Optimism about the threat of nuclear war

From an email from Trey Howard, I won’t impose further double-indent on it:

“I recently came across the pessimistic Edward Luce column you retweeted, and wanted to offer some trends that I think point in the opposite direction. I offer these as someone who was much more worried about nuclear war in the first 2 weeks of the war, before the factors below became apparent.

  1. Putin has been willing to revise his objectives. The Russian army fell back from Kyiv, did not launch an amphibious assault on Odessa, and has not attempted to storm the Azovstal steelworks. All of these indicate that Putin is receiving some objective information about the poor performance of his military, and is revising his plans accordingly.
  2. Putin’s objectives are amorphous. What does it mean to de-nazify Ukraine? What does control of “the Donbass” mean exactly? These kinds of objectives are susceptible to BS-ing for the domestic audience. They are not like “Kill Zelensky” or “Capture Kyiv”. They permit Putin an off-ramp at any time he wants to declare victory.
  3. NATO is unwilling to intervene directly. If anything, I have heard less chatter about no fly zones since the first two weeks of the war.
  4. Putin has not escalated to chemical weapons, despite having an opportunity to use them effectively on the Azovstal works.
  5. NATO has limited the supply of weapons to short range weapons that a) do not require a complex supply chain of trainers and contractors close to Ukraine or b) are unlikely to cause mass casualties in Russia itself (airplanes, tactical ballistic missiles). This seems likely to continue for the foreseeable future. For all the breathless talk of “heavy weapons” being shipped to Ukraine, it is hard for me to imagine that Russia sees T-72 tanks, towed howitzers, or M113 personnel carriers from the 1970s as tilting the balance. They have thousands of comparable weapons in storage.
  6. Russia has not attempted to interdict the flow of weapons inside NATO countries. Not even “plausibly deniable” things like train derailments or warehouse fires. This is all the more remarkable when you consider that the GRU committed attacks in NATO countries in the years before the war started.
  7. Putin is not threatened at home. If anything, support for the invasion seems to have increased. The Russian economy has not collapsed as some predicted, and this will bolster support for him.
  8. Russia continues to make payments on its foreign debt. To me this indicates a long-term outlook and is not the kind of thing one would do if contemplating murder-suicide at a national level.
  9. Russia has not increased the readiness of its strategic nuclear forces (like putting SSBNs to sea).
  10. Russia is actively recruiting foreign mercenaries and seems likely to order a general mobilization soon. Some people see this as a sign of escalation, but I think it is more likely that Putin realizes that he needs more bodies to garrison captured territory. Additional conscripts will eventually allow some of the BTGs in action to rotate away from the front lines. It will increase his perception that time is on his side. More troops will make it less likely that Ukraine can inflict a decisive defeat on Russian forces in the Donbass (which might really precipitate tactical nuclear weapon use).
  11. Russia is taking over administration of infrastructure in captured territory, and is preparing residents to switch to the ruble. These are long-term thinking measures consistent with a power planning to occupy and administer new territory (which they would not want to irradiate).
  12. Putin thinks that the political winds are on his side. Viktor Orban being re-elected, Le Pen performing better than her prior showing, and the coming midterms in the USA all point to populations becoming impatient at the high inflation and constant drumbeat of scary news coming out of Ukraine. Of course, the biggest break for him would be Trump 2024…

I disregard all public statements from Russia (whether from state TV, Putin himself, or lesser officials). There is never going to be a situation where the Russians say “relax, we aren’t going to use the nukes”. They want to keep us guessing. I look at the trends above instead.

Many of these trends are bad news for Ukraine and the west in general, but they are factors that make nuclear war less likely. As you said on a recent podcast “things are never as bad or as good as you might think.””

TC again: That’s it, have a cheery day!

Monday assorted links

1. Surgeon quality really matters.

2. Further observations on the Russian Army.

3. The Trump tariffs hurt Hollywood in China.

4. Heckman and Zhou vs. test scores.

5. Who went to BLM protests?  Some of you will enjoy this point: “Finally, we provide novel evidence of overlap: attending a Black Lives Matter protest increases the likelihood of attending a protest calling for fewer public health restrictions.”

6. “Finally, the inflation expectations of managers deviate systematically from the predictions of “anchored” expectations.

The Minimum Wage, Rent Control, and Vacancies or Who Searches?

In an interesting new paper Federal Reserve economists Marianna Kudlyak, Murat Tasci and Didem Tüzemen look at what happens to job vacancy postings when the minimum wage increases.

