India’s Tallest Building Cut Down To Size
The FT writes about the bust in India’s construction sector:
It was meant to be the tallest building in India, with luxury flats, a swimming pool and cinema where billionaires and Bollywood stars could enjoy a life of perfect splendour looking down over the Mumbai skyline.
But the Palais Royale complex now sits unfinished alongside other partially built structures tangled in the megacity’s traffic-choked downtown streets, an apt symbol of a crisis that threatens a key part of India’s financial system.
Part of the problem is cyclic, a shadow banking system that overextended credit and is now having to deleverage. India’s construction sector, however, is also plagued by systematic issues including the fact that major construction projects are invariably sued and thus become entangled with India’s notoriously slow legal system. Drawing on a Brookings India working paper by Gandhi, Tandel, Tabarrok and Ravi the FT notes:
But progress was soon slowed by legal challenges over allegedly unauthorised features, sparking a series of delays….However grand the planned building, Palais Royale’s woes fit a familiar pattern: 30 per cent of real estate projects and half of all built-up space in Mumbai is under litigation, according to a 2019 Brookings India report, with projects taking an average of eight and a half years to complete.
The health care public option in Washington state
This excellent Sarah Kliff NYT article is from a few weeks ago, but I missed it the first time around. Here is the clincher:
“The whole debate was about the rate mechanism,” said Mr. Frockt, the state senator. “With the original bill, with Medicare rates [for the state’s public option], there was strong opposition from all quarters. The insurers, the hospitals, the doctors, everybody.”
Mr. Frockt and his colleagues ultimately raised the fees for the public option up to 160 percent of Medicare rates.
“I don’t think the bill would have passed at Medicare rates,” Mr. Frockt said. “I think having the Medicare-plus rates was crucial to getting the final few votes.”
Nonetheless the piece is interesting throughout, and illustrates some basic dilemmas with health care reform and public options in particular, especially when a sector is controlled by powerful lobbies.
William Darity Jr. and Darrick Hamilton advising the Democratic Party
Here is the opening of a Jacob M. Schlesinger Wall Street Journal piece:
For decades, William Darity Jr. and Darrick Hamilton toiled in obscurity. They criticized mainstream economists and politicians for failing to address racial inequality, and touted more radical remedies of their own.
Now, with the 2020 presidential campaign under way and liberal Democrats ascendant, the two economists are in the spotlight, thrust into the middle of an intraparty debate over how much to embrace big government and a race-oriented message.
Their signature ideas—guaranteed jobs for all adult Americans seeking them, government-backed trust funds for American babies and reparations for slave descendants—are being talked about on the campaign trail and, in the case of reparations, during a raucous congressional hearing in June.
The two African-American economists’ theories on “stratification economics,” which focuses on economic gaps between whites and blacks, have helped shape the rhetoric and platforms of several candidates.
At a conference earlier this year for liberal activists, New Jersey Sen. Cory Booker told Mr. Hamilton he had “laid the foundation for a lot of things that we’re doing,” including “baby bonds.” Former Texas Rep. Beto O’Rourke name-checks Mr. Hamilton in television interviews, calling him an “extraordinary economist” who “talks about a more conscious capitalism.”
Mr. Hamilton, an Ohio State University professor, has advised the campaigns of California Sen. Kamala Harris on middle-class tax cuts, Vermont Sen. Bernie Sanders on job guarantees and Massachusetts Sen. Elizabeth Warren on student-debt relief.
And this section:
They have teamed up to write more than 50 articles for academic and popular journals and books, and pioneered what they consider a new field of scholarship they branded stratification economics. They contend that mainstream economists tend to regard racial discrimination as a short-term market glitch that market forces will correct eventually. That logic, they say, leads to the conclusion that persistent African-American woes result mainly from their own failings, such as inadequate education or poor financial choices.
Policy makers, they contend, focus too much on employment, income and education and not enough on family wealth across generations. They say wealth is a better measure of household economic security—the ability to weather emergencies, pay for education, afford homes in good neighborhoods and take risks.
