influential critique of the efficient markets hypothesis.
Another classic early Thaler piece is on a phenomenon known as “mental accounting,” for instance you might treat a dollar in your pocket as different from a dollar in your bank account. Or earned money may be treated different from money you just chanced upon, or won that morning in the stock market. This has significant implications for predicting consumer decisions concerning saving and spending; in particular, economists cannot simply measure income but must consider where the money came from and how it is perceived by consumers, namely how they are performing their mental accounting of the funds. Have you ever gone on a vacation with a notion that you would spend so much money, and then treated all expenditures within that range as essentially already decided? The initial piece on this topic was published in a marketing journal and it has funny terminology, a sign of how far from the mainstream this work once was. It is nonetheless a brilliant piece. Here is more Thaler on mental accounting.
Thaler, with Kahneman and Knetsch, was a major force behind discovering and measuring the so-called “endowment effect.” Once you have something, you value it much more! Maybe three or four times as much, possibly more than that. It makes policy evaluation difficult, because as economists we are not sure how much to privilege the status quo. Should we measure “willingness to pay” — what people are willing to pay for what they don’t already have? Or “willingness to be paid” — namely how eager people are to give up what they already possess? The latter magnitude will lead to much higher valuations for the assets in question. This by the way helps explain status quo bias in politics and other spheres of life. People value something much more highly once they view it as theirs.
This phenomenon also makes the Coase theorem tricky because the final allocation of resources may depend quite significantly on how the initial property rights are assigned, even when the initial wealth effect from such an allocation may appear to be quite small. See this Thaler piece with Knetsch. It’s not just that you assign property rights and let people trade, but rather how you assign the rights up front will create an endowment effect and thus significantly influence the final bargain that is struck.
With Jolls and Sunstein, here is Thaler on a behavioral approach to law and economics, a long survey but also constructive piece that became a major trend and has shaped law and economics for decades. He has done plenty and had a truly far-ranging impact, not just in one or two narrow fields.
Thaler’s “Nudge” idea, developed in conjunction with Cass Sunstein over the course of a major book and some articles, has led policymakers all over the world to focus on “choice architecture” in designing better systems, the UK even setting up a “Nudge Unit.” For instance, one way to encourage savings is to set up pension systems for employees so that the maximum contribution is the default, rather than an active choice people must make. This is sometimes referred to as a form of “soft” or “libertarian paternalism,” since choice is still present. Here is Thaler responding to some libertarian critiques of the nudge idea.
I first encountered Thaler’s work in graduate school, in the mid-1980s, in particular some of his pieces in the Journal of Economic Behavior and Organization; here is his early 1980 manifesto on how to think about consumer choice. I thought “this is great stuff,” and I gobbled it up, as it was pretty consistent with some of what I was imbibing from Thomas Schelling, in particular Thaler’s 1981 piece with Shefrin on the economics of self-control, a foundation for many later discussions of paternalism. I also thought “a shame this work isn’t going to become mainstream,” because at the time it wasn’t. It was seen as odd, under-demonstrated, and often it wasn’t in top journals. For some time Thaler taught at Cornell, a very good school but not a top top school of the kind where many Laureates might teach, such as Harvard or Chicago or MIT. Many people were surprised when finally he received an offer from the University of Chicago Business School, noting of course this was not the economics department. Obviously this Prize is a sign that Thaler truly has arrived at the very high levels of recognition, and I would note Thaler has been pegged as one of the favorites at least since 2010 or so. When Daniel Kahneman won some while ago and Thaler didn’t, many people thought “ah, that is it” because many of Thaler’s most famous pieces were written with Kahneman. Yet as time passed it became clear that Thaler’s work was holding up and spreading far and wide in influence, and he moved into a position of being a clear favorite to win.
Here is Thaler’s book on the making of behavioral economics. Excerpt:
…my thesis advisor, Sherwin Rosen, gave the following as an assessment of my career as a graduate student: “We did not expect much of him.”
Very lately Thaler on Twitter has been making some critical remarks about price gouging, suggesting we also must take into account what customers perceive as fair. Here is his earlier piece about fairness constraints on profit-seeking, still a classic.
Thaler has written many columns for The New York Times, here is one on boosting access to health care. Here are many more of them. Here is “Unless you are Spock, Irrelevant Things Matter for Investment Behavior.” Here is Thaler on making good citizenship fun. He also told us that trading up in the NFL draft isn’t worth it.
