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Wednesday assorted links

1. NYT reports on Shenyang.

2. On political anger (pdf).  And methods to limit violence at demonstrationsAnd “Do black Americans have the courage and conviction to look the hateful monsters in the eye and offer a love so radical that it reminds them their hatred does not define them?”

3. “Users would be able to earn “Karma Coins” by meditating and teaching Buddhism. The coins could be spent within a special Buddhist community called the “Lotos Network.”” Link here.

4. Millennials don’t care about classic movies.

5. Gelato sushi > sushi gelato, or so it is claimed.  And the Neptune forecast is for diamond rain.

6. Receiving welfare does not seem to dis-incentivize future achievement.

7. Kevin Drum offers a rebuttal on market power, but he cedes the entire ground on mark-ups.  Concentration is up somewhat, but that is not the debate at hand.  Bookstores are an excellent example of where concentration has gone up, and real choice has gone up too.  Nor do I see a big problem with pricing (Amazon used anyone?), though of course the marginal cost of producing an extra book copy is pretty low and thus the measured mark-up should be high.  Pharma?  A given drug has falling mark-ups over time, for new drugs the price falls from infinity.  For phone service, these days prices are tumbling.  Airfares falling too.  Search engines?  p = 0.  An unusual “fail” from Kevin.

The Rise of Market Power?

I am referring to the new Jan De Loecker and Eeckhout paper that is starting to get some buzz (ungated versions here).  Their major result, quite simply, is:

In 1980, average markups start to rise from 18% above marginal cost to 67% now.

That sounds like big news, and probably it is.  But I don’t think the authors are doing enough to interpret their results.  There are two ways these mark-ups go could up: first there may be more outright monopoly, second there may be more monopolistic competition, with high mark-ups but also high fixed costs, and firms earning close to zero profits.  The two scenarios have very different distributional implications, and different policy implications as well.

Consider my local Chinese restaurant.  Maybe the fixed cost of a restaurant has gone up, due to rising rents and the need to invest in information technology.  That can mean higher fixed costs, but still a positive mark-up at the margin.  The marginal meal ordered there probably is taken from food inventory, representing almost pure profit.  They are happy when I walk in the door!  Yet they are not getting super-rich, rather they are earning the going risk-adjusted rate of return.

Now, if the economy is moving more toward monopolistic competition, higher mark-ups don’t explain other distributional changes in the macro data, such as the decline of labor’s share, as cited by the authors.

The authors consider whether fixed costs have risen in section 3.5.  They note that measured corporate profits have increased significantly, but do not consider these revisions to the data.  Profits haven’t risen by nearly as much as the unmodified TED series might suggest.  I do see super-high profits in firms such as Google and Facebook, however.  Those companies for the most part have lowered margins compared to the status quo ex ante when the relevant service cost infinity.  “Mark-ups over time” measurements become very tricky when new products are being introduced.

The authors argue that the rising value of the stock market (plus dividends) is further evidence for rising profits.  Maybe, but keep in mind that the public market is less and less representative of corporate America.  It also has significant survivorship bias, based on size, as superfirms are rising and the number of small and mid-sized companies listing has plummeted since the 1980s.  I suspect what has really happened is that large firms are way more profitable, partly because of globalization, not because they are doing such a major rip-off of American consumers.  In most areas we have more choice, maybe much more choice, than before.  I would be very surprised if it turned out that most good ol’ normal mid-sized service sectors firms saw a nearly fourfold increase of the profit rate relative to gdp since 1980, as the authors are suggesting might be true for the American economy as a whole.  Health care, maybe, I grant that.

Or consider old-style manufacturing.  The authors report that “Markups have gone up in all industries…”  This is in an environment where numerous other highly credible empirical pieces, backed also by good anecdotal observation, cite rising competition from Chinese and other global suppliers.  How does that all square?  I side with David Autor on that one, yet it is reported that those mark-ups, in the sectors where American business now competes with the Chinese, are rising as measured.  I am worried the paper does not at all try to square this tension.  Surely it means the measures are significantly wrong in some way.

Similarly, the time series for manufacturing output is a pretty straight upward series, especially once you take out the cyclical component.  If there is some massive increase in monopoly power, where does the resulting output restriction show up in that data?  Once you ask that simple question, the whole story just doesn’t add up.

