My Conversation with Mark Carney

by  Tyler Cowen in

Here is the audio, video, and transcript, definitely recommended.  Here is part of his closing statement:

COWEN: Last question. You wake up each morning. Surely you still think about central banking. What for you is the open question about central banking, where you don’t know the answer, that you think about the most?

CARNEY: I gave a speech at Jackson Hole on this issue, and I started — which is the future of the international monetary system and how we adjust the international monetary system.

I’ll say parenthetically that we’re potentially headed to another example of where the structure of the system is going to cause big problems for the global economy. Because it’s quite realistic, sadly, that we’re going to have a fairly divergent recovery with a number of emerging, developing economies really lagging because of COVID — not vaccinated, limited policy space, and the knock-on effects, while major advanced economies move forward. That’s a world where rates rise and the US dollar strengthens and you get this asymmetry, and the challenge of the way our system works bears down on these economies. I think about that a lot.

And this:

COWEN: If you’re speaking in a meeting as the central bank president, do you prefer to speak first or speak last?

CARNEY: I prefer — I tend to speak early. Yes, I tend to speak early. I’m not sure that’s always the best strategy, but I tend to speak early. I will say, one thing that’s happened over the years at places like the G20, I noticed, is the prevalence of social media and devices. The audience drifts away over time, even at the G20, even on a discussion of the global economy.

And from the horse’s mouth, so to speak, do note this:

CARNEY: …I think you’re absolutely right on that, there wasn’t. It is revealed that there wasn’t a liquidity trap.

Rooftops!  Finally, on more important matters:

COWEN: Are the Toronto Raptors doomed to be, on average, a subpar NBA team due to higher taxes?

And:

COWEN: What’s the best Clash album?

CARNEY: Fantastic question. London Calling, and one of my best memories — I was very fortunate; they came to Edmonton when I was in 12th grade in high school. I went to the concert and that was fantastic, yes.

COWEN: I also saw them, I think in what would have been 12th grade had I been in school that year. But London Calling is too commercial for me. I much prefer the Green album, like “Career Opportunities,” “Janie Jones.”

CARNEY: Well, “I Fought the Law” was the best song at the concert. I have to say, they had got to Combat Rock by this time, which was relative — [laughs] Combat Rock was more commercial, I thought, than London Calling, although they threw it all out the door with Sandinista!

Again, here is Mark’s new book Value(s): Building a Better World For All.

*Modern Paraguay: South America’s Best Kept Secret*

by  Tyler Cowen in

There should be more books serving as introductions to individual countries, and this one, written by Tomás Mandl, is a fine entry in the genre.

…Paraguay was South America’s first country to get electricity, railroads, and an iron foundry.

The Triple Alliance War of 1864-1870:

Although available data and sources remain contested, estimates put the figure at 25 percent of the Paraguayan population killed on the lower end, and upwards of 60 percent on the higher end…

For purposes of contrast, Poland during WWII saw “only” about 20 percent of the population killed.

Under Stroessner, the torture centers were neither secret nor undercover.  And:

The clear pattern post-Stroessner is one of mild support for democracy: While in 2017 more Paraguayans agreed with the claim “democracy is preferable” than in 1995 (55 percent versus 52 percent, respectively), the average for the period was 46 percent….When Latinobarómetro asked Paraguayans to assess their country’s political regime on a range where 1 is “not democratic” and 10 is “fully democratic,” they have responded “5” consistently in almost every year of the twenty-first century.

With mandatory voting the average turnout rate is about 66 percent in recent times.  And:

Notably, the largest center for Paraguayan studies is located in Argentina.

I enjoyed this sentence:

Unfamiliarity with Paraguay is not new.

Paraguay has very low FDI even by Latin American standards, it is typically rated as the most corrupt country on the continent, and a common saying is “¿Con factura o sin factura?”

Highly recommended, you can pre-order here, and yes the author does speak Guarani and he does also know the Solow growth model and why Singapore is interesting.

