Saturday assorted links
1. Taliban price controls also do not work.
2. Alice Evans and Claudia Goldin podcast.
3. Do advanced time series models outperform the epidemiologists “R”?
4. My review of Lamb, the new Icelandic film, full of spoilers. “It is hard to imagine a more theological movie.”
5. What a “more Woke” France looks like (Simon Kuper, FT).
Will this revolution be televised?
More than a century after the artists of the Vienna Secession declared “to every age its art; to art its freedom”, the Austrian capital has found a new site for artistic expression free from censorship: the adults-only platform OnlyFans.
Vienna’s tourism board has started an account on OnlyFans – the only social network that permits depictions of nudity – in protest against platforms’ ongoing censorship of its art museums and galleries.
In July, the Albertina Museum’s new TikTok account was suspended and then blocked for showing works by the Japanese photographer Nobuyoshi Araki that showed an obscured female breast, forcing the museum to start a new account. This followed a similar incident in 2019, when Instagram ruled that a painting by Peter Paul Rubens violated the platform’s community standards which prohibit any depictions of nudity – even those that are “artistic or creative in nature”.
In 2018, the Natural History Museum’s photograph of the 25,000-year-old Venus of Willendorf figurine was deemed pornographic by Facebook and removed from the platform.
The Leopold Museum has likewise struggled to promote its collection of nudes by the expressionist Egon Schiele, with advertising regulators in Germany, the UK and US refusing to show them in a city tourism campaign in 2018. (The tourist board successfully resubmitted the posters with banners obscuring the bare bodies reading: “Sorry – 100 years old but still too daring today.”)
Here is more from The Guardian, via Jason D.
What I’ve been reading
1. Carole Angier, Speak, Silence: In Search of W.G. Sebald. Might Sebald be the only semi-recent writer who can hold a candle to Ferrante, Knausgaard, and Houllebecq? This book is sprawling, and suffers somewhat from lack of access to the author’s family, but it is a true labor of love. And Angier has a deep understanding of Sebald, and also brings out the Jewish-related themes in his work (though he was not Jewish himself). It attempts to be a Sebaldian work itself, and even if it does not always succeed it is the kind of passionate book we need more of. Recommended, but you have to read Sebald first, if need be start with Die Ausgewanderten [The Emigrants].
2. Arthur Herman, The Viking Heart: How Scandinavians Conquered the World. Ignore the subtitle! There have been a number of good books on the Vikings lately, and this is perhaps the most “popular” and big picture of the lot. The early Vikings swept through Europe in a matter of decades, mixing conquest and trade. King Canute was pretty impressive it seems. Specialists may pick nits, but it is very readable and seems to me to give a good overview of the role of the Vikings in European history. This would be the one to start with.
3. Lawrence Rothfield, The Measure of Man: Liberty, Virtue, and Beauty in the Florentine Republic. An excellent introduction to Florence, with some focus on issues of liberty and also civic leaderhip. One should never tire of reading about this particular topic.
4. Howard W. French, Born in Blackness: Africa, Africans, and the Making of the Modern World 1471 to the Second World War. Think of this book as a retelling of some standard historical episodes, but with Africa at the center rather than as a recipient of European advances. This is a useful reframing, and I enjoyed the read. But perhaps by the end it was the New World that in my mind was upgraded as a more central spot for the rise of modernity? Too frequently the relevance of Africa has to be rescued by invoking Portugal, as Sweden, Russia, and Turkey simply will not do the trick there.
New out is Diane Coyle, Cogs and Monsters: What Economics Is, and What It Should Be; she is typically wise.
I am happy to see the publication of Calvin Duke’s Entrepreneurial Communities: An Alternative to the State, The Theories of Spencer Heath and Spencer MacCallum.
There is also Kyle Harper, Plagues Upon the Earth: Disease and the Course of Human History, long and comprehensive.
Tyrone, your local Straussian, comments on “Trap House”
I took it to refer to a place where drugs are sold, but you might be trapped either by the police or by the attendant lifestyle and its appeals. The Yale Federalist Society was proclaming itself comparable to such a trap house, and thus at the same time broadcasting both its appeal and its potential danger.