Or ask yourself a simple question — in how many sectors of the American economy do I, as a consumer, feel that concentration has gone up and real choice has gone down?  Hospitals, yes.  Cable TV?  Sort of, but keep in mind that program quality and choice wasn’t available at all not too long ago.  What else?  There are Dollar Stores, Wal-Mart, Amazon, eBay, and used goods on the internet.  Government schools.  Hospitals.  Government.  Did I mention government?

I do think concentration in the American economy is up modestly, as I argue in The Complacent Class, and probably profits are up too, including relative to gdp.  Hospitals are the most significant practical problem in this regard, and again that squares with the anecdotal evidence.  As it stands, I don’t yet see that this paper has established its central claim that measured rising mark-ups indicate truly higher profits in a significant way.

Addendum: The section on macroeconomic implications I think is premature (they cite the declining labor share, declining capital share, decline of low skill wages, declining LFP, declining labor market flows, declining migration rates, and slower productivity growth).  They should try to calibrate this, to see if the postulated effects possibly might work out as suggested, and by the way RBC research really is useful.  And timing matters too!  Given the mechanisms the authors cite, what kind of timing lags are possible?  It would seem for instance that when mark-ups rise, real wages fall right then and there, due to the higher prices.  Is that what the data show?  Do the productivity growth effects, and their weird timing with 1973 and 1995-2004 breaks, fit into the same framework?  And so on.  I would be very surprised if the pieces fit together in even a crude sense.

And here are remarks by Rohan Shah.  I thank Alex and Robin for useful comments and discussion, of course without implicating them.

A Theory of the Size and Number of Nations

Gancia, Ponzetto, Ventura provide a precis to their very interesting theory about the size and number of nations.

Before 1950, more than one third of all territorial disputes were decided by war, while after that date diplomacy prevailed in almost 90% of cases.

Why did the first wave of globalisation lead to political concentration and conflict? Why did the second wave of globalisation lead instead to political fragmentation, resolved in a more peaceful way? To answer these questions, in a new paper we develop a model to study the interaction between globalisation and political structure (Gancia et al. 2017). A key premise of our theory is that borders hamper trade and globalisation make borders more costly. We show that political structure adapts to expanding trade opportunities in a non-monotonic way. In early stages, borders are removed by increasing the size of countries. In later stages, the cost of borders is removed by creating economic unions, and this leads to a reduction in the size of countries. Moreover, while the incentive to conquer markets through aggression increases with globalisation, international economic unions remove this incentive, thereby paving the way to the rule of diplomacy.

This point is very good:

Since the size of markets grows rapidly while political borders tend to change slowly, it suggests that globalisation is likely to put more pressure on the world’s political structure. Designing political institutions that can optimally adapt may become one of the major challenges faced by modern societies.

The full paper is here.

Some new results on Chilean school vouchers

There is a new NBER working paper by Richard J. Murnane, Marcus R. Waldman, John B. Willett, Maria Soledad Bos, and Emiliana Vegas.  I have not had a chance to read it, but here is the key part of the abstract:

We found that:

1. On average, student test scores increased markedly and income-based gaps in those scores declined by one-third in the five years after the passage of SEP.

2. The combination of increased support of schools and accountability was the critical mechanism through which the implementation of SEP increased student scores, especially in schools serving high concentrations of low-income students. Migration of low-income students from public schools to private voucher schools played a small role.

We interpret these findings as more supportive of improved student performance than other recent research on the Chilean policy reform.

That is not exactly the Milton Friedman story, but it is essentially a positive report for vouchers.

*Against the Grain: A Deep History of the Earliest States*

That is the new James C. Scott book, and so far it is the most interesting non-fiction read of the year (I am about halfway through).  You can think of it as an extended essay on which technologies actually gave rise to economies of scale, expressed through governance but not only.  Ultimately the focus settles on Mesopotamia, but the discussion is wide-ranging and the lessons are applicable to much of human history.  Here is an opening summary bit:

I propose that cereal grains have unique characteristics such that they would be, virtually everywhere, the major tax commodity essential to early state building.  I believe that we may have grossly underestimated the importance of the (infectious) diseases of crowding in the demographic fragility of the early state.  Unlike many historians, I wonder whether frequent abandonment of early state centers might often have been a boon to the health and safety of their populations rather than a “dark age” signaling the collapse of a civilization.  And finally, I ask whether those populations that remained outside state centers for millennia after the first states were established may not have remained there (or fled there) because they found conditions better.

