Solve for the equilibrium
This one concerns China:
A person familiar with the negotiations said Myanmar’s government reached out to the U.S. to request help reviewing the contract [with China] to ensure it didn’t include any hidden traps. This person said other Western countries, including the U.K. and Australia, provided similar assistance.
The negotiations “were very much Burmese-led but armed with the advice of the Americans and others as well. We were able to go to the Chinese [and say], ‘This part is OK, this part is problematic in terms of debt,’” the person said, referring to the country by its previous name.
The Myanmar port deal is part of an economic and diplomatic influence campaign known as the Belt and Road Initiative, a signature effort by Chinese President Xi Jinping to dot the globe with Chinese-funded infrastructure projects.
Should we break up the big tech companies?
That is my piece in the Globe and Mail, excerpted with edits from my new Big Business: A Love Letter to an American Anti-Hero, here is one excerpt:
Furthermore, it is striking just how effective the major tech companies have been as innovators. Other than providing the best free search in the world, Alphabet – the umbrella corporation under which Google is a subsidiary – gave us Gmail, one of the best and biggest e-mail services in the world, for free. Google Maps, which is also free, is pretty neat, too.
Then, despite the risks identified by critics of the deal – that YouTube appeared to be a bottomless pit for copyright-violation suits and nasty comments – Google bought the streaming-video service for US$1.65 billion, and dramatically upgraded it. Google cleaned up the legal issues, using its advanced software capabilities to spot copyright violations while enforcing takedown requests, improving search and heavily investing in the technology that has helped make video so widely used on the internet today.
In 2005, Google purchased Android and elevated the company’s open-source system to the most commonly used cellphone software in the entire world. Because of the Google-Android combination, hundreds of millions of people have enjoyed better and cheaper smartphones. More generally, Google has made most of its software open-source, enabling others to build upon it with additional advances, with entire companies now devoted to helping other companies build upon that infrastructure – meaning Google has not likely been the major beneficiary of its own actions.
Google, by way of Alphabet, has taken a lead role in developing self-driving vehicles and the underlying artificial intelligence, now being developed through Waymo; by throwing its weight behind this, Alphabet made the concept more publicly acceptable, and it could potentially save many lives on the road. After Hurricane Maria devastated Puerto Rico, Alphabet also stepped in to do good, deploying its work-in-progress Project Loon to restore internet access, which may eventually be integral for remote areas in Africa. It’s a bold attempt to create a better and more connected living situation for some of the world’s more vulnerable people.
All that from a company that is just a little more than 20 years old. Is this really the kind of company we should be punishing?
There are other points of interest at the link.
Privacy sentences to ponder
Significantly, 86% of respondents express no willingness to pay for additional privacy when interacting with Google. Among the remaining 14%, the average expressed willingness to pay is low.
That is from a new paper by Caleb S. Fuller, via the excellent Kevin Lewis.
Friday assorted links
1. Wolves return to the Netherlands after 140 years.
2. Points about politics, true ones, from Matt Y.
4. Markets in everything: “You can now hire someone to drink your bubble tea in China.”
5. “Canada: one Indigenous group accuses other of cultural appropriation in award row.”
6. There is no great stagnation: “A quieter airplane toilet flush may soon be on its way.“
An Interview with Preston McAfee
Here’s a good interview by the Richmond Fed of Preston McAfee. McAfee was one of the designers of the FCC’s spectrum auctions and used that experience to move from academia to technology firms. He has held top positions at Yahoo, Google and Microsoft. Here’s one issue that I have discussed before, tacit collusion among AIs..
EF: What are the implications of machine learning, if any, for regulators?
McAfee: It is likely to get a lot harder to say why a firm made a particular decision when that decision was driven by machine learning. As companies come more and more to be run by what amount to black box mechanisms, the government needs more capability to deconstruct what those black box mechanisms are doing. Are they illegally colluding? Are they engaging in predatory pricing? Are they committing illegal discrimination and redlining?
So the government’s going to have to develop the capability to take some of those black box mechanisms and simulate them. This, by the way, is a nontrivial thing. It’s not like a flight recorder; it’s distributed among potentially thousands of machines, it could be hundreds of interacting algorithms, and there might be hidden places where thumbs can be put on the scale.