I hope you subscribe or can get through the gate, as there are many meaty sections. One interesting angle, of course, is whether their claims and theories are true. But most of all this piece, and their role as advisers, marks the end of an era, namely that of mainstream consensus technocracy. The range of ideas being considered in politics today is remarkably wider than just a few years ago, for better or worse. And, whether we like to admit it or not, the academic world also will follow rather than just lead this process. If a plausible candidate pops up and starts making claims, especially on the Democratic side, the academic research supporting those claims will rise in status.
Fasten your seatbelts.
Addendum: Here are links for Darity, here are links for Hamilton.
Han Kuo-yu has won the Kuomintang primary in Taiwan
So yes, Taiwan does have the weirdest politics in the world right now. Here is a reprise from my Bloomberg column last week:
Another candidate vying for the KMT nomination is Han Kuo-yu, mayor of Kaohsiung and a blunt-speaking outsider populist. He has called for closer ties with China and is believed to be China’s favored candidate, calling China and Taiwan “two individuals madly in love.” It is believed that Chinese cyber-operatives have been working to promote his candidacy. He might be more interesting yet.
What if Han wins the general election and calls for “peaceful reunification” of the two Chinas, based on “one country, two systems”? Solve for the equilibrium! I see the following options:
1. They go ahead with the deal, and voila, one China!
2. The system as a whole knows in advance if this is going to happen, and if it will another candidate runs in the general election, splitting the KMT-friendly vote, and Han never wins.
2b. Han just doesn’t win anyway, even though his margin in the primary was considerable and larger than expected.
3. The current president Tsai Ing-wen learns from Taiwanese intelligence that there are Chinese agents in the KMT and she suspends the general election and calls a kind of lukewarm martial law.
4. Han calls for reunification and is deposed by his own military, or a civil war within the government ensues.
5. Han foresees 2-4 and never calls for reunification in the first place.
Well people, which of these would it be? Here is general background (NYT) on the new primary results.
British naval commanders were somewhat rational in avoiding battles
Mutual optimism theory holds that mutually optimistic beliefs about outcomes cause international conflict. Because beliefs are unobservable, this theory is difficult to test systematically. Here, I present a clean test of theory that relies exclusively on observable variables by exploiting novel features of naval battles in the age of sail, most notably an admiral’s ability to avoid battle by simply sailing away. Using a formal model, I show that the outcome of mutual naval battles, where either side could avoid battle by sailing away, should not be predictable from observable capability indicators. The outcome of unilateral battles, where only one side could sail away to avoid fighting, should be predictable from these same indicators. I test these predictions against all squadron-level British naval battles from 1650 to 1833. I show that observable strength indicators are substantially less predictive in mutual battles, confirming the core key theoretical prediction.
That is from David Lindsey, via the excellent Kevin Lewis. Aumann theorem for them!
Some points from Peter Thiel (?)
Second-hand reporting, to be clear, here is the tweet storm from Peter’s latest talk.
And from Bonnie Kavoussi here are systematic notes on the talk, recommended.
Monday assorted links
1. Examples of late life ideological pivots?
2. Becoming a hermit at twenty.
3. Djokovic.
4. Chinese in love with pre-stagnation America.
6. Hundreds of new laws to take effect in Virginia. This is what America is up to.
What is an optimal number of Pamplona bull gorings?
Two or more each year?:
Longtime runners voiced their frustration that the event had been “totally adulterated” and said it was time to “say enough to the distortion of the run”.
The problem for purists is not just that the run, known as the encierro, has become too safe — with only two gorings last year, the least since 1984 — but that the bulls are unable to break free from the highly trained steers that accompany them. This makes the adrenaline-fuelled race less dangerous but also less exciting.
“For the runners, this is the end of the encierro as they know it,” said Joe Distler, a semi-retired American who ran the bulls for 50 years and took part in the protest in solidarity.
For regular runners, a good day is when the bulls break free from the cabestros — the castrated steers that accompany them over the 875-metre course to the city bullring — and one can feel the adrenaline-drenched thrill of running half a block directly in the front of a bull’s horns before letting it pass.
Here is more from Ian Mount at the FT. As you wish folks, but I for one am content to live “inside the algorithm.”