Thaler is underrated as a policy economist, here is an excellent NYT piece on the “public option” for health insurance, excerpt: “…instead of arguing about whether to have a public option, argue about the ground rules.”
His last pre-Nobel tweet was: “The @Expedia web site is using lots of #sludge. Advertised rates include cashing in of “points”, cancellation policies not salient if bad…”
A well-deserved prize and one that is relatively easy to explain, and most of Thaler’s works are easy to read even if you are not an economist. I would stress that Thaler has done more than even many of his fans may realize.
The show so far, a continuing series
The big news was that China actually started to apply real pressure to North Korea, namely ceasing to buy their coal for the rest of the year. That may prove a phantom or reversed piece of news, but still it is real progress of some kind, if only in expected value terms. Did Trump’s antics and also his courting of Abe have anything to do with this? We don’t know. Was Obama’s THAAD missile deployment to South Korea a factor? Probably. I say score one for them both. Keep in mind that is probably the world’s #1 foreign policy problem, and otherwise progress has been hard to come by. Their KL airport assassination also may end up as a relevant PR disaster, costing them further foreign support.
Closer to home, outright Obamacare repeal seems increasingly unlikely. Since I never favored Obamacare, you might think I am unhappy, but as I see it they were likely to replace with something unworkable and worse. So this is, if not good news outright, at least the opposite of bad news. Whether through brilliance or incompetence, Trump simply isn’t leading on this issue and so major changes won’t get done, maybe not even minor changes.
Republicans in state governments are running away from fiscal conservatism rather rapidly. The Michigan legislature turned down a tax cut and there was a significant revolt in Kansas. That was an under-reported story, namely a reversal of Tea Party influence on Republican-controlled state governments.
The Border Tax plan appears to be dead or on life support. Flynn is gone and replaced by the apparently excellent McMaster. There is talk (fact?) again of Kevin Hassett as CEA chair — a great idea — and Russia seems increasingly disillusioned with our president, also a nicer place to be.
The new Executive Order on regulation has some upside deregulatory potential. Whether or not you favor a federal role in the matter, I thought it was a good sign to see Betsy DeVos sticking up for transgender rights.
Proposed policies on trade and immigration, as well as rhetoric toward the press, remain awful, plus various “background problems” continue, but overall I thought this was a very good week for Trump, with Flynn out to pasture and the North Korea news far outweighing the rest.
Sunday assorted links
Tim Duy on desperately searching for a new strategy
I liked this recent Tim Duy post, the one that is everyone is talking about. Do read the whole thing, but here is the closing bit:
We don’t have answers for these communities. Rural and semi-rural economic development is hard. Those regions have received only negative shocks for decades; the positive shocks have accrued to the urban regions. Of course, Trump doesn’t have any answers either. But he at least pretends to care.
Just pretending to care is important. At a minimum, the electoral map makes it important.
These issues apply to more than rural and semi-rural areas. Trump’s message – that firms need to consider something more than bottom line – resonates in middle and upper-middle class households as well. They know that their grip on their economic life is tenuous, that they are the future “low-skilled” workers. And they know they will be thrown under the bus for the greater good just like “low-skilled” workers before them.
The dry statistics on trade aren’t working to counter Trump. They make for good policy at one level and terrible policy (and politics) at another. The aggregate gains are irrelevant to someone suffering a personal loss. Critics need to find an effective response to Trump. I don’t think we have it yet. And here is the hardest part: My sense is that Democrats will respond by offering a bigger safety net. But people don’t want a welfare check. They want a job. And this is what Trump, wrongly or rightly, offers.
In part this is a question about helping these communities but if you read the whole post it is also about checking or preventing Trump and Trumpism. My main disagreement is simply with the view that a solution is difficult. It is not, rather most people are unwilling to accept the solutions on the table. In fact I have a more or less bulletproof two-part remedy. I’ll phrase it in backward-looking terms, but it is not hard to divine the forward-looking implications, noting that in the short term we have the president-elect we have no matter what. Here goes:
1. In 2012, have five percent of Democratic voters switch their support to Mitt Romney, so that Romney is elected. You don’t have to think Romney would be a better president than Obama has been, but a Romney election almost certainly would have forestalled the rise of Trump. The worse you think Trump is, the more you should support this kind of “change we can believe in.”