I think another interesting issue now is that price-fixing historically has been the making of an agreement. In fact, what’s specifically illegal is the agreement. You don’t have to actually succeed in rigging the prices, you just have to agree to rig the prices.
The courts have recognized that a wink and a nod is an agreement. That is, we can agree without writing out a contract. So what’s the wink and a nod equivalent for machines? I think this is going somewhat into uncharted territory.
Coasean kidnappings and the bargaining range
One of the highest ransoms ever paid — US $60 million for the two Born brothers in Argentina in 1975 — was negotiated by one of the captives himself: Jorge Born. As a company insider, he knew how much money could be raised, but it still took seven months before his captors were convinced that they had truly squeezed him dry. When it finally arrived, the father felt he had no option but to accede to the memorandum signed by his son and his kidnappers. So negotiators work extremely hard to avoid parallel negotiations and bat away unhelpful interventions from the hostage. It is not surprising that some victims despair.
That is from the new and interesting Kidnap: Inside the Ransom Business, by Anja Shortland.
Samir Varma on the forthcoming tech breakthroughs
From my email:
We are now starting to get a hint of the future transformative technologies that you guessed were on their way in “The Great Stagnation”. You had not speculated on what they might be, but there are faint hints on what is likely to happen.
I believe this article is one leg: extremely fast air travel. The second leg is the Hyperloop and similar: extremely fast ground travel. The third leg is synthetic biology (e.g: https://www.economist.com/leaders/2019/04/04/the-promise-and-perils-of-synthetic-biology). The fourth leg is quantum computing, which is finally starting to show that it might work. And the fifth, and final leg, is fusion energy, which looks eerily like it will actually come to fruition this time.Put those 5 together and you have the makings of a new economy, with a huge burst of growth to come for many decades. These are just faint hints, of course, but they’re starting to get increasingly clear.
Is work fun?
Ladders runs an excerpt from my book Big Business: A Love Letter to an American Anti-Hero, here is one part:
Another way to think about the non-pay-related benefits of having a job is to consider the well-known and indeed sky-high personal costs of unemployment. Not having a job when you want to be working damages happiness and health well beyond what the lost income alone would account for. For instance, the unemployed are more likely to have mental health problems, are more likely to commit suicide, and are significantly less happy. Sometimes there is a causality problem behind any inference—for instance, do people kill themselves because they are unemployed, or are they unemployed because possible suicidal tendencies make them less well suited to do well in a job interview? Still, as best we can tell, unemployment makes a lot of individual lives much, much worse. In the well-known study by economists Andrew E. Clark and Andrew J. Oswald, involuntary unemployment is worse for individual happiness than divorce or separation. Often it is more valuable to watch what people do rather than what they say or how they report their momentary moods.
There is much more at the link.
Thursday assorted links
1. Umps are bad at calling strikes.
2. The Non-Non-libertarian FAQ.
3. Small towns are doing better out west.
4. “The Travis Corcoran novel (a sequel to last year’s winner) the moon colonists consult a “Cowen wiki” to figure out where to eat, and Corcoran says in the Afterword that this is a hat tip to you.” Or so I am told.
5. Why doesn’t the price of on-line higher education fall more? A very interesting and important symposium.
6. “The data don’t seem to support the claim that human capital investments are most effective when targeted at younger ages.” A very interesting and important post.
How is the Swachh Bharat Mission Really Going?
One of the goals of the Swachh Bharat or Clean India mission was to achieve an “open-defecation free” (ODF) India by 2 October 2019 (the 150th anniversary of Gandhi’s birth). OD is a big problem in India contributing to child sickness, stunting and a host of permanent problems including lower IQs. As of 2011, half of Indian households didn’t have access to a latrine but since that time millions of latrines have been built and the government has encouraged (sometimes “vigorously”) latrine use.
