Is the Beijing Consensus collapsing?
From my latest Bloomberg column:
The more dramatic developments have come from China itself. China did effectively wield state power to build infrastructure, manage its cities and boost economic growth. And most advocates of the Washington Consensus underestimated how well that process would go.
But along the way, China became addicted to state power. Whenever there was a problem in Chinese society, the government ran to the rescue. The most dramatic example was the extreme use of fiscal policy to forestall the 2008 financial crisis from spreading to China.
Yet this general application of state power, even if successful in a particular instance, brought a great danger: The Chinese were left with overdeveloped state-capacity muscles and underdeveloped civil-society capabilities. Over the last several years the Chinese government has done much to restrict civil society, free speech and religion within China. Now much of the world, including but not limited to China’s neighbors, is afraid of Chinese state power.
Now, because state power has its limits, it is difficult for China to solve many of its most fundamental problems. Chinese leaders are worried about the country’s low birth rate, for instance, but lifting restrictions on the number of children has not yet helped increase the birth rate. In many societies, it is religious families that have more children, but promoting religion is not a remedy that comes easily to China today.
And how will China deal with the pending spread of the omicron variant of Covid-19? The Communist Party staked its legitimacy on the claim that it could control Covid while the U.S. could not. Soon Chinese citizens may be in for a rude awakening, especially if the Chinese vaccines are not so effective.
Recommended.
Wednesday assorted links
2. The quest to find the world’s best rice.
3. Will Poland raise its birth rates with this policy?
4. Israeli scientists train goldfish to steer car around room.
5. 2010 interview with Robert Barro.
6. Inside the Silicon Valley attempt to revolutionize science. Quite a good piece, sees the bigger picture better than any other coverage to date. (You do have to register to read it.)
Does Pot Contribute to GDP?
As Tyler and I explain in our textbook, GDP is the market value of all finished goods and services produced within a country in a year. Sounds simple but there are always edge cases including whether or not illegal goods should count towards GDP. According to the definition, illegal goods should count towards GDP. But in practice they often don’t. In part because some people think that counting illegal goods would signal approval (or that not counting them signals disapproval) but also because it’s hard to count the market value of illegal goods. Do we really expect the BEA to survey drug dealers and prostitutes about the price of their goods and services?
But what happens when an illegal good is legalized? The market value of any finished legal good should definitely count towards GDP but just adding it to GDP on the day of legalization causes problems. Did the economy boom the day pot was legalized? Did the recession end that day? Did we all become wealthier? Some countries shrug and just add footnotes.
In 1987, Italy, whose citizens are famous scofflaws when it comes to reporting income and paying taxes, announced that it was adjusting GDP upward by about a fifth to reflect the underground—but not necessarily illegal—economy. Overnight, Italy became the fifth-largest economy in the world, surpassing the United Kingdom. National euphoria ensued. Italians dubbed it “il sorpasso,” the overtaking.
But when Canada legalized pot in 2018, Statistics Canada decided not just to add pot to GDP but to backdate all their previous GDP statistics to create a consistent series. The Walrus has the interesting story.
The teams had to invent codes to capture classifications for new line items. Among them: 71.0105, in the classification of instructional programs for cannabis culinary arts and cannabis-chef training, and 71.0110, for cannabis-selling skills and sales operations.
…Apart from hammering out semantic protocols, StatCan faced two central hurdles in determining how to count cannabis: How much do Canadians use? And what does it cost? But the economists at StatCan wanted to calculate those numbers not just for the final quarter of 2018, when cannabis became legal, but for every year back to 1961, which is as far back as the national accounts go, at least in their current form.
…So the cannabis team dug back through decades of surveys on drug use, addiction rates, law enforcement, and health data to figure out how much cannabis Canadians were consuming back in the day. It started small, with as little as twenty-four tonnes a year in the early 1960s. By 2015, it was close to 700 tonnes. Until the 1990s, when the US war on drugs ramped up, a lot of that came from abroad. Now, we’re a major exporter.
Still, StatCan craved more detail. So, in 2018, analysts hooked up with researchers at McGill University’s department of chemical engineering for a year-long scrutiny of wastewater in Halifax, Montreal, Toronto, Edmonton, and Vancouver. (Halifax clocked in with the highest cannabis load per capita and roughly triple the usage of Vancouverites. Go figure.) That pilot project has now been suspended for lack of money, says Barber-Dueck.
The latest figures show that more than 2 million Canadians use cannabis at least once a week, and more than a third of those use it every day. But what have they been paying? Barber-Dueck says that the team ploughed into historical databases of weed prices, talked to law enforcement officers, and canvassed longtime illegal growers, mining their memories. British Columbians were especially forthcoming. “People are pretty open about it and have been for years,” Barber-Dueck says.