Cheating markets in everything

by  Tyler Cowen in
  • This phone shaker device can achieve your weekly fitness goal without efforts, unlocking rewards at distances in Pokemon Go.
  • The phone walker is ideal for those people who are doing corporate steps challenges to get rewards with freebies for getting fit.
  • The step counter device features three kinds of working modes, running mode(fast speed), jogging mode(medium speed) and walking mode(low speed).
  • It can earn 9,500 steps(running mode) in an hour equivalent to 4 miles approx, cheating your way to 10,000 steps in a short time.
  • It is compatible with any IOS and Android’s smart phones whose width is less than 3.6”. If you have any questions, just feel free to click the contact seller button

Here is the Amazon listing, via Ben M.

Tuesday assorted links

by  Tyler Cowen

1. “There are about 465,000 open positions in cybersecurity nationwide as of May 2021, according to Cyber Seek — a tech job-tracking database from the U.S. Commerce Department — and the trade group CompTIA”  Link here, though if you bring up skills mismatch you still get shouted down these days.

2. One-minute Covid breath test approved in Singapore (Bloomberg).  And my early April Covid predictions.

3. Predicting high-impact science.  And Ashlee Vance on Celine Halioua and her anti-aging start-up and work (Bloomberg).

4. The importance of immunocompromised individuals for Covid issues.

5. Ross Douthat on Foucault is completely correct (NYT).

6. Brain synchronization remains an underdiscussed topic (NYT).

Hayek and Keynes: Bomb Throwers

by  Alex Tabarrok in

Sometime in the summer of 1942, the economists John Maynard Keynes and Friedrich Hayek spent the night on the roof of the King’s College Chapel in Cambridge. The Germans were in the midst of what some called the “Baedeker bombings,” a campaign to destroy the quaint and historical sorts of buildings that might be found in a Baedeker travel guide, in an effort to break the British fighting spirit. The Cambridge faculty volunteered to spend nights protecting their buildings from damage by extinguishing flames from incendiary bombs. Keynes was a long-time fellow of King’s College. Hayek was in Cambridge for the summer, the London School of Economics having closed due to the blitz.

Keynes’ greatest book, his General Theory of Employment, Interest and Money had been published in 1936, to the acclaim and fury of the entire field of economics. Hayek had just finished what was to become his greatest book, The Road to Serfdom, but he had yet to find a publisher for it. When he did publish it, the impact would be explosive.

Both men were intellectual bomb throwers; creatively destructive in their attacks on prevailing orthodoxies.

Eric Samuelsen on his play, Clearing Bombs, which somehow I missed when it was performed in Salt Lake City in 2014. Did any of you see it?

The supply of motivation is elastic — Study Web

by  Tyler Cowen in

Study Web is the space students have constructed for themselves in response to the irl system that just isn’t working. Unable to find a place or person to turn to with their academic and career anxieties, they find internet strangers—strange kin—to speak to, or simply share the same space with, online. Lacking the intrinsic inspiration to study for hours each day, online advice and group accountability provide a solution. Feeling isolated, virtual study partners create a sense of fellowship. On Study Web, while stressed, students have accepted their lot—they’re not investigating the rightness or wrongness of the pressurized environment of the Gen Z student or asking whether college is worth it at all. 12-hour Study With Me videos are seen as something to aspire to rather than rebel from. Students accept the premise that school and studying are non-negotiables. Where they come from, where they live, their beliefs and value systems are not barriers to community-building; they suffer in common.

And Study Web is huge, and weird:

The Study Web is a constellation of digital spaces and online communities—across YouTube, TikTok, Reddit, Discord, and Twitter—largely built by students for students. Videos under the #StudyTok hashtag have been viewed over half a billion times. One Discord server, Study Together, has over 120 thousand members. Study Web extends far past study groups composed of classmates, institution specific associations, or poorly designed retro forums discussing entrance requirements for professional programs. It includes but transcends Studyblrs on Tumblr that emerged in 2014 and eclipses various Reddit and Facebook study groups or inspirational images shared across Pinterest and Instagram. Populated mostly by Gen Z and the youngest of millennials, Study Web is the internet most of us don’t see, and it’s become a lifeline for students from junior high to college.