If you don’t favor this retrospective change, you’re not very pragmatic (or you might really like Trump), perhaps preferring to consume your own expressive views than to improve the world. That’s a common enough preference, and maybe it is even morally OK, but let’s recognize it for what it is: a deliberate lack of interest in solving the major problem before us, instead preferring to focus on your own feelings. It’s not that different than the wealthy wishing to keep their tax cuts. And if your response is something like “But the Republicans started this whole mess, why should I reward them?”, well, that is yet another sign you are far from the pragmatic, reality-oriented perspective. At the very least, you should be regretting that you did not vote for Romney. Unless of course you did.
A complement to this strategy, looking forward, is to have the Democrats run more conservative candidates, including those with a more conservative cultural garb. They still can support a social safety net. And, my friend, if you are tempted to suggest that Hillary Clinton was such a candidate, you need to attend Ross Douthat University for remedial lessons.
Another way to put this point is that Democrats (and some others) need to become more like the more sophisticated libertarians, namely to realize you won’t win but need to settle for what you can get. At least increase your “p” that is the case, as the European left is finally starting to do. I know that comes hard, but again our country is at stake. And there is a lesson for libertarians too, more or less in the same direction, namely that potential backlash to libertarian ideas is stronger than we had thought, even for those with a fairly weak libertarian bent, and thus there is less absolute scope for their realization. Sad!
Many progressives and libertarians have one thing in common, namely assuming that human affairs can be more governed by reason than ever will be the case.
2. Support a voluntary temperance movement for zero alcohol, zero drugs. No exceptions. Make these commodities less socially available, less widely advertised, less diverse in supply, and less glamorized on television and in the movies. Take away the demand, and along the way praise Islam and Mormonism for their stances on this.
That’s so simple, isn’t it? No one argues that the Rust Belt communities and the like are unacceptably “income poor” by global standards, rather they have wrenching social problems. A temperance movement, insofar as it succeeds, would eliminate a significant share of those tragedies. It would mean less alcoholism, fewer opioid addictions, less crime and spouse beating, and so on. Consider the impact of this on America’s inner cities as well. It’s hard to estimate how many of the problem users would stop if say 70 percent of America went “cold turkey,” but surely we should give this a try. For instance, even less educated Americans smoke at much lower rates than they used to.
Do you really care about suffering Americans? The answer is staring you right in the face, but are you brave enough, altruistic enough, and contrary enough to embrace it? Again, you might like your evening glass of wine, or joint, but that is also like the wealthy seeking to keep their tax cuts. It really is the same logic, like it or not.
From another direction, here are comments from Paul Krugman. I agree with most of what he says, though I would stress the points above.
Saturday assorted links
1. Why do more educated workers enjoy greater employment stability?
2. I found this sentence strange for the NYT: “Ms. [Chelsea] Clinton often gravitated to weighty policy discussions and interspersed statistics and SAT words into casual conversations.”
3. Most people don’t have a good alibi.
4. Obamacare isn’t that easy to fix.
Tyrone on why Democrats should vote for Donald Trump
I know that Tyrone, my evil twin brother, has been fairly silent in 2015, but that’s only because he’s been so busy whispering things in my ear. He’s also been spending his profits from having shorted the Chinese stock market. And having shorted the Democrats.
Can you imagine his latest? Electoral politics once again, his weakest area (not nearly as good as Tyrone the neo-Fisherian). Well, I scribbled down some notes on a napkin, over lunch, so this is an imperfect rendition of what he really said. Tyrone in fact didn’t want me to write this post, fearing people would take it the wrong way. Here goes, here is Tyrone at his mischievous worst:
Tyrone: It is obvious that intellectual Democrats, especially those concerned with climate change, should vote for Donald Trump for President. Furthermore they should welcome his ascent, as should intellectual Republicans.
Let’s accept the commonly argued premise that climate change, if not quite an existential risk, can drastically lower the quality of life on earth for generations to come.
There is some chance that Trump will in fact support some kind of comprehensive climate change legislation. After all, he used to be a liberal, but perhaps more importantly he wants to think of himself as a savior. The chance of this is higher than that of any other Republican, and he is hardly beholden to the standard lobbies.
Most importantly, the chance of Trump “going Nixon” is higher than Hillary’s chance of selling meaningful climate change legislation to an oppositional Republican Congress. She’ll be unpopular from day one, and the salaries of Dutch kunstmatige land consultants will skyrocket; that would bring a new Dutch disease, not just the one you get in those pretty Amsterdam shop windows.