Here is one good passage:

It is surely striking that virtually all classical states were based on grain, including millets.  History records no cassava states, no sago, yam, taro, plantain, breadfruit, or sweet potato states. (“Banana Republics” don’t qualify!)  My guess is that only grains are best suited to concentrated production, tax assessment, appropriation, cadastral surveys, storage, and rationing.  On suitable soil wheat provides the agro-ecology for dense concentrations of human subjects.

In contrast the tuber cassava (aka manioc, yucca) grows below ground, requires little care, is easy to conceal, ripens in a year, and, most important, can safely be left in the ground and remain edible for two more years.  If the state wants your cassava, it will have to come and dip up the tubers one by one, and then it has a cartload of little value and great weight if transported.

The discussion of how the technology of fire is the ultimate root of economies of scale is alone worth the price of the book.  Scott analogizes complacency/peace to the domestication of non-human animals, including the phenomenon of less violent emotional reactions and greater conformity.

Urgently recommended, and fun to read as well.

Here are various articles on the work of James C. Scott.  Here is a good NYT profile of Scott and also his farming work.

Jeff Mcmahan on Derek Parfit

Above all else, dedicated:

Parfit had a native genius for philosophy. But he also devoted more time and concentrated effort to the development of his ideas than any other philosopher I have known. He once mentioned a passage in a book of economic history that noted that the concept of work had sometimes been understood in such a way that work was necessarily unpleasant. On this understanding, Parfit almost never worked. Yet throughout his adult life he did little other than think about, read, and write philosophy. When I visited Oxford in January and February of 2014, I stayed in his house. During those months, he left the house only a few times. In all but one instance, he left only to walk a few blocks to buy fruits and vegetables for his spartan meals. The other instance was when he walked with me to an appointment I had so that we could continue the philosophical discussion we were having. The one exception to his monomaniacal commitment to his philosophy was his architectural photography, samples of which appear on the covers of his four books. But he gave that up many years ago when he came to fear that he might not live long enough to complete his remaining work in philosophy.

There are many anecdotes about the ways in which Parfit simplified his life to take as little time as possible away from his work. He ate only twice a day, with almost no variation in what he had at each meal. He ate cold food only, mostly fruits and vegetables without any preparation. Even when he could have had freshly ground coffee with only a minute’s additional preparation, he drank instant coffee, often with water straight from the tap. He sometimes kept a book open on the chest-of-drawers so that he could read while putting on his socks. His speed in reading was phenomenal, in part because his power of concentration was prodigious. Wanting to preserve his mental and physical capacities, he took an hour every evening during his last decade to get vigorous exercise on a stationary bicycle, but never without reading philosophy (or occasionally physics) while furiously pedalling.

Parfit’s kindness and generosity, not only to his students and friends but to others as well, are legendary. The comments he gave to people on their manuscripts were sometimes longer than the manuscripts themselves, and the comments were invariably articulated in the gentlest, most tactful, encouraging, and constructive way possible. He frequently wept, not for himself but always from compassion for others.

Here is the full piece, the final two paragraphs are a complete gem.  That is via Joshua Cohen, and various retweeters.

Has intergenerational mobility finally been shown to have declined?

If you recall, Robert D. Putnam, in his last book, expressed surprise that Chetty and Hendren, et.al. (2014) did not find evidence of a decline in intergenerational mobility.  Putnam predicted that researchers would find such evidence soon enough.  After all, it seems the returns to education have been rising, geographic mobility has been falling, market concentration is up slightly, life expectancy is behaving in funny ways, and regional disparities seem to have grown.  Chetty and Grusky, et.al. (2016) seemed to paint a more pessimistic picture than did his work from a few years ago, and now we have a new paper by Jonathan Davis and Bhashkar Mazumder:

We demonstrate that intergenerational mobility declined sharply for cohorts born between 1942 and 1953 compared to those born between 1957 and 1964. The former entered the labor market prior to the large rise in inequality that occurred around 1980 while the latter cohorts entered the labor market largely afterwards. We show that the rank-rank slope rose from 0.27 to 0.4 and the IGE rose from 0.35 to 0.51. The share of children whose income exceeds that of their parents fell by about 3 percentage points. These findings suggest that relative mobility fell by substantially more than absolute mobility.

