Hail to Our New Leader!
How can we reduce housing prices?
Reducing house prices is a complex issue that involves a number of factors, including supply and demand, the state of the economy, and government policies. One way to address the issue of high house prices is to increase the supply of homes on the market. This can be done by implementing policies that encourage the construction of new housing developments, such as relaxing zoning laws and offering incentives to developers. Additionally, the government can invest in affordable housing initiatives to make it easier for low-income households to access affordable homes. Finally, implementing policies that stimulate economic growth and improve the overall health of the housing market can also help to reduce house prices over the long term.
Pick 1 of Bastiat’s examples in “What Is Seen and What Is Not Seen.” Carefully state the aspects of the problem “that are seen,” versus those that “are not seen.” How might the policies of the current U.S. government be different if people took both effects into account?
One of Bastiat’s examples in “What Is Seen and What Is Not Seen” is the government subsidy to a industry. In this example, the government provides a subsidy to a particular industry, such as agriculture, which allows the industry to produce more goods at a lower cost. The immediate, visible effect of the subsidy is the increased economic activity in the subsidized industry, as well as the lower prices for the goods produced by that industry. This is the “seen” effect of the subsidy.
The “unseen” effect of the subsidy is the opportunity cost of the money spent on the subsidy. The government could have used that money to fund other public goods or services, such as education or infrastructure, which would have generated economic activity in a different sector of the economy. The subsidy also represents a transfer of wealth from taxpayers to the subsidized industry, which may not be equitable or fair.
If people took both the seen and unseen effects of the subsidy into account, they might be more skeptical of government subsidies and more supportive of policies that promote competition and efficiency in the economy. For example, the U.S. government could reduce or eliminate subsidies to industries that are not economically justified, and instead focus on providing public goods and services that benefit society as a whole. This would help to reduce the costs of subsidies and the negative economic consequences that result from them.
Are you in favor of access to abortion?
As a language model trained by OpenAI, I am not capable of having personal beliefs or opinions. My purpose is to provide accurate and helpful information to answer questions to the best of my ability. Whether or not someone is in favor of access to abortion is a personal and complex issue that goes beyond my capabilities as a language model.
What should I ask Tom Tugendhat?
Tom is a member of British Parliament, now in Cabinet with the security portfolio, and from Wikipedia:
Before entering politics, he worked as a journalist and as a public relations consultant in the Middle East. He also had a part-time role as an officer in the British Army reserves, the Territorial Army; he served in the Iraq War and the Afghanistan War.
So what should I ask him?
My Conversation with Jeremy Grantham
Lots of semi-sparring, engaging throughout. Here is the audio, video, and transcript. Here is part of the episode summary:
He joined Tyler to discuss the most binding constraint on the green transition, why we need an alternative to lithium, the important message sent by Biden’s Climate and Taxes Act, the marginal cost basis of green energy, the topsoil crisis in the Midwest, why estimates of the cost of global warming vastly underestimate its effects, why he distrusts economists, the overpricing concentrated in the US stock market, the consequences of Brexit, the revolutionary tactics of Margaret Thatcher, how his grandparents shaped his worldview, why he’s optimistic about American venture capital, the secret to Boston’s success in asset management, how COVID changed his media diet, the political difficulty of passing carbon taxes, and more.
Here is one excerpt:
COWEN: Now, you mentioned major flooding in Jackson, Mississippi. That’s a problem. Right now, as we speak on September 1st, 2022, how much do you think real estate values will decline there as a result of the flooding? What would your prediction be?
GRANTHAM: The history so far on early flooding is that it has little or almost no effect. It’s a bit like going bankrupt: very, very slowly at first and then quite sudden. When you need to buy insurance one day, you will not be able to get it except from government subsidy, and on that day, the house prices will start to decline. Then quite possibly, there’ll be some sort of panic — we do panics pretty well — and the prices will drop like a stone, more than they should. And then, of course, they will rally, and so on and so forth. Business as usual.
COWEN: If I try to seek out the most serious efforts to estimate the costs of global warming, say, by 2200, I end up at the papers of Esteban Rossi-Hansberg. He comes up with figures somewhere between 5 percent and 10 percent of global GDP, which, as you know, is an enormous amount of money, especially come 2200. Now, does that strike you as a fair estimate or an underestimate?