As the legalization date approached, the team created the crowd-sourcing app StatsCannabis, complete with a cannabis logo. “Statistics Canada needs your help collecting cannabis prices,” the app pleads, adding, “Your data is protected!”
The technique had its drawbacks, Peluso notes. Heavy users of cannabis are the most frequent participants in the surveys by default. But they’re also filling out the survey right after they’ve made a purchase. “When you survey heavy users of a psychotropic substance, the error band is always a little bit bigger. You’re picking up people whose—How shall I put it?—whose awareness might be slightly compromised.”
So does pot contribute to GDP? It does in Canada but not in the United States!
Neither Canada nor the United States include prostitution in GDP although the Netherlands does. The United States has higher GDP per capita than either the Netherlands or Canada but if we included pot and prostitution our GDP per capita would be even higher and would better reflect our true standard of living relative to these other countries!
Hat tip: Ryan Briggs on twitter who notes that as another consequence Canada’s CPI now includes pot prices, at a weight of .55%.
Arnold Kling’s proposal for regulatory reform
To improve our agencies’ performance, we need to think about restructuring the federal bureaucracy itself.
I propose we do so by creating two positions within the executive branch that operate in tension with each other. The first would be the chief operating officer, charged with managing the administrative agencies. The second would be the chief auditor, charged with leading a watchdog agency that monitors the administrative state for effectiveness and abuses of authority. Both the president and Congress would oversee the balance of power between the two positions.
Much like that of a private firm, the chief operating officer (COO) of the regulatory state would direct the operations of the entire executive branch, including independent agencies like the FDA, the Federal Trade Commission, the Federal Communications Commission, the Federal Reserve Board, and the Patent and Trademark Office. The COO’s charge would be to maximize operational effectiveness. He would have the authority to make decisions without the approval of the president.
Unlike presidents, who tend to enter the Oval Office without having supervised anything larger than a Senate staff, the COO should come into office with strong organizational-management experience — ideally based on having led a large, private-sector firm. This person should be familiar with the challenges of improving incentive systems, streamlining organizational processes, planning, budgeting, facilitating coordination among disparate units, articulating objectives, and aligning organizational efforts toward those objectives. He should have the authority to put this experience to work within the regulatory state.
To unravel the tangle of agencies that are the legacy of so many congressional bills, the COO should be empowered to re-organize, restructure, merge, or eliminate any existing agencies, refine their missions, and appoint their directors.
And:
With a COO in charge of managing government agencies, the roles of Congress and the president would adjust accordingly. Congress would act more like a board of directors with respect to the agencies, and the president would act more like a board chairman. The COO would assume the responsibility of presenting a plan and budget to Congress for approval, while the president would have the authority to hire and fire the COO at will. In a spirit of conservative incrementalism, we could first apply the COO model to one functional domain, such as domestic infrastructure, before extending it to the others.
The second new position — the chief auditor (CA) — would lead a powerful audit agency that provides independent evaluations of agency performance.
Markets in everything those new service sector jobs
Brainstorming a wedding hashtag? Good luck finding one that hasn’t #beendone.
More than a decade of wedding hashtags have flooded social-media sites to help couples curate guests’ photos on their special day. But soon-to-be-newlyweds are finding it harder to identify a clever, distinctive phrase…
Wedding hashtags have historically often combined a couple’s names and wedding year or date, says Marielle Wakim, Ms. Wakim, founder of hashtag-writing service Happily Ever #Hashtagged.
“It’s so beyond #JimandPamWedding2016 at this point,” she says.
Ms. Wakim launched her Los Angeles-based business in 2016 as the wedding-hashtag trend was booming. Her prices range from one hashtag for $50 to five for $125. Some couples prefer having options or multiple hashtags for different events, such as a bachelorette party and wedding ceremony.
Clients want personalized, tailored, creative hashtags, she says. Some have had specific requests, like Disney -themed hashtags or ones that incorporate specific Chance the Rapper lyrics.
Here is the full WSJ story, via Daniel Lippman.
Tuesday assorted links
1. More Scott Sumner movie reviews. And here is an essential concordance: “Films of TheMoneyIllusion.”
2. What Jane Flowers read last year, great list, different.
3. The Nate Myvis guide to Conversations with Tyler. And relative media ratings, the top podcast (Rogan) does very well.
4. Matt Notowidigdo’s favorite economics papers on the year. Good picks.
5. Those who are getting fourth and fifth doses (NYT). And pandemic baby bust in Mexico.
Samsung markets in everything
What would Marshall McLuhan say?:
Staring at your non-fungible tokens on a smartphone or laptop screen is fine and all, but why not remind everyone who visits your home of the money you spent on digital art NFTs by showcasing them on your TV screen? Somehow we’re in a world where that’s about to become reality: Samsung says it’s planning extensive support for NFTs beginning with its 2022 TV lineup.