By Fadeke Adegbuyi, this is one of the best pieces I have read all year.

“Why economics is failing us”

by  Tyler Cowen in

That is the topic of my latest Bloomberg column, here is one excerpt:

Here’s the dirty little secret that few of my fellow economics professors will admit: As those “perfect” research papers have grown longer, they have also become less relevant. Fewer people — including academics — read them carefully or are influenced by them when it comes to policy.

Actual views on politics are more influenced by debates on social media, especially on such hot topics such as the minimum wage or monetary and fiscal policy. The growing role of Twitter doesn’t have to be a bad thing. Social media is egalitarian, spurs spirited debate and enables research cooperation across great distances.

Still, an earlier culture of “debate through books” has been replaced by a new culture of “debate through tweets.” This is not necessarily progress.

To use a bit of economic terminology, economists haven’t fully internalized the lessons of the Laffer Curve. By demanding so much rigor in academic research, they’ve created an environment in which most of the economics people actually see is less rigorous.

There is also a political effect. Twitter is a relatively left-wing social medium, and so the tenor of popular economic discourse has moved to the left.

Recommended, and it is one of those pieces where the reaction to the piece itself confirms the thesis of the piece…

Vaccine wastage, toward a general theory of multilateral institutions

by  Tyler Cowen in

South Sudan, for instance, recently destroyed nearly 60,000 doses it received from Covax; Malawi destroyed 20,000. Neither were able to distribute their entire allotments before the vaccines expired. Kenya, with more than 50 million people, received over a million doses from Covax in early March, but had used less than one-fifth by late April. The Ivory Coast similarly distributed less than a quarter of the over 500,000 doses it received in late February, raising fears that doses will expire before they are used. The problem goes beyond lower-income countries. More than 600,000 Covax-provided AstraZeneca vaccines sit in Canada at risk of spoilage, while Canadians debate whether it is safe to use them. Vaccinations can begin to confer meaningful protection in under 14 days. Freed from freezers, these vaccines could have saved many lives in Peru, India or Brazil, where the pandemic is raging.

Here is more from Zeke Emanuel and Govind Persad (NYT).

Further Monday assorted links

by  Tyler Cowen

6. Cicadas on the menu.

7. Yuan Longping, RIP (NYT).

8. Famous musicians pick their favorite Bob Dylan songs.  Would mine be “Highway 61”?  “Mr. Tambourine Man”?  “Tangled Up in Blue”?  “Don’t Think Twice It’s Alright”?  Too many choices.  Bob is today 80 years old.  The most overrated is perhaps “Desolation Row”, with its pretentious lyrics?

9. Why the new Elon Musk rocket really will matter?

10. Why a new business surge in black communities during the pandemic? (NYT)

Staple a Lottery Ticket to Every Vaccination Card

by  Alex Tabarrok in

I’ve been promoting stapling a lottery ticket to every vaccination card for some time, so it was good to see Ohio followed by New York, Maryland and Oregon introduce vaccine lotteries. Moreover, the program appears to be working as noted by Philip Bump in the Washington Post:

The seven-day average number of Ohioans getting their first shots increased the day after DeWine’s announcement and continued heading up through Sunday. It’s worth noting that this happened while the number of vaccinations nationally remained flat, suggesting that the trend in Ohio was driven by something different. It’s also worth pointing out that the number of Ohioans completing their vaccinations continued to slip lower, again reinforcing that these were people newly seeking out the vaccine. (In two or three weeks it will be interesting to see if more people are completing their vaccinations.)