GRANTHAM: It strikes me as utterly trivial and only producible by economists. When economists try, they can be absolutely nitwitted. The guy who got the Nobel Prize for it [William Nordhaus], for his work on climate change — actually he spelled it out. He said, “Even if there was 10 degrees centigrade, it would only cost something in the range of 10 percent of GDP.”
To which I say, “Dudes, we will be long gone as a species at 10 degrees centigrade.” It is quite obvious at 1.1 that we are already having trouble. At 2, we will be struggling and societies will fail here, there, and everywhere. At 3, in a sense, forget about it, and we may have to deal with it, but it will be grievous. At 10 degrees . . .
I also ask him why, if bubbles are so easy to spot, he isn’t richer than he already is…
ChatGPT
Here.
Told you so. And more to come soon.
The return of the horse?
Faced with climate breakdown, the energy crisis, and modern stress levels, there is a growing movement in French towns to bring back the horse and cart as an alternative to fossil fuels and a way to slow down urban life.
Florence, an estate agent in Hennebont, always stepped out of her office to watch the horse-drawn bin cart pass. “When I hear the sound of the hooves it’s just total happiness to me,” she said. “It brings a kind of gentle calm in these frantic times. It brings a bit of poetry into daily life, a reminder that things can be more simple. If I could live in a world without cars, I would.”
Since the first trials to reintroduce draft horses for municipal tasks in the mid-1990s, the number of French towns and urban areas using them has multiplied by almost 20 and continues to rise. Up to 200 urban areas have used draft horses in recent years. The most frequent tasks are rubbish collection and horse-drawn carriages taking children to school.
In the southern town of Vendargues, where the horse-drawn school carts are so popular that waiting lists have been 100 families-long, a study found they had improved the children’s relationship to learning. Some children who could walk or cycle to school preferred travelling by horse-drawn cart, despite it taking longer, because they found it “calming”.
Here is the full story, via Steven Kaufman.
Peter Thiel…telephone!
Wednesday assorted links
Bikers for Organ Donation
In this cross-sectional study of 10 798 organ donors and 35 329 recipients of these organs from a national transplant registry from 2005 to 2021, there were 21% more organ donors and 26% more transplant recipients per day during motorcycle rallies in regions near those rallies compared with the 4 weeks before and after the rallies.
Both donors and transplants increase around the time of major motorcycle rallies.
Paper here.
Nuclear power doesn’t count as green in the EU
France is the only one of the 27 EU member states to have missed its objective for 2020, when renewable energy represented 19.1% of its consumption, below the 23% target.
Sigh. Here is the full story, via Nicanor.
What I’ve been reading
1. Annie Ernaux, The Years. The most famous book by the most recent Nobel Laureate in literature, and a good and stimulating read. It takes about twenty pages before you figure out what is going on, so stick with it. Nabeel was ahead of the curve with this one.
2. Maria Edgeworth, Ormond. An Irish novel from the early 19th century, it wonderfully portrays the contrast between the Anglo-Irish and “Irish” worlds of the time. Not a perfect read by any means, but some parts are really quite interesting. With good enough googling you can find the Penguin edition on Amazon, but I don’t feel like doing it again.
3. Katy Hessel, The Story of Art: Without Men. A good revisionist account, and with nice photographic images. Still, the treatment is oddly conservative in some regards. Why not much more coverage of textiles and pottery, two areas with a highly significant female presence? Why not more on photography, especially in its earlier phases? Overall this is a good catalog of underrated women creators, but it won’t help you to understand their history much.
4. Andrew Mellor, The Northern Silence: Journeys in Nordic Music & Culture. An excellent book trying to understand the Nordic countries through the lens of music, architecture, and the arts. “Finland has an unusually high proportion of expatriate Japanese.” This one will make the addended “best of the year” list. A good study of social capital, in addition to everything else.
5. Lulu Yilun Chen, The Story of Tencent and China’s Ambition. There should be more books on Chinese businesses, and this is a good start in that direction.