Sunday assorted links
1. “This means the watching of pornographic videos generates as much CO2 per year as is emitted by countries such as Belgium, Bangladesh and Nigeria.” Link here.
2. Should we add any countries as states to the U.S.? How about Greenland?
Compensating Kidney Donors
The Trump administration will allow greater compensation for live kidney donors.
Supporting Living Organ Donors. Within 90 days of the date of this order, the Secretary shall propose a regulation to remove financial barriers to living organ donation. The regulation should expand the definition of allowable costs that can be reimbursed under the Reimbursement of Travel and Subsistence Expenses Incurred Toward Living Organ Donation program, raise the limit on the income of donors eligible for reimbursement under the program, allow reimbursement for lost-wage expenses, and provide for reimbursement of child-care and elder-care expenses.
While pure compensation is still illegal this goes a long way to recouping costs. In addition the executive order improves the rules that govern the organ procurement organizations with the goal of deceasing the number of wasted organs. Compensating kidney donors is a policy that I have long supported. Together the two changes could save thousands of lives. Even Dylan Matthew, a living organ donor who writes for Vox, is pleased.
Hat tip: Frank McCormick
How to prevent brain drain?
Moldova has a reasonable education system, but per capita income far below that of Mexico. I don’t see any reason why that ought to change, moving forward. Insofar as Moldova generates serious entrepreneurial talent, you would expect those individuals to leave for greener pastures, say London or even Vienna or Moscow.
(By the way, I wonder what the “new class of very poor white people” are going to be like in a generation or so, in terms of their political views, as liberalism becomes less internationally dominant.)
Sometimes I wonder which features of a country encourage the very smart people to stay there.
One possible candidate would be “very large and messy countries but with a unique ethos,” such as India or Nigeria. If you are born in Latvia, having to migrate to and live in say Frankfurt or London just isn’t that much of a life disruption from the point of view of culture, and you can be at peace with what your breakfast likely will be. It is perhaps harder to leave fufu or chapati behind.
Alternatively, Mexico would seem to be an example of a country where the most talented usually do not leave, and indeed we observe that Mexican migration to the United States is only of “average” human capital quality. Many of the most talented Mexicans are keen to stay in Mexico, where they can earn relatively high incomes, have lots of servants, pursue a variety of life styles with impunity, and enjoy higher social status than they would receive in the States. Yet perhaps those overall features — which induce the talented to stay — are also correlated with the economic, political, and social environment being somewhat dysfunctional?
Footnote: There are numerous very talented Mexican migrants from poor or possibly indigenous backgrounds. But often they do not have the core educational conditions in their upbringing to be able to mobilize their ambitions to achieve maximum productivity potential.
Prejudice and foreign policy views
Scholars of foreign policy preference formation have accepted what Rathbun et al. (2016) call the “vertical hierarchy model,” which says that policy attitudes are determined by more abstract moral ideas about right and wrong. This paper turns this idea on its head by introducing the prejudice first model, arguing that foreign policy preferences and orientations are in part driven by attitudes towards the groups being affected by specific policies. Three experiments are used to test the utility of this framework. First, when conservatives heard about Muslims killing Christians, as opposed to the opposite scenario, they were more likely to support a humanitarian intervention and agree that the United States has a moral obligation to help those persecuted by their governments. Liberals showed no religious preference. When the relevant identity group was race, however, liberals were more likely to want to help blacks persecuted by whites, while conservatives showed no racial bias. In contrast, the degree of persecution mattered relatively little to respondents in either experiment. In another experiment, conservatives adopted more isolationist policies after reading a text about the country becoming more liberal, as opposed to a paragraph that said the United States was a relatively conservative country. The treatment showed the opposite effect on liberals, although the results fell just short of statistical significance. While not necessarily contradicting the vertical hierarchy model, the results indicate that prejudices and biases not only help influence foreign policy attitudes, but moral perceptions of right and wrong in international politics.
That is from Richard Hanania and Robert Trager. File under “Mood Affiliation…”
Saturday assorted links
Does Taiwan have the weirdest politics in the world?