So far this seems to be the current version of the final word.  The authors also argue, by the way, that Chetty (2016) is somewhat too pessimistic, though correct in suggesting mobility has indeed fallen.

By the way, this seems to be the best link for a download.

Great Britain fact of the day

…the [English] census of 1851 for the first time registered a majority as living in urban areas…the rest of the world remained overwhelmingly rural, perhaps one-tenth of humanity living in towns.  The exceptionalism persisted throughout the century.  In 1890, 61.9 percent of the population of England and Wales dwelled in towns with at least 10,000 inhabitants, while the figure for the country second on the list, Belgium, was 34.5 percent, France staying at 25 percent, China at 4.4 percent.; by 1900, the metropolitan region of Manchester — including satellites such as Bolton, Oldham and Stockport — contained the largest concentration of human population on the planet.

That is from the at times quite interesting Fossil Capital: The Rise of Steam Power and the Roots of Global Warming, by Andreas Malm.  It is most interesting on steam power and the history of energy, not the treatment of current environmental debates.

Monday assorted links

1. Checkout lanes for people who want it to be slow?

2. “In summary I’d say the most important and mysterious unanswered question of economics is the point from #2: which cooperative norms are chosen to be enforced and how does this come about?”  Link here.

3. Larry Summers and his wife discussing poetry, mostly Larry doing the reading (video), and discussion here.

4. New and important results on why labor’s share has fallen:

The recent fall of labor’s share of GDP in numerous countries is well-documented, but its causes are poorly understood. We sketch a “superstar firm” model where industries are increasingly characterized by “winner take most” competition, leading a small number of highly profitable (and low labor share) firms to command growing market share. Building on Autor et al. (2017), we evaluate and confirm two core claims of the superstar firm hypothesis: the concentration of sales among firms within industries has risen across much of the private sector; and industries with larger increases in concentration exhibit a larger decline in labor’s share.

That is from Autor, Dorn, Katz, Patterson, and van Reenen.

What I’ve been reading

1. Joshua Foer, Dylan Thuras, and Ella Morton, Atlas Obscura: An Explorer’s Guide to the World’s Hidden Wonders.  Short descriptions of places you ought to visit, such as ossuaries, micronations, museums of invisible microbes, the floating school of Lagos, the Mistake House of Elsah, Illinois, Bangkok’s Museum of Counterfeit Goods, and the world’s largest Tesla coil in Makarau, controlled by Alan Gibbs of New Zealand.  The selection is conceptual, so I like it.  I will keep this book.

2. James T. Hamilton, Democracy’s Detectives: The Economics of Investigative Journalism.  A highly original look at exactly what the subtitle promises, I thank Jay for keeping Cowen’s Second Law valid.  Has this topic ever been more important than this year?

3. Andre Schlueter, Institutions and Small Settler Economies: A Comparative Study of New Zealand and Uruguay, 1870-2008.  There should be more such books!  New Zealand and Uruguay had roughly comparable per capita incomes in 1920, yet New Zealand pulled away and never gave back much of that lead.  One factor, according to the author, was that the Kiwis had about 40% public ownership of farm land in 1930, resulting in a greater distribution of gains from agriculture and eventually a more egalitarian polity.  Uruguay, in contrast, had engaged in some badly-run land privatizations and ended up with excess concentration.  New Zealand also took the lead on frozen meat shipments, and New Zealand had a much more rapid recovery from the Great Depression, among other factors, and in Uruguay the enforceability of contract rights slipped away considerably in the 1940s and 1950s.  In sum, Uruguay ended up with more rent-seeking policies that redistributed resources toward elites.  I can’t believe this one wasn’t a bestseller.