OK people, let’s say Trump sticks to the mainstream Republican position. What will happen then? Won’t greedy capitalists rape the earth, not to mention building that energy-consuming wall?
Well, in the short run, maybe. (Don’t forget Lennon on the omelette and those broken eggs!) But we all know how disastrous Trump’s economic ideas would be in practice. They would lower the growth rate of gdp and impoverish the masses. Even if you read Trump as a policy moderate, just imagine what his volatile temperament would do to the equity risk premium. (Then they would have to give Robert Barro a Nobel prize!) And so, four or maybe eight years later, — or is it two? — what we could expect to find? A fully Democratic Congress and White House. (And dear reader, is there any other way to get there?) And thus would arrive comprehensive climate change legislation, just as we got Obamacare post-2008. Voila! That’s way more important than maintaining America’s status as a nice, well-respected, and tolerant country, isn’t it?
So Democrats, if you really care about Bangladesh and Vietnam, and don’t just have this silly mood affiliation fancy that Tyler has fabricated, you should promote the candidacy of Donald Trump. The more Democratic you are, the better. The more worried about climate change you are, the better. Your man has arrived on the national scene. Finally.
Remember the take of Borges on Judas? He made the real sacrifice of his reputation, so that the rest of us could be saved by Christ. It is time for you too to be like Judas…[TC: At this point the absurdities piled up so high I just had to cut Tyrone off.]
Tyler again: Readers, I am so sorry for this. I receive numerous requests for more Tyrone, but usually I resist. The only reason I occasionally oblige is to show you all, once again, how crazy he is. How unreasonable he is. How subject he is to his own mood affiliations, foibles, and quirks. How little heritability can explain, once you look get past superficial sibling similarities and look more closely at the details of the intellect.
Tyler’s view — my view — is that good Democrats in fact should support…[at which points Tyrone cuts Tyler off, and the two tumble over the proverbial cliff]…
What can be named after whom?
There is an ongoing controversy at Princeton over whether it should still be called the Woodrow Wilson School of Public Policy. Wilson was a notorious racist and segregationist, bad even by the standards of his time, plus he was a terrible President to boot. At Yale there are murmurings about a house named after John Calhoun.
Of course there is a slippery slope. There are plenty of American institutions named after slaveholders, and for that matter was Amerigo Vespucci such a great guy? For one thing, he helped Columbus commit genocide by provisioning one of his voyages.
Should George Washington stay on the dollar bill? If you’ve decided that no university or other positive-sum institution should be named “School of Simon LeGree Satan,” it seems hard to draw a line in a meaningful, non-arbitrary manner. Most famous people, especially in politics, have some pretty significant blemishes. Yet we cannot open every can of worms in this regard, or so it seems.
No one seems to mind that the Nazi Party is called…the Nazi Party. No one says “we can’t call the party that, those Nazis were the people who killed the Jews. Can’t name anything after them. Not even their own party.” In fact calling them Nazis is designed to remind people of what they did, appropriately I would add.
I don’t mind if an institution names itself after a person of mixed moral quality, or allows such a name to persist, provided the institution, in both its framing of the name and its pursuit of its broader mission, is self-conscious about that person’s drawbacks and invests resources toward that self-consciousness beyond the usual rhetorical statements. That said, others may mind more than I do, so it would be nice if we had a graceful way out of a slightly complicated situation.
I also would not be disturbed if they had kept the city names at Leningrad and Stalingrad. Lenin and Stalin were evil guys, but it seems appropriate to remind people what a big role they played in the histories of those cities. (At least for another hundred years, probably not forever.) Of course if the citizens of the cities don’t want those names, I would not force the matter.
Perhaps in the longer run everything, including the Woodrow Wilson School, will be named after donors.
Why do we name things after people at all?
When I look at countries which are periodically renaming buildings, cities, and institutions, I get a little uncomfortable. The renaming probably isn’t causing their bad or unstable qualities, but pushing for a world of constant renaming does not strike me as a useful goal. It is not governed by a desirable feedback process, too much voice and not enough exit and competitive constraints.
There should be some kind of intermediate process where institutions can indicate that they take very seriously the moral failings of their namesakes, and publicize that message. And then over time they can try to raise enough money so as to have a convenient excuse to rename the Wilson School after a wealthy donor, taking constructive action but not ending up in an endless game of renaming.