By calling itself such a trap house, in a funny self-referring way it became one. A kind of opposite to the Liar’s Paradox. How many other claims become true by the mere act of making them? “I am making a claim now” would be one of them.
Tyler: So says Tyrone. But he is very consistently wrong. And if you don’t know what Tyrone is talking about in this incoherent, philosophically naive missive, it is not worth trying to find out.
Now-defunct publicity markets in everything
The official Wizard of New Zealand, perhaps the only state-appointed wizard in the world, has been cast from the public payroll, spelling the end to a 23-year legacy.
The Wizard, whose real name is Ian Brackenbury Channell, 88, had been contracted to Christchurch city council for the past two decades to promote the city through “acts of wizardry and other wizard-like services”, at a cost of $16,000 a year. He has been paid a total of $368,000.
Here is the full story, and for the pointer I thank P. And speaking of marketing, here is vaccine markets in everything.
Friday assorted links
1. Are strong interventions overrated?: “I find that the interventions reduce completion rates of the opposite behavior by 19-29%.”
2. Colby College bans caste-based discrimination.
3. The most overstudied places in development economics?
4. My sister wins another bird photography award.
5. Do Americans want smaller government once again?
6. A deeper look at the vaccine-hesitant (Zeynep, NYT).
Hunting the Satanists
Michael Flynn, the former Trump National Security Advisor and QAnon promoter, is now being accused by QAnon of being a Satanist.
…Flynn’s trouble started on Sept. 17, when he led a congregation at Nebraska pastor Hank Kunneman’s Lord of Hosts Church in prayer. Flynn’s prayer included invocations to “sevenfold rays” and “legions,” two phrases that struck some of Flynn’s followers as strange.
…As video of the prayer circulated in online conspiracy theorist groups, the references to “legions” and “rays” soon sparked speculation among Flynn’s right-wing supporters that their hero had been lured to the dark side. Always on the lookout for the Satanic influence they imagine lurks at the heart of the world, they claimed that Flynn had secretly been worshiping the devil. Worse, since the congregation was repeating the prayer after Flynn, the rumor went, he had duped hundreds of Christians into joining the ritual.
…Flynn isn’t the first right-wing figure tied to QAnon to see its acolytes turn on him. Oklahoma Senate candidate Jackson Lahmeyer, whose challenge to Sen. James Lankford (R-OK) has been endorsed by Flynn, appeared at an April pro-QAnon conference with Flynn in Tulsa.
A few months later, however, Lahmeyer posted a seemingly innocent picture of his daughter wearing red shoes—apparently unaware that QAnon followers consider red shoes to be yet another sign of their imagined Satanic sex-trafficking cabal. Lahmeyer was soon caught up in a QAnon controversy of his own.
“Unfortunately, I have to say it because people are asking me,” Lahmeyer wrote in a Facebook post. “I’m in no way involved in Child Sex Trafficking, pedophilia or devil worship.”
Now, here’s another story–this one about an email sent by a Yale law student from the Native American Law Students Association (NALSA) to fellow classmates. The email in question reads:
SUP NALSA,
Hope you’re all still feeling social! This Friday at 7:30 we will be christening our very own (soon to be) world=renowned NALSA Trap House….by throwing a Constitution Day Bash in collaboration with FedSoc. Planned abstractions include Popeye’s chicken, basic-bitch-American-themed snacks (like apple pie, etc.), a cocktail station, assorted hard and soft beverages, and (most importantly) the opportunity to attend the NALSA Trap House’s inaugural mixer!
Hope to see you all there!
The email seems to me like a light-hearted invitation to a party but, of course, not being one-of-the-elect I can’t read the secret, esoteric meaning. According to Yale’s Diversity office the email was actually a coded message to celebrate white supremacy with a blackface party.
Just 12 hours after the email went out, the student was summoned to the law school’s Office of Student Affairs, which administrators said had received nine discrimination and harassment complaints about his message.