Sadly, some politicians are now introducing legislation in Ohio to stop the program. Thus, it’s worthwhile recapping why we expect a lottery program to work. Most people think first about behavioral or psychological explanations. A vaccination is all about immediate costs and future benefits and it’s more difficult to act on future benefits than immediate costs, ala hyperbolic discounting. A free beer, donut, or lottery ticket provides an immediate benefit to offset the immediate cost and so may encourage vaccination, especially for those who are very present oriented. Note, however, that a lottery ticket might be expected to be less beneficial than an equivalent-cost donut because the donut is truly immediate while the lottery ticket is not. On the other hand, if vaccine hesitancy is driven by over-estimated fear of rare side-effects then perhaps a lottery ticket balances with an over-estimated hope of rare-benefits.

Even within a risk-neutral, rational model, however, there are good reasons to tie public goods to lotteries (ungated). Charities, for example, often use lotteries or raffles to fund public goods. Why? The reason is that a lottery is a natural counter to free-riding. Imagine that there is a public good but no one contributes because they each hope to free ride off other people’s contributions. As a result, the public good is not provided. Now introduce a fixed prize lottery. If no one else contributes then a contributor wins the lottery for certain so it can’t be an equilibrium for everyone to free ride (reminiscent of my dominant assurance contract mechanism for producing public goods). Note that the lottery in this model can’t just be a regular lottery ticket where you have to match X numbers to win. It has to be a raffle where the probability of winning is 1/N where N is the number of contributors. Thus, the Maryland and Ohio vaccine lotteries, which draw winners from the vaccinated, are much better than New York version which just hands out free lottery tickets. Thus, I expect the Ohio and Maryland versions to be more successful than the New York version.

Hat tip: Casey Mulligan for reference to the Morgan paper.

Facts about recessions and unemployment (and matching)

by  Tyler Cowen in

Not everyone is going to like this one:

During a recovery, unemployment seems little responsive to demand disturbances.  Economic policy should focus on preventing recessions rather than trying to ameliorate their effects.

That is from the new slides/paper by Robert E. Hall and Marianna Kudlyak on the consistency of recovery from recessions, lots of evidence behind that claim, as employment recovery occurs at a remarkably consistent rate across recessions, regardless of policy response.  Furthermore explanation of the micro-data mostly follows from the supply of employment, not the demand, and no that doesn’t require any kind of weird DSGE model, nor does it involve aggregate demand denialism about the initial cause of the problem.  Links are here, including other papers by Kudlyak, many good papers in there, sadly these rooftops are nearly empty.

The British in 18th century India

by  Tyler Cowen in

The British were obliged to design a state structure in India virtually from scratch, because the one Warren Hastings lashed together between 1772 and 1784 was considered to have failed.  He had tried to adapt traditional Indian practice while adding a British top layer to it, but this compromise never worked well.  Absence of supervision, abundant temptation, scarcity of reliable information and poor communication between Calcutta and the mofussil (rural areas) created multiple problems.  When placed in Indian shoes, Europeans often behaved worse than their native predecessors.  Hastings’s system lacked discipline, so British politicians resolved in the early 1780s to supply standards and enforce them.  Pitt’s India Act of 1784 and the Cornwallis Code of 1793 were the results.

Traditional ruling practices in India were replaced by specific rules, designed to reduce personal discretion.  What the British most feared in their own rulers — arbitrary power — they were determined, at least initially, to deny to those placed in authority in India.

Just as the US Constitution was designed to thwart the central executive, so the objective of the Cornwallis system of 1793, its near contemporary, was to restrain the EIC’s [East India Company’s] servants in India.  The collective self-regulation that it set up, by means of boards and committees, worked fairly well in enforcing honesty within government in India after 1784, but not in achieving efficiency.  Day-to-day government was not facilitated, and judicial decisions slowed to a crawl.  Meanwhile tax revenues, instead of sticking to British fingers, stayed somewhere out in the rural areas, hid behind an opaque wall of legal and customary technicalities.

That is from Roderick Matthews’s excellent Peace, Poverty and Betrayal: A New History of British India.  Here is my previous post on the book.