The vacancy data in our analysis come from the job openings data from the Conference Board as a part of its Help Wanted OnLine (HWOL) data series. HWOL provides monthly data on vacancies at detailed geographical (state, metropolitan statistical area, and county) and occupational (six-digit SOC and eight-digit O*Net) levels starting from May 2005. HWOL covers around 16,000 online job boards.

…Our identification strategy exploits the idea that different occupations can be differently impacted by minimum wage hikes due to differential mass of occupation-specific wage distributions concentrated around the prevailing minimum wage. We formalize this idea by analyzing wage distributions by occupation at the state level using micro data from the Current Population Survey (CPS). We identify occupations with large shares of employed workers at or near the state-level effective minimum wage and we refer to these occupations as “at-risk occupations.” We then estimate vacancy growth in at-risk occupations relative to vacancy growth in other occupations around the time when minimum wage increase takes place in the state, and relative to growth in vacancies in at-risk occupations at the national level.

…We find a statistically significant and economically sizeable negative effect of the minimum wage increase on vacancies. Specifically, a 10 percent increase in the level of the effective minimum wage reduces the stock of vacancies in at-risk occupations by 2.4 percent and reduces the flow of vacancies in at-risk occupations by about 2.2 percent.

…We find that firms cut vacancies up to three quarters in advance of the actual minimum wage increase. This finding is consistent with the firms’ desire to cut employment and vacancies being a forward-looking tool to achieve it. This finding is also consistent with a typical announcement effect of a policy change. Formally testing for the parallel trends assumption in our triple-difference identification, we find that at-risk and not-at-risk occupations do not have statistically significant differences in their vacancy trends prior to the typical announcement period. But the negative effect persists even four quarters after the minimum wage increase. The cumulative negative effect of a 10 percent increase in the minimum wage on total vacancies is as large as 4.5 percent a year later.

…We find that vacancies in occupations that typically employ workers with lower educational attainment (high school or less) are affected more negatively than vacancies in other occupations. The negative effect on vacancy posting is exacerbated in counties with higher poverty rates, which highlights another trade-off that policymakers might want to take into account.

This reminded me of a similar paper on rent controls (ungated) by Are Oust that Tyler and I mention in the forthcoming edition of Modern Principles of Economics.

Are Oust studied rent controls in Oslo, Norway and found that during the rent control era it was common for landlords to require their tenants to be of a certain gender, age, occupation and even religion (which would be illegal in the United States). Landlords would also find ways to charge extra by asking renters for extra services such as baby-sitting, garden work or snow-clearing. When rent control was eliminated, however, the number of apartments increased and landlords no longer advertised these kinds of requirements. Perhaps most telling, in the rent-control era it was common for renters to advertise “Apartment Wanted” but when rent controls were lifted it became much more common for landlords to advertise “Apartments for Rent!”

In other words, in a free market firms search for employees and landlords search for renters but under the minimum wage and rent control, workers must search for jobs and renters must search for apartments to a much greater extent.

How strong are the racial preferences of universities?

Using detailed admissions data made public in the SFFA v. Harvard and SFFA v. UNC cases, we examine how racial preferences for under-represented minorities (URMs) affect their admissions to Harvard and UNC-Chapel Hill. At Harvard, the admit rates for typical African American applicants are on average over four times larger than if they had been treated as white. For typical Hispanic applicants the increase is 2.4 times. At UNC, preferences vary substantially by whether the applicant is in-state or out-of-state. For in-state applicants, racial preferences result in an over 70% increase in the African American admit rate. For out-of-state applicants, the increase is more than tenfold. Both universities provide larger racial preferences to URMs from higher socioeconomic backgrounds.

Here is the paper, by Peter Arcidiacono, Josh Kinsler, and Tyler Ransom, forthcoming as an NBER paper.

Mexicans die from the cold

We examine the impact of temperature on mortality in Mexico using daily data over the period 1998–2017 and find that 3.8 percent of deaths in Mexico are caused by suboptimal temperature (26,000 every year). However, 92 percent of weather-related deaths are induced by cold (<12 degrees C) or mildly cold (12–20 degrees C) days and only 2 percent by outstandingly hot days (>32 degrees C). Furthermore, temperatures are twice as likely to kill people in the bottom half of the income distribution. Finally, we show causal evidence that the Seguro Popular, a universal health care policy, has saved at least 1,600 lives per year from cold weather since 2004.

That is from a new paper in American Economic Journal: Economic Policy, authored by François Cohen and Antoine Dechezleprêtre.  Here are ungated copies.