At a Sept. 16 meeting, which the student recorded and shared with the Washington Free Beacon, associate dean Ellen Cosgrove and diversity director Yaseen Eldik told the student that the word “trap” connotes crack use, hip hop, and blackface. Those “triggering associations,” Eldik said, were “compounded by the fried chicken reference,” which “is often used to undermine arguments that structural and systemic racism has contributed to racial health disparities in the U.S.”
Eldik, a former Obama White House official, went on to say that the student’s membership in the Federalist Society had “triggered” his peers.
…Throughout the Sept. 16 meeting and a subsequent conversation the next day, Eldik and Cosgrove hinted repeatedly that the student might face consequences if he didn’t apologize—including trouble with the bar exam’s “character and fitness” investigations, which Cosgrove could weigh in on as associate dean.
…When the student hadn’t apologized by the evening of Sept. 16, Eldik and Cosgrove emailed the entire second-year class about the incident. “[A]n invitation was recently circulated containing pejorative and racist language,” the email read. “We condemn this in the strongest possible terms” and “are working on addressing this.”
The two cases illustrate that the worldview of QAnon and Yale’s diversity office are surprisingly similar. Both see a world in which Satan, literal or metaphorical, is an active force in the world corrupting individuals and institutions. Satan is powerful but hidden. He only reveals his influence when the corrupted slip-up and by the incorrect use of a word, phrase, or gesture reveal their true natures.
Since Satan is powerful and hidden the good people must constantly monitor everyone. The moment a slip-up is spotted, no matter how small, the corrupted must be denounced because anyone who even unwittingly associates with the corrupted will themselves become corrupted. “Legions”and “rays”? Satanist! “Trap House.” Satanist! “Red shoes.” Sex-trafficker! “Federalist Society.” Satanist society! Repeating the prayer? Duping hundreds of Christians into joining the ritual! Attending a party? We condemn this in the strongest possible terms! Condemn the non-believers to HELL! It’s all the same.
The other similarity, of course, is that both views are disturbingly common and completely bonkers.
Photo Credit: Wikipedia.
Why the IMF is intrinsically conservative and hard to reform
That is the topic of my latest Bloomberg column, here is one excerpt:
The IMF is used by the G-5 nations and their allies to put their reputational capital behind the international monetary order. Obviously, the backing countries are only going to underwrite a system that they largely approve of and benefit from.
If the IMF didn’t exist, failed nations still periodically would be bailed out by rich ones, if only because the G-5 politicians wouldn’t wish to endanger the stability of the global financial order. But problems would arise as the bailouts would have to be organized anew each time. Which nation would put in how much? Who would pull the plug on failing nations and when? Who or what would enforce repayment? All those questions are regularized and institutionalized through the existence of the IMF.
The cronyist element is that the G-5 nations use the IMF and its lending facilities to protect the creditworthiness of their own banks and financial systems. In contrast, an IMF serving “the citizens of the world,” whatever that might mean, would be an IMF without much support from the biggest and most important financial players. It would be more like the undercapitalized Unicef than an institution that can move world markets or help preserve them…
If the directorship and board governance of the IMF were picked by a vote from all 190 member countries, the leading G-5 nations would put much less of their reputational capital behind the institution. The IMF is an international public good, but such public goods only get produced when it is in somebody’s selfish interest to do so.
And to close:
Successful international economic orders typically have been based on a fair degree of hegemony, whether it was the British-led gold standard of the 19th century, or the more recent post-World War II American dominance. Once you realize that, a lot of the current questions about the IMF answer themselves rather automatically. The real issue isn’t how to improve the IMF, but how we are going to cope as current hegemonies continue to lose their sway.
Recommended.
Rising Markups and the Role of Consumer Preferences
That is a new paper by Hendrik Döpper, Alexander MacKay, Nathan Miller, and Joel Stiebale, with striking results:
We characterize the evolution of markups for consumer products in the United States from 2006 to 2019. We use detailed data on prices and quantities for products in more than 100 distinct product categories to estimate demand systems with flexible consumer preferences. We recover markups under an assumption that firms set prices to maximize profit. Within each product category, we recover separate yearly estimates for consumer preferences and marginal costs. We find that markups increase by about 25 percent on average over the sample period. The change is attributable to decreases in marginal costs that are not passed through to consumers in the form of lower prices. Our estimates indicate that consumers have become less price sensitive over time.