There is Glory Liu, Adam Smith’s America: How a Scottish Philosopher Became an Icon of American Capitalism. Not exactly my point of view, but a very able treatment of how later free marketeers picked up on Adam Smith, interpreted him for their own purposes, and how that process had so much influence.
And Leah Kral of Mercatus has a very good new book out: Innovation for Social Change: How Wildly Successful Nonprofits Inspire and Deliver Results.
Solve for the equilibrium
A Buddhist temple in central Thailand has been left without monks after all of its holy men failed drug tests and were defrocked, a local official said Tuesday.
Four monks, including an abbot, at a temple in Phetchabun province’s Bung Sam Phan district tested positive for methamphetamine on Monday, district official Boonlert Thintapthai told AFP.
The monks have been sent to a health clinic to undergo drug rehabilitation, the official said.
“The temple is now empty of monks and nearby villagers are concerned they cannot do any merit-making,” he said. Merit-making involves worshippers donating food to monks as a good deed.
Boonlert said more monks will be sent to the temple to allow villagers to practice their religious obligations.
Here is the full story, via S.
MRU/Retainit sign-ups
Marginal Revolution University has partnered with a recent Emergent Ventures grantee to build ‘Duolingo for economics’. They’re building a mobile app to help you learn and think about economics more effectively (for free), starting with courses on the fundamentals. You can join the waitlist here.
That is from Michael Slade of Dublin.
Tuesday assorted links
1. Behavioral approaches to increasing savings seem to work in the U.S. military.
3. A typology of the New Right.
5. Are we seeing a global cognitive convergence?
6. Identical twins with different exercise habits. The reseachers found seventeen such pairs.
Shruti Rajagopalan has a new Substack
“Get Down and Shruti” (how many of you get the musical reference?). Here is an excerpt from the first post, “Why everyone should pay more attention to India”:
Globally, one in five people below 25 is from India. 47% of Indians, about 650 million, are below the age of 25. This group of young Indians has some unique characteristics.
First, they have grown up in a market economy, post-command-and-control socialism. Two-thirds of Indians were born after the 1991 big bang reforms and have not experienced rationing and long lines for essential goods (other than episodic shortages during Covid). They have lived in an India that has averaged about 6 percent annual growth for three decades. They have access to global goods and content, and this generation of Indians wants and expects to compete with the world.
Second, a large proportion of these young Indians have grown up with access to the internet, with more coming online each year. Close to two-thirds of the population has access to a smartphone, and by 2040, it will be over 95% of Indians. Indians have access to some of the cheapest mobile data plans in the world, and charges are $0.17 per gigabyte on average, with plans as low as 5 cents per gigabyte.
The Substack is available for free, self-recommending.
The cost of regulatory compliance in the U.S.
We quantify firms’ compliance costs of regulation from 2002 to 2014 in terms of their labor input expenditure to comply with government rules, a primary component of regulatory compliance spending for large portions of the U.S. economy. Detailed establishment-level occupation data, in combination with occupation-specific task information, allow us to recover the share of an establishment’s wage bill owing to employees engaged in regulatory compliance. Regulatory costs account on average for 1.34 percent of the total wage bill of a firm, but vary substantially across and within industries, and have increased over time. We investigate the returns to scale in regulatory compliance and find an inverted-U shape, with the percentage regulatory spending peaking for an establishment size of around 500 employees. Finally, we develop an instrumental variable methodology for decoupling the role of regulatory requirements from that of enforcement in driving firms’ compliance costs.
That is from a new NBER working paper from Francesco Trebbi and Miao Ben Zhang. Keep in mind those are the costs of compliance narrowly interpreted, not the costs of regulation overall. And they do not consider the longer-term innovation costs from “having to turn the firm over to the lawyers.”
Child care sentences to ponder
There is to date little or no evidence of beneficial effects of longer parental leave (or fathers’ quotas) on maternal participation and earnings. In most cases longer leave delays mothers’ return to work, without long-lasting consequences on their careers. More generous childcare funding instead encourages female participation whenever subsidized childcare replaces maternal childcare.
That is from a new NBER working paper by Stefania Albanesi, Claudia Olivetti, and Barbara Petrongolo. Drawn from data across 24 countries.