Unfortunately, the close connection between the Swachh Bharat mission and Prime Minister Modi has made achieving the mission, or claiming to have achieved the mission, not just a political goal but a test of patriotism and support for Modi. The Swachh Bharat website, for example, proclaims that India is now 99% open defecation free, including 100% coverage in Rajasthan, Madhya Pradesh, Utter Pradesh and Bihar.
In fact, surveys from the RICE Institute reported in an article for the India Forum show that open defecation is still common:
In Rajasthan and Madhya Pradesh, states that had been declared ODF by the time of the survey, we found rural open defecation rates of about 50% and about 25%, respectively. The vast majority of villages in Uttar Pradesh and Bihar have also been declared ODF; the quantitative survey found open defecation rates of approximately 40% and 60%, respectively, in these states (Gupta et al 2019).
How do villages, and eventually blocks, districts, and states get declared ODF despite high levels of open defecation? One reason is that ODF status is often declared where latrine coverage is, in fact, incomplete: about 30% of households in the four states we studied did not own a latrine. Another reason is that many people who own a latrine still defecate in the open. In fact, latrine use among latrine owners has not changed since 2014: one in four people who own a latrine in the 2018 survey do not use it (Gupta et al 2019).
Ambitious program need not reach their goals to be successful–progress has been made and Modi can take credit–but it’s dangerous when problems are declared solved in order to meet political timelines and narratives. Work remains to be done.
Filibuster sentences to ponder
These data reveal that, in half of the Congresses over the past two decades, successful filibustering minorities usually represented more people than the majorities they defeated.
That is from Benjamin Eidelson in Yale Law Review, note that he is covering only 1991-2010.
What Explains Labor’s Declining Share of Revenue in Major League Baseball?
Somehow I had missed this earlier paper by John Charles Bradbury:
Since the early-2000s, the share of revenue going to Major League Baseball players has been diminishing similar to the decline of labor’s share of revenue observed in the US economy. This study examines potential explanations for the decline in baseball, which may result from related factors and provide information relevant to explaining this macroeconomic trend. The results indicate that the value-added from non-player inputs, collective bargaining agreement terms, and related changes in the returns to winning contributed to the decline of players’ share of income. Competition from substitute foreign labor and physical capital are not associated with the decline in labor’s share of income in baseball.
There is also this sentence:
The decline in labor’s revenue share in MLB is consistent with changes in revenue share in the hospitality and leisure industry that experienced a decrease in labor’s share of income from 65.7 percent to 62.1 percent between 1987 and 2011 (Elsby, Hobijn, and Şahin 2013).
Another hypothesis I have heard is that baseball players are not nearly as good at, or as well-suited for, the use of social media, as compared say to the more visible basketball players. Another (quite speculative) claim is that sabermetrics has commoditized a lot of players and in turn lowered their bargaining power.
Wednesday assorted links
1. Andrea O’Sullivan reviews Big Business for Reason magazine: “In true Cowenesque fashion, the book starts out with a markedly contrarian premise that by the last page seems so evident that you wonder why it first felt outlandish at all. I expect that even the most dogged big business critic will feel just a little tenderer towards today’s titans by the end (whether they want to admit it or not).”
2. Boeing and innovation (NYT).
3. Interview with Preston McAfee.
My Conversation with Ed Boyden, MIT neuroscientist
Here is the transcript and audio, highly recommended, and for background here is Ed’s Wikipedia page. Here is one relevant bit for context:
COWEN: You’ve trained in chemistry, physics, electrical engineering, and neuroscience, correct?
BOYDEN: Yeah, I started college at 14, and I focused on chemistry for two years, and then I transferred to MIT, where then I switched into physics and electrical engineering, and that’s when I worked on quantum computing.
COWEN: Five areas, actually. Maybe more.
BOYDEN: Guess so.
COWEN: Should more people do that? Not the median student, but more people?
BOYDEN: It’s a good question.
And:
COWEN: Are we less creative if all the parts of our mind become allies? Maybe I’m afraid this will happen to me, that I have rebellious parts of my mind, and they force me to do more interesting things, or they introduce randomness or variety into my life.
BOYDEN: This is a question that I think is going to become more and more urgent as neurotechnology advances. Already there are questions about attention-focusing drugs like Ritalin or Adderall. Maybe they make people more focused, but are you sacrificing some of the wandering and creativity that might exist in the brain and be very important for not only personal productivity but the future of humanity?