Of course under this hypothesis, the supposed increase in monopoly is not so daunting after all. It would be an interesting question, however, why elasticity of demand might have fallen. Better matching to consumers? More complacency? Goods and services are these days more addictive?
Thursday assorted links
1. Paul Simon and Malcolm Gladwell collaboration.
2. Farhad Manjoo sanity about Instagram (NYT).
3. Is Wang Huning the world’s most important public intellectual?
4. Average guy vs. 100 mph fastballs. What is the meta-lesson here?
5. The importance of rare gene variants for autism.
6. We are winning the war on oil spills.
7. Freddie on Ross. I tend to side with Ross, but still a good piece.
8. NYT covers Human Challenge Trials — amazing how lame is the quoted response of the biomedical establishment.
Model these Sweden Denmark lower inflation rates
Sweden’s annual inflation rate rose to 2.5 percent in September of 2021 from 2.1 percent in August but below market expectations of 2.7 percent. It was the highest since November of 2011, mainly due to prices of housing & utilities (5.1 percent vs 3.8 percent in August), namely electricity and transport (6.2 percent vs 6.4 percent), of which fuels. Additional upward pressure came from education (2.5 percent vs 2 percent); restaurants & hotels (2.4 percent vs 2.6 percent); miscellaneous goods & services (2 percent vs 1.4 percent) and food & non-alcoholic beverages (0.9 percent vs 0.3 percent). Consumer prices, measured with a fixed interest rate, rose 2.8 percent year-on-year in September, the fastest pace since October of 2008, below market expectations of 3 percent but above the central bank’s target of 2 percent. On a monthly basis, both the CPI and the CPIF rose 0.5 percent.
Here is the link, they are an open economy facing lots of supply shocks, right? So what is up?
Denmark’s annual inflation increased to 2.2% in September of 2021 from 1.8% in the previous month. It was the highest inflation rate since November 2012, due to a rise in both prices of electricity (15.2%), pointing to the highest annual increase since December 2008 and gas (52.8%), which is the highest annual increase since July 1980.
I thank Vero for the pointer. In an email to me she asks:
“If supply issues are the only cause of our inflation woes, then why is it that countries that spent less than 5% of GDP on the pandemic are experiencing average inflation of 2.15%? While countries that spent over 15% of GDP are experiencing average inflation of 3.94%? I don’t know the answer but I think it is worth asking this question.”
Anyone?
Stripe v. Elrond! Crypto and the Payments System
Recently Elrond, the blockchain startup for which I am an advisor, bought a payments processor (conditional on approval from the Romanian government). On the same day, Stripe, the payments processor, announced that they are moving into crypto. None of this is coincidental. Elrond understand that the payments market is a multi-trillion dollar opportunity. Stripe knows that crypto innovation could undercut them very quickly if they aren’t prepared.
How did Stripe turn into a multi-billion dollar firm almost overnight? Obviously, Stripe is a great firm, led by the brilliant Collison brothers, CEO Patrick Collison and President John Collison. But it’s also important to understand that the payments market in the United States is a $100 trillion dollar market. Yes, $100 trillion. Any firm that captures even a small share of this market is going to be big. Credit cards are actually a small part of payments, about $7 trillion with roughly a 2% transaction fee or a $140 billion market. (Quick check. Credit card companies had 2020 revenues of $176 billion). ACH debit and credit transfers are the big market, $65 trillion, which at a .5% transaction fee amounts to a $325 billion market (this is retail price, wholesale is lower). Thus, payments revenue is on the order of $465 billion. A small share of $465 billion is a very big market (and that is just the US market).
Now consider the following. Crypto payments are in principle at least an order of magnitude cheaper than ACH payments. On Elrond, for example, a very fast and low cost blockchain compared to Ethereum or Bitcoin, someone recently transferred $17.5 million for less than a penny. Moreover, crypto payments are global while every other payments system gets much more expensive as you cross borders. I recently sent $1500 to India and it cost me $100 in transaction fees! To be sure, payments made through the banking system have to obey “Know Your Customer” regulations and also include invoicing and billing services which adds both to value and cost. The main reason, however, that payments through the banking system are expensive is because the banking system rails are taped together with two hundred years of spit and duct tape.