That is the topic of my Bloomberg column earlier in the week, here is one excerpt:
Chiang Kai-shek, the first leader of the island, was part of a generation of Asian visionary leaders which is perhaps without parallel. It includes Lee Kuan Yew of Singapore, Park Chung-Hee in South Korea, Mao Zedong and Deng Xiaoping in China, and Ho Chi Minh in Vietnam. Whether you admire these figures or not, theirs was an unparalleled time for nation building and at a much swifter pace than in European history.
And there is no successful polity that has so many apparently insoluble problems:
Taiwan is also inextricably linked to the economy of the mainland. By one estimate, over 10% of the Taiwanese population lives or works in mainland China, including many of the most ambitious Taiwanese, and China is by far the number one counterparty for trade and investment. Taiwanese real wages stagnated from 2000-2016, in large part because it was more profitable for Taiwanese investors to send their capital to the mainland. The Taiwanese birth rate has plummeted to 1.2 per woman, possibly the lowest in the world.
The Chinese also wish to take them over, by the way. Finally, I close with some remarks on the forthcoming election.
How I practice at what I do
Following up on my post a few days ago, about the value of deliberate practice for knowledge workers, a number of you asked me what form my practice takes. A few of you were skeptical, but it is long since established that practice improves both your writing and your memory, so surely it can do much more than that for your thinking. Here is a partial list of some of my intellectual practice strategies:
1. I write every day. I also write to relax.
2. Much of my writing time is devoted to laying out points of view which are not my own. I recommend this for most of you.
3. I do serious reading every day.
4. After a talk, Q&A session, podcast — whatever — I review what I thought were my weaker answers or interventions and think about how I could improve them. I rehearse in my mind what I should have said. Larry Summers does something similar.
5. I spent an enormous amount of time and energy trying to crack cultural codes. I view this as a comparative advantage, and one which few other people in my fields are trying to replicate. For one thing, it makes me useful in a wide variety of situations where I have little background knowledge. This also helps me invest in skills which will age relatively well, as I age. For me, this is perhaps the most importantly novel item on this list.
6. I listen often to highly complex music, partly because I enjoy it but also in the (silly?) hope that it will forestall mental laziness.
7. I have regular interactions with very smart people who will challenge me and be very willing to disagree, including “GMU lunch.”
8. Every day I ask myself “what did I learn today?”, a question I picked up from Amihai Glazer. I feel bad if I don’t have a clear answer, while recognizing the days without a clear answer are often the days where I am learning the most (at least in the equilibrium where I am asking myself this question).
9. One factor behind my choice of friends is what kind of approbational sway they will exercise over me. You should want to hang around people who are good influences, including on your mental abilities. Peer effects really are quite strong.
10. I watch very little television. And no drugs and no alcohol should go without saying.
11. In addition to being a “product” in its own right, I also consider doing Conversations with Tyler — with many of the very smartest people out there — to be a form of practice. It is a practice for speed, accuracy in understanding written writings, and the ability to crack the cultural codes of my guests.
12. I teach — a big one.
Physical exercise is a realm all of its own, and that is good for your mind too. For me it is basketball, tennis, exercise bike, sometimes light weights, swimming if I am at a decent hotel with a pool. My plan is to do more of this.
Here are a few things I don’t do:
Taking notes is a favorite with some people I know, though my penmanship and coordination and also typing are too problematic for that.
I also don’t review video or recordings of myself, for fear that will make me too self-conscious. For many people that is probably a good idea, however.
I don’t spend time trying to improve my memory, which is either very bad or very good, depending on the kind of problem facing me. (If I need to remember to do something, I require a visual cue, sometimes a pile on the floor, and that creates a bit of a mess. But it works — spatial organization is information!)
I’ve never practiced trying to type on a small screen, though probably I should.
I’ll close by repeating the end of my previous post:
Recently, one of my favorite questions to bug people with has been “What is it you do to train that is comparable to a pianist practicing scales?” If you don’t know the answer to that one, maybe you are doing something wrong or not doing enough. Or maybe you are (optimally?) not very ambitious?
Better training has brought big improvements to the quality of athletics and also chess, and many of those advances are quite recent — when is the intellectual world going to follow suit? When are you going to follow suit?