Here is the full story, via the excellent Samir Varma.
How to watch movies
Fergus asks:
Having enjoyed your posts on how to read canonical Western literature and how to get started with opera, I’d like the same thing but for film, and perhaps for architecture.
Today let’s do movies! I am hardly an expert, but here are my tips:
1. Yes there are some movies made for the television, but for first-rate movies you really do need the big screen. Do whatever you must, and no your home studio arrangement is not a good substitute. Good cities for seeing movies on a large screen are NYC, LA, Paris, London, and the DC area (Silver Spring, MD in particular, AFI).
2. Choosing with whom to go is very important. And you should see a fair share of movies alone, so you are not swayed by the views and reactions of the other parties.
3. The best prep for watching a particular movie is to have watched a lot of other movies already, and from a wide variety of sources and countries. Knowledge of the Bible can be helpful too.
3b. If you don’t “get” a classic movie with good pedigree, 3/4 of the time the fault is yours.
4. I don’t like to read reviews before seeing a movie. I might read just enough to see the evaluation, but then I stop. I don’t want the movie “explained to me,” and furthermore very few critics have an adequate mix of travel, linguistic facility, knowledge of the classics, etc. Critics can stop you from seeing what is there. That said, after I’ve seen the movie I try to read as many reviews as possible.
5. If a movie is good, you should watch it again. Then a smaller screen might be OK, or at the very least necessary. You should have seen your favorite “deep” movies at least four times.
6. You want to have good peer groups to discuss movies with. And get a movie mentor!
7. The classic movie critics — not always on-line! — are worth reading. Buy a book of Pauline Kael essays, and then keep on buying books of essays by movie critics. Don’t rely too heavily on Google. My favorite movie critic used to be David Denby of The New Yorker. Buy books on the history of movies too.
8. Now go watch more movies.
By the way, here is an interesting review of the best movies of 1931.
What else?
Monday assorted links
1. Devon Zuegel on inflation. And should Devon try to get Omicron Covid? But her “best” interlocutor — cited in the thread — doesn’t consider that the booster shot will wear off in effectiveness, the costs of not getting Covid, whether Omicron is a “special” variant due to its rapid spread, or how about cross-immunities, or the travel/events benefits of getting Omicron out of the way, and the probabilities of various events (Devon is young and I believe healthy). Does she really think that, ceteris paribus, natural immunity is a negative? That was the best answer?
2. Harvard freshman becomes youngest person to serve in Icelandic parliament.
3. Does religious diversity undermine personal morality?
4. “Ultimately, he was far too Right-wing to accept Nazism.”
Malcolm Gladwell requests that I post a bleg
“What’s the best example of an experiment or trial that could be scientifically useful and informative but which can’t be done for legal, ethical or logistical reasons?”
Comments are open…
The Barbary Pirates
Rumors held that as many as sixty Barbary men-of-war were actively prowling the English Channel, waiting for the opportunity to capture more product for the slave markets of Algiers and Tripoli. For most of the seventeenth century, an English or Irish family living near the coast confronted the real possibility that the might be hauled off without warning….[the] numbers suggest that the odds of sudden enslavement by Barbary pirates were far higher for the average Devonshire resident than the odds of experiencing a terrorist attack in a modern-day Western City.
From Steven Johnson’s excellent Enemy of All Mankind, about which I will say more later.
Why are meetings so bad?
Andrew Alexander asks:
Why are meetings so bad? There’s a standard set of criticisms of meetings (e.g., ambiguous purposes, wasted time, poor presentation and moderation skills by the leader), most of which are basically accurate. If we’re all so familiar with why meetings are bad, and if the reasons they’re bad are accurate, why are they still bad?
First, I don’t think all meetings are bad! In part you remember the bad ones more. Many meetings for me are fun, especially if a) I get to decide something, or b) the other people in the meeting are some mix of smarter/more experienced/more knowledgeable than I am. In sum those cases hold pretty often, though I will leave it to you to judge the relative mix.
But about bad meetings, I will say this:
1. Often the purpose of a meeting is to instruct everyone in the nature of an idea. That is boring for many of the people in the room, especially if they are prone to leaving comments on MR. “We need to get everyone on board.” Ho hum.
2. Often the purpose of a meeting is to flex muscles and show a demonstration of power/support for a person or idea. That may or may not be necessary, but it is boring too.