I think what we’re realizing is that when you intervene with the brain, even with brain stimulation, you can cause unpredictable side effects. For example, there’s a part of the brain called the dorsolateral prefrontal cortex. That’s actually an FDA-approved site for stimulation with noninvasive magnetic pulses to treat depression. But patients, when they’re stimulated here . . . People have done studies. It can also change things like trust. It can change things like driving ability.
There’s only so many brain regions, but there’s millions of things we do. Of course, intervening with one region might change many things.
And:
COWEN: What kind of students are you likely to hire that your peers would not hire?
BOYDEN: Well, I really try to get to know people at a deep level over a long period of time, and then to see how their unique background and interests might change the field for the better.
I have people in my group who are professional neurosurgeons, and then, as I mentioned, I have college dropouts, and I have people who . . . We recently published a paper where we ran the brain expansion process in reverse. So take the baby diaper polymer, add water to expand it, and then you can basically laser-print stuff inside of it, and then collapse it down, and you get a piece of nanotechnology.
The co–first author of that paper doesn’t have a scientific laboratory background. He was a professional photographer before he joined my group. But we started talking, and it turns out, if you’re a professional photographer, you know a lot of very practical chemistry. It turns out that our big demo — and why the paper got so much attention — was we made metal nanowires, and the way we did it was using a chemistry not unlike what you do in photography, which is a silver chemistry.
And this:
COWEN: Let’s say you had $10 billion or $20 billion a year, and you would control your own agency, and you were starting all over again, but current institutions stay in place. What would you do with it? How would you structure your grants? You’re in charge. You’re the board. You do it.
Finally:
COWEN: If you’re designing architecture for science, what do you do? What do you change? What would you improve? Because presumably most of it is not designed for science. Maybe none of it is.
BOYDEN: I’ve been thinking about this a lot, actually, lately. There are different philosophies, like “We should have open offices so everybody can see and talk to each other.” Or “That’s wrong. You should have closed spaces so people can think and have quiet time.” What I think is actually quite interesting is this concept that maybe neither is the right approach. You might want to think about having sort of an ecosystem of environments.
My group — we’re partly over at the Media Lab, which has a lot of very open environments, and our other part of the group is in a classical sort of neuroscience laboratory with offices and small rooms where we park microscopes and stuff like that. I actually get a lot of productivity out of switching environments in a deliberate way.
There is much more of interest at the link.
Terrorism at GMU and the Very Long Arm of the Law
I found this email from the GMU Police about GMU and terrorism surprising and somewhat disturbing:
On Wednesday, March 20, 2019, Mason Police informed the Mason community about an individual who had threatened harm to the University in a video posted on social media. At the time of the threats, the suspect was located in Morocco and was not an immediate or credible threat to the Mason community. However, because the suspect’s actions violated Virginia criminal law, Mason Police secured five felony warrants of arrest related to bomb threats against the University. Additionally, Mason Police worked with Interpol and several federal law enforcement agencies to track the suspect through several countries in the Middle East before he was ultimately arrested on the Virginia warrants while trying to enter Israel.
The suspect, Nassim Darwich, was extradited back to the US through JFK International Airport in New York City. Yesterday, Mason Police were in New York to take custody of Mr. Darwich and return him to Virginia. He is currently in the Fairfax County Adult Detention Center where he is being held on $100,000.00 secured bond.
Mason Police would like to thank Interpol, the US Customs Service, Homeland Security Investigations, and the FBI/NY for assisting Mason Police with monitoring and arresting the suspect. We also appreciate the Mason community members who saw Darwich’s internet-based threats and acted to alert Mason Police. If anyone has any additional information about this case, please give the Mason Police Department a call at (703) 993-2810.
The email was from April 5 so a university police department was able to reach out to the Middle East, arrest and extradite an individual to the United States in about two weeks. Impressive. As a potential target, I guess I am pleased. But it’s somewhat frightening to see how long the arm of the law has become, at least for terrorism related crimes.