Are spies a cyclical asset?

The number of secret search and eavesdropping orders approved by the U.S. Foreign Intelligence Surveillance Court dropped by more than half in the last two years, according to data released Friday by government officials who attributed the drop to the pandemic keeping even spies and terrorism suspects at home.

The figures released by the Office of the Director of National Intelligence (ODNI) show the FISA court, named after the law that created it to handle sensitive national security cases, approved 907 probable cause applications in 2019, which plummeted to 524 the following year and 430 in 2021. Those orders covered an estimated 1,059 targets in 2019 — a figure that sank down to 376 last year.

Here is the full story.

Saturday assorted links

1. “When Lee Jae-hye goes to the United States, she’s 30. When she’s back in South Korea, she’s 32.” (NYT)

2. Review essay on social media and political dysfunction.

3. The deadly accordion wars of Lesotho.

4. Ivanchuk Reviews His Game Against Carlsen, Ignores Air Raid Alert.

5. Jonathan Haidt Lunch with the FT.

6. Interview/podcast/YouTube with Thomas Uhm of Jane Street.  Crypto and NFTs too, some unique perspectives, in part a non-crazy person explaining the potential to the doubting Sallies.

The equilibrium, a continuing series

Under both Republican and Democratic administrations, the Federal Trade Commission has consistently ranked in the top five for staff satisfaction among medium-size government agencies, according to annual government surveys. But that changed in 2021, the year Lina Khan, a favorite of progressives, took the helm with plans to overhaul how the antitrust agency operates and turn it into a more aggressive bulwark against corporate consolidation, especially in the tech sector.

In the government’s November survey of the 1,100-person FTC, about half of whom responded, 53% of employees said senior leaders “maintain high standards of honesty and integrity,” down from 87% in 2020. And 49% of respondents had a “high level of respect” for senior leaders, down from 83% in 2020. Overall satisfaction with the agency dropped by a third, to 60% from 89%.

The “overall trends are not where we want them to be,” Khan said…

Here is the full piece. You may recall I predicted this from the beginning…

What is your most underappreciated paper?

If you are a scholar working primarily in the social sciences and/or humanities with at least 4000 Google Scholar citations, we hereby invite you to identify one or two publications with publication date 2012 or prior, and for which the count is lower than your present h-index, that you consider underappreciated. It is OK that the publication is coauthored.

…We encourage you to remark briefly on why you select the publication, and to provide a link to it. However, your entire contribution, including the referenced item(s) should be no more than 200 words.

That is from Econ Journal Watch, instructions for participating are at the link.

Toward a simple theory of why tech employees are so left-leaning

That is the topic of my latest Bloomberg column, here is part of the explanation:

Another hypothesis concerns meritocracy. The top tech companies are very meritocratic in that they try to hire the very best programmers, engineers and managers, if only because so much money is at stake and these companies are sufficiently profitable that they can afford top talent.

Yet a meritocracy of intellect does not itself constitute a corporate culture or common set of values for employees. A series of meritocratic hires will come from a variety of backgrounds and cultures; it’s not as if they all went to Eton together. Those meritocratic hires thus may want some additional layer of shared culture — and the enterprise of tech, so often based on the manipulation of abstract symbols, does not provide it.

Wokeism does. In fact, this semi-religious function of woke ideology may help explain what many people perceive as the preachy or religious undertones to woke discourse.

You might wonder why this shared culture is left-wing rather than right-wing. Well, given educational polarization in the U.S., and that major tech companies are usually located in blue states, it is much easier for a left-leaning common culture to evolve. But the need for common cultural norms reinforces and strengthens what may have initially been a mildly left-leaning set of impulses.

Developing such a common culture is especially important in tech companies, which rely heavily on cooperation. The profitability of a major tech company typically is based not on ownership of unique physical assets, but on the ability of its workers to turn ideas into products. So internal culture will have to be fairly strong — and may tend to strengthen forces that intensify modest ideological proclivities into more extreme belief systems…

Further pieces of the puzzle are explained in the column.

The macroeconomics of a pandemic

Hence, aggregate demand stimulus is one quarter as effective as in a typical recession where all labor markets are slack.

That is from a new Baqaee and Farhi piece in the May AER, AEA gate.  It is a discouraging sign how little talk was heard of this kind of argument until recently.  The piece is titled “Supply and Demand in Disaggregated Keynesian Economies with an Application to the COVID-19 Crisis.”