Crypto payments are the future. Stripe knows it. Elrond knows it. The race is on.
NIMBY vs. YIMBY sentences to ponder
CZs means “commuting zones”:
We find that larger and higher‐earnings CZs have much higher housing costs than smaller or lower‐earnings CZs, enough so to more than completely offset their larger effects on nominal earnings. Thus, movements to larger or to higher earnings locations mean reductions in real income.
That is from a new paper by David Card, Jesse Rothstein, and Moises Yi. Via Adam Ozimek. Maybe this is a problem!
Medieval Coasean warfare?
Politics thus gained a new intensity after the Conquest, and yet they were also less bloody. In the great Anglo-Norman and English battles between 1106 and 1264, as in the more general ravaging warfare, very few nobles were ever killed. The immediate reason, as Orderic stressed, was the protection of armour, but ultimately any knight could be surrounded and disarmed. The key point was that when this moment came he simply surrendered and was taken off for ransom. The institution of ransom was, therefore, absolutely central to the failsafe warfare enjoyed by the nobility in this period. Indeed the whole aim in battle was to capture, not to kill, a noble opponent. There was here a wider context because politics too, not just warfare, was largely bloodless. It is a remarkable fact (and one quite contrary to usual perceptions of the Middle Ages) that between Waltheof’s demise in 1076 and Gaveston’s in 1312 not a single English earl, and indeed hardly a single baron, was executed (or murdered) in England for political reasons.
That is from the excellent and highly substantive book by David Carpenter, The Struggle for Mastery: The Penguin History of Britain, 1066-1284. Wasn’t there also a JLE piece about this kind of warfare?
How do low real interest rates affect optimal tax policy?
Alan Auerbach and William Gale have a new paper on this topic:
Interest rates on government debt have fallen in many countries over the last several decades, with markets indicating that rates may stay low well into the future. It is by now well understood that sustained low interest rates can change the nature of long-run fiscal policy choices. In this paper, we examine a related issue: the implications of sustained low interest rates for the structure of tax policy. We show that low interest rates (a) reduce the differences between consumption and income taxes; (b) make wealth taxes less efficient relative to capital income taxes, at given rates of tax; (c) reduce the value of firm-level investment incentives, and (d) substantially raise the valuation of benefits of carbon abatement policies relative to their costs.
One core intuition here is that as the safe return goes to zero, capital taxes are not especially burdensome compared to consumption taxes. Of course “the safe return” may not be entirely well-defined within a corporate context, and capital taxes often hit returns to risk as well, so this is a bit more complicated than the abstract alone would indicate.
The authors also offer this intuition, which I do not quite follow:
In simplified environments, a wealth tax can be written as an equivalent tax on capital income. As the rate of return falls, the equivalent income tax rate of any given wealth tax rises. That is, a given wealth tax rate becomes more distortionary relative to a given capital income tax as the rate of return falls.
One of my biggest worries about a wealth tax is that it takes resources away from people who at the margin seem to be good at generating extra-normal returns. That comparative advantage might be more important as the safe rate goes to zero. So I am fine with the conclusion of the authors, but not sure if their intuition is equivalent to mine (I suspect it is not).
This one is clearer to me:
A major focus of potential tax reform has been the treatment of capital gains, given their tax-favored status, their high concentration among the very wealthy, and the distortions that the current method of taxation causes. A key element of the current system of capital gains taxation
is the lock-in effect, which discourages the realization of gains to take advantage of deferral of taxation. With very low interest rates, the deferral advantage loses much of its relevance, and this can make relatively simple reforms (such as taxing capital gains at death) achieve results very similar to more complicated schemes (such as taxing capital gains on accrual, even when not realized).
Overall this paper is very interesting and thought-provoking. Nonetheless, until we understand better why the safe rate of return has diverged so radically from “typical” (but still risky) corporate rates of return, I am not sure what implications we can draw from the model.