A simple concrete step would be to cut the price of the naming rights on the Wilson School by fifty percent.
That also could prove an efficient form of price discrimination, by selling the naming rights to one school for less, yet with a special circumstance so donors do not feel that every naming right now should sell for less.
Just how guilty is Volkswagen?
I have a few points:
1. There is decent evidence that many other car companies have done something similar. Read this too. Besides, Volkswagen committed a related crime in 1973. When I was a teenager (maybe still?), it was commonly known that New Jersey service stations would help your car pass the emissions test if you slipped them a small amount of money. So we shouldn’t be shocked by the new story. The incentive of the agencies is to get the regulations out the door and to avoid subsequent bad publicity, not to actually solve the problem. So yes, there is a “regulation ought to be tougher” framing, but there is also a “we’ve been overestimating the benefits of regulation” framing too. Don’t let your moral outrage, which leads you to the former lesson, distract you from absorbing some of the latter lesson too.
2. We are more outraged by deliberate attempts to break the law, compared to stochastic sloppiness leading to mistakes and accidents. But it is far from obvious that the egregious violations should be punished more severely in a Beckerian framework. In fact, if they are harder to pull off, compared to sheer neglect, perhaps they should be punished less severely, at least from a utilitarian point of view. I am not saying we should discard our intuitions about relative outrage, but we ought to look at them more closely rather than just riding them to a quick conclusion. I’ve seen it noted rather frequently that the head of the supervisory committee at Volkswagen is named Olaf Lies.
3. Don’t think this is just market failure, it springs from a rather large government subsidy program. Clive Crook makes a good point:
Remember that “clean diesel” was a government-led initiative, brought to you courtesy of Europe’s taxpayers. And, by the way, the policy had proved a massively expensive failure on its own terms even before the VW scandal broke.
…At best, the clean-diesel strategy lowered carbon emissions much less than hoped, and at ridiculous cost; at worst, as one study concludes, the policy added to global warming.
4. One back of the envelope estimate is that the added pollution killed 5 to 23 Americans each year. Now I don’t myself think we should always or even mostly use economic methods to value human lives. But if you wish to play that cost-benefit game, maybe here we have $25 million to $100 million in economic value a year destroyed. It’s not uncommon to spend $100 million marketing a bad Hollywood movie. So in economic terms (an important caveat), this is a small event. Most of the car pollution problem comes from older vehicles with poor maintenance, not fraud on the newer tests. It also seems (same link) that diesel engines are 95% cleaner since the 1980s.
5. The German automobile sector exported about $225 billion in 2014. That’s almost as big as Greek gdp.
6. Manipulated data will be one of the big, big stories of the next twenty years, or longer.
7. It is worth citing Glazer’s Law, which is designed to classify explanations for microeconomic puzzles: “It’s either taxes or fraud”
This one isn’t taxes.
Which country is most likely to have the next financial crisis?
Sorry people, but Ukraine and Venezuela and Argentina are not eligible for this designation, any more than you can give “Most Likely to Succeed” to LeBron James. Have I mentioned lately that emerging market corporate debt doubled over the course of 2012-2014? But where exactly is the pot most likely to boil over next?
Here are a few contenders:
1. Brazil
The currency declined nine percent last month, prompting reactions such as:
“It is incredible to see how dauntingly fast things are deteriorating,” Enestor dos Santos, an economist at BBVA, said from Madrid. “It’s been hard to nail down a projection.”
According to some polls, seventy percent of the population favors the impeachment of President Rousseff; political dysfunction adds to the brew and the various scandals only seem to be growing worse. Moody’s has downgraded the country to Baa3, right on the margin of junk. The economy is expected to contract 1.7 percent this year and the current account deficit is coming in higher than forecast. Financial crises are a tradition.
2. Turkey
The country is headed for snap elections, in light of ongoing political instability, while fighting a two-front war and it has a growing current account deficit. Hmm…
That said, the economy grew at 2.4 percent last year, exports are relatively diversified, and I suspect the current dire situation will prove manageable. The Greek and Turkish ten-year yields are now about the same (which country should be happy with that comparison?). On the down side, the country is especially dependent on short-term financing, which can prove volatile.
3. Russia
The Russian economy shrank by 4.6 percent in the quarter ending June. Although the media has focused on the stability in Moscow and maybe St. Petersburg, the economic decline in Russian provinces has been much more serious.