3. Often the purpose of a meeting is so that everyone can feel involved in a decision. That can be really boring.
4. Some meetings turn into debates, whether intentionally or not. Most debates are in fact quite boring, and that makes these meetings boring too.
5. Many meetings lack a natural close, due to insufficiently strong leadership. Participants keep on adding comments, and no single person bites the bullet and shuts them down. Ending the meeting may suffer from a public goods problem, especially when this factor interacts with #3. Meetings do not price the scarce resource of time.
6. Many meetings appeal to either the “median voter” or to the “least common denominator” in the meeting. That also makes meetings worse, noting this factor can interact with all those listed above.
7. On average, meetings attract more low opportunity cost types. Which in turn further lowers the quality of the median voter or least common denominator in the meeting, thereby producing more interaction effects.
Those are some reasons why meetings are boring, but I have not listed all of them.
*Red Rose Speedway*, or drinking the Paul McCartney Kool-Aid
Of all the early McCartney albums, this one has been the easiest to dislike. Band on the Run was recognized as high quality and classy from the beginning, whereas McCartney and Ram eventually developed a strong avant-garde pedigree. Wild Life wasn’t even trying.
But Red Rose Speedway doesn’t fit the picture, not even for the pro-McCartney revisionists. It doesn’t have strong avant-garde elements (“Loup” being the exception), nor did it have the perfection of Band on the Run, which almost could have been Beatles material. It is McCartney shoving his classic romantic McCartneyisms in your face. It is a Paul and Linda album. It has a closing medley as Abbey Road did. It is not afraid to be corny. There is something relentless about it. It does not in every regard reject the notion of monotony.
Robert Christgau decreed it was “quite possibly the worst album ever made by a rock and roller of the first rank.” Dave Marsh said it was “rife with weak and sentimental drivel.”
Unlike some of the Wings albums, Paul dominates every song, but along with Linda. “Man devotedly in love with his wife” was not the optimal 1973 message, but it has held up better than a lot of other ideas from that era.
Red Rose Speedway has many of Paul’s best vocal performances. Just try the end of “My Love” or the “ows!” in “Get on the Right Thing.” The bass playing is uniformly excellent (best on “Loup”?), and Paul cuts loose on piano, mellotron, and synthesizer more than he had done before, or was to do since.
Some drawbacks:
Many of the lyrics are mediocre. The love notes aside, Paul was not inspired in how he “set” his material. In this regard he is much the inferior of John Lennon.
“Big Barn Red” is a programmatic opening, promising you…something. Maybe it set the wrong tone for what was to follow. But in fact I am fully on board.
“Little Lamb Dragonfly” — A lot of blather in this one, maybe the weak point of the album? The melody is nice, but the song is overlong and lacking in energy.
Some pluses:
“My Love” — one of Paul’s best songs. And his best song to Linda. The Henry McCullough solo was done in one take, and yes it is better than what George would have come up with. No one will admit this, but “My Love” is better than “Yesterday” or “Michelle,” and it is also more real.
“Single Pigeon” — Everyone mocked them, but the Paul/Linda vocal duets are excellent. Don’t forget how much Paul loves the Everly Brothers. “When the Night” is very nice too.
“Loup (First Indian on the Moon)” — An early inspiration for what would later become Paul’s innovations in techno and electronica.
“Hold Me Tight” — There is an early Beatles song with the same name, so maybe Paul is reclaiming the legacy as his own or at least asserting some continuity? Are the melody and vocal here really worse than on the originally titled song? It’s debatable.
The closing medley — melodically and harmonically excellent. Maybe it’s pointless, but the Abbey Road medley is pretty improvised too and lacking in any real dramatic center until you get to the very end, when it becomes a good-bye to the Beatles.
Red Rose Speedway originally was to be a double album, with a lot of Wings representation, more rockers, and even some live material. Yes, I’ve heard all of those cuts, and they belong elsewhere. Macca kept the love songs, kept the Macca/Linda dominance, kept the love orientation, and caused the previous incarnation of Wings to dissolve in protest. He basically made the right decisions.
This album was recorded only a few years after the “Get Back” Paul you saw in the Peter Jackson movie — have some faith in him! It was surrounded by material such as “Hi Hi Hi” and “Live and Let Die,” and followed by Band on the Run, all of which are more critically acclaimed but I think this stuff is really good too.
Then again, I also like “Mary Had a Little Lamb” and “Seaside Woman.“
Request for requests
So what would you like to hear about over the course of the next year?
I can promise at least that requests will not be counterproductive.
Sunday assorted links
1. Maureen Dowd has a Tyrone and he is not bad (NYT).
2. And South Korean men fight back against beneficial feminization (NYT). And more here.
3. Insights from Arnold Kling.