Debt in Russia’s 83 regions has risen by 100 to 150 percent since 2010. Russia’s economic minister suggested that possibly 60 of those 83 regions are in crisis mode, and 20 may have already been defaulting on their debt.
The economy still hasn’t recovered from the 2008-2009 crisis, and it doesn’t seem the price of oil will be bouncing back anytime soon.
A few days ago Ivan Krastev wrote: “The Kremlin is populated not by mere survivors of the post-Soviet transition but by survivalists, people who think in terms of worst-case scenarios, who believe that the next disaster is just around the corner, who thrive on crises, who are addicted to extraordinary situations and no-rules politics.”
On the bright side, they have $541 billion in reserves. I say that’s overrated when everything else is turning sour.
4. Belarus
The economy shrank 3.3 percent in the first half of this year, and the government responded by increasing borrowing. For further information, see Russia.
5. Greece
They are hanging on, and the freeing up of previously held government payments will deliver the economy a decent burst of stimulus. Still, they are one EU spat, or one coalitional collapse, away from being back in the doghouse with closed banks, Grexit, higher austerity, and plummeting exports. That said, the Not Very Serious People turned out to be the Not Very Serious Person and things are looking much better than they did a few weeks ago. Even the Finns are on board with the bailout. Staying in the euro may not be good for Greece in the longer run, but for now it means they are unlikely to win this particular tournament.
6. China
For all the current problems, I still don’t think they are next in line. Their production is crashing, but that’s not the same as a financial crisis. They don’t seem to have their debt distributed “in just that right way.” The $3.6 trillion in foreign exchange reserves — down from $4 trillion I might add — doesn’t hurt either. Still, this year China is on the list of nominees, and for the first time.
The bottom line: I’ve got to go with Russia and Belarus. Runner-up is Brazil.
Honorable mentions include Indonesia, Jamaica, and Belize (decent growth but a widening current account deficit). The dark horse pick? Colombia, with a peso down 36 percent against the dollar in the last year and a heavy dependence on oil exports. Alternatively, Malaysia. Thailand isn’t doing well, but it seems like more of a slow burn. South Africans are economically miserable, but the country does not really fit the financial crisis profile.
Here is my discussion from 2014, Ukraine ended up as the exemplar. The sad thing is that this year’s post is longer than last year’s.
A few notes on Singaporean (and other) health care systems
This is oversimplifying of course, but you can think of the Singaporean system as “2/3 private money, 4/5 public provision,” with private hospitals on the side.
You can think of the UK system as “public money, public provision.” Again with some private supply on the side.
The US system is “lots of public money, lots of private money, mostly private provision.”
Many other systems are “public money, private provision.” In all cases there are various complexities piled on top.
Singapore now is making some changes, outlined in brief here. For the most part, Singapore is adding on some public money, but in targeted fashion (one of the changes is for people over 90 years old, another is for people over 60).
Here’s from The Straits Times (gated, I write from the paper copy) from Saturday:
The first [priority] is to keep government subsidies targeted at those who most need them, rather than commit to benefits for all. Universal benefits are “wasteful and inequitable”, and hard to take away once given, he [the Finance Minister] said.
That’s exactly the liberaltarian line and sometimes the conservative line as well. It is a principle I strongly agree with.
I am grateful to have had a lengthy dinner with several of the civil servants who run the Singaporean health care system (I don’t need to tell you about the food). I had the liberty to “ask away” for several hours and I learned a lot.
Yes, the system really is a marvel, and no it is not laissez-faire. The mix of “private money, public provision” has some marvelous properties for economizing on costs, not the least of which is that private hospitals and doctors and medical device salesmen do not become too strong a lobby. And the level of conscientiousness in Singapore is high enough that the public hospitals work fine, though they don’t in general have the luxuries of the private hospitals. Furthermore those public hospitals have to compete against each other for patient loyalty and thus revenue, and so the reliance on private money helps discipline public hospitals.
Whether those public hospitals would work fine everywhere in the world is a debatable proposition. It’s easier to monitor quality in a small, Confucian city-state with high levels of expected discipline. (Oddly, Krugman, who thinks the VA model in the U.S. could be generalized to a national scale, should be especially sympathetic toward a Singapore-like system. An alternative is that the public hospitals are run at city, county, and state levels.)
In any case let’s start by admitting, and keeping on the table, the notion that the current version of the Singapore system is indeed a poster child of some sort. And it is not being modified because somehow it has started spewing out unacceptable health care outcomes. It is being modified because, for better or worse, Singaporean politics is changing.
Now enter Aaron Carroll, who tries to argue Singapore is moving in an ACA-like direction. His post has been cited numerous times, but it is not insightful nor does it show much curiosity about the new changes in Singapore. It is mostly a polemic against Republicans. In any case the new Singaporean emphasis on taking care of the elderly isn’t well understood by a comparison with ACA.
For an additional and important point, here is a good comment by Chris Conover on just how limited Singaporean coverage can be. This ain’t your grandfather’s ACA, though with some luck it may be your grandson’s. Even if the Singapore model is not fully generalizable to larger, more chaotic countries, it shows that government health care coverage and finance, no matter what exact form they take, should and indeed can be quite limited and you still can end up with excellent outcomes, including better cost control.
I also should add that quite a few intelligent, non-ideological Singaporean economists and civil servants believe the new changes to be bad ones, driven primarily by the demands of citizens for goodies rather than by the quest for the best technocratic policy. The alternative view is that Singapore is now a wealthy place and it can afford to spend extra on these health care services and indeed should do so to limit inequality and also for reasons of political popularity and stability.
The Singaporean health care system is not done changing.
Very good sentences
This raises an interesting, tangentially related question. Liberals fulminate constantly against outrageous conservative obstruction, yet often seem nevertheless surprised by its effectiveness. Why is that? My guess is that liberals are sometimes deceived by assumptions about the scope of liberalising moral progress. Modern history is a series of conservative disappointments, and the trend of social change does have a generally liberal cast. The surprisingly rapid acceptance of legal gay marriage is a good example. Liberals are therefore accustomed to a giddy sense of riding at the vanguard of history, routed reactionaries choking in their dust. But all of us, whatever our colours, overestimate the moral and intellectual coherence of our political convictions. We’re inclined to see meaningful internal connections between our opinions—between our views on abortion and regulatory policy, say—when often there’s no connection deeper than the contingent expediencies of coalition politics. For liberals, this sometimes plays out as a tendency to see resistance to all liberal policy as an inevitably losing battle against the inexorable tide of history. This occasionally leads, in turn, to a slightly naive sense of surprise when a hard-won political victory isn’t consolidated by a decisive, validating shift in public opinion, but instead begins to be ratcheted back.
That is from Will Wilkinson.
The fiscal cliff, a reader request, and which new states will there be?
Celestus, a loyal MR reader, asks:
A couple suggestions:
(a) The “fiscal cliff.” Whether it should be avoided, and how it should be avoided assuming that politics requires it be so. [I did a search for “fiscal cliff” with no results; apologies if it has been covered using more generic language].
(b) Name the 51st through 55th U.S. states, including Gingrich Moon Colony or N/A as necessary.
The fiscal cliff has a few quite different components, ranging from expiration of the Bush tax cuts to the AMT to automatic spending cuts, and each year you can toss in the Medicare doc fix as well. Most economists agree the best solution is no fiscal contraction now, but fiscal consolidation later on. That said, most economists should recognize (but often do not) that “fiscal consolidation later” is very often a myth. If it were “now or never” should we do fiscal contraction and cause a recession but restore some fiscal sanity? The correct answer will boil down to your probability forecast for “fiscal contraction later.” It’s tricky, though, because for a low enough probability of “fiscal contraction later” you end up believing that “fiscal contraction now” isn’t possible either, and then what is the original question about anyway? The original question appears to be straightforwardly normative, but it embodies hidden assumptions about which counterfactuals one is willing to entertain. It’s the counterfactuals assumptions which are often doing the work in generating the fiscal policy recommendation. Many people writing on this topic don’t make that clear.
Ideally we should bring more and more taxpayers under AMT-like rules. As for the Medicare doc fix, I would cut reimbursement rates whenever I could, and without fear of much fiscal contraction. The health care sector is growing in any case and full of price discrimination and other price oddities.
I don’t think we will have extra states, but the most likely candidates are the obvious, starting with Puerto Rico (a very clear first choice), Alberta, and the Maritime Provinces. I would bet against all or any of those becoming states, if only because of the extreme status quo bias when it comes to sovereignty. Why give it up? Even bankrupt countries are reluctant to give it up.