4. John Richard Boren, For Intellectual Property: The Property Ideas of Andrew J. Galambos.  As far as I can tell from this intriguing but maddeningly vague book, and based on what I have heard, Galambos was a 1960s-70s libertarian astrophysicist who believed in intellectual property rights for all ideas, indeed in ideas and not just for the expression of ideas as under current law.  The rumor, possibly apocryphal, was that those who knew his true doctrines were forbidden to explain them to others without first making the requisite payments.  I saw this in the bibliography in the back of the book:

Sic Itur Ad Astra, Volume One by Andrew J. Galambos.  This is the transcript of his 1968 delivery of Courses V-50 and V-50X.  The book discloses the basics of the Science of Volition but has been removed from sale by Galambos’ trustees.  Used copies are sometimes available.  Some of Galambos’ recorded lectures…can be heard online at the FEI website, www.fei-ajg.com, where the trustees have imposed significant restrictions on access.  Only one Galambos course, V-76…is available for purchase on CD without restrictions.

In fact I know more than I am letting on.

5. James Joyce, Ulysses, always worth a reread, in bits and pieces.  Don’t start on p.1.  That way, you won’t be discouraged by not knowing what is going on.  That is serious advice.

I have browsed the useful-seeming Johan A. Lybeck,  The Future of Financial Regulation: Who Should Pay for the Failure of American and European Banks?  Most books with titles like that are bad and boring, this seems to be a very useful collection of facts about previous bailouts.

Yesterday’s antitrust laws can’t solve today’s problems

I view antitrust law as a body of doctrine that is largely obsolete.  Here is one part of my broader argument, from today’s Bloomberg column:

Or consider the body of law assessing resale-price maintenance in the book trade. Today you can buy used books online. That constrains the prices of both used and new books, no matter how judges might rule. In 1998, the U.S. Justice Department initiated an antitrust suit against Microsoft, partly on the grounds that the company sought to extend its market power to browsers. Few people today think the company’s Internet Explorer browser failed because the government restored competitiveness; Firefox and Google built better software. Yet prosecutors spent years distracting the talent of one of America’s most successful companies, as they had with IBM earlier in a 13-year case dropped in 1982.

Policy should instead focus on the real problems that depress living standards for the middle class and the poor. Rates of inflation have been high for housing, medical care and higher education, major budget items for many people. As for housing, there are harmful restrictions on cheaper building, but in the expensive areas there is no monopolistic landlord who owns all the housing stock. So that is not an antitrust issue, nor is university tuition for the most part.

On the other hand, there is a strong case that growing concentration in the hospital market has raised health-care costs. Some major metropolitan areas have only a small number of hospital chains. Part of the problem is that highly regulated environments encourage consolidation and larger firms to deal with compliance costs, so antitrust law won’t provide an easy fix. Nonetheless, hospitals probably should be the biggest area of concern for antitrust enforcers, as competition does not now operate freely.

And this:

The major internet companies are a new target of antitrust attention, yet most of them give their main product away for free. Contrary to charges that they were going to stifle innovation, Google and its parent company, Alphabet, have led or subsidized innovation in driverless vehicles, artificial intelligence and wearable devices. Most major tech companies also are seeking to expand their innovative presence outside their main businesses, with artificial intelligence being a major new field of competition. Complainers about Amazon are more likely to be suppliers than consumers, the presumed beneficiaries of antitrust enforcement.

The best we can hope for is benign neglect, as I cannot imagine today’s politics producing an improved version of antitrust laws.  Do read the whole thing, I consider IP law, cable regulation, and a number of other issues too.

Innovation is less concentrated than it used to be

Might growing deconcentration possibly be either a partial cause or symptom of the Great Stagnation? Yasin Ozcan and Shane Greenstein report:

Using patents as indicators of inventive activity, this article characterizes the concentration of origins of invention from 1976 to 2010, and how these changed over time. The analysis finds pervasive deconcentration in virtually every area related to ICT, but it can explain only a small part of this trend. Deconcentration happens despite the role of lateral entry by existing firms. New firm entry drives part of the deconcentration, but this alone cannot explain the change. A single supply factor in the market for ideas, such as the breakup of AT&T, also cannot explain the trend. Finally, eleven percent of patents change hands through mergers and acquisitions activity, but this does not make up for the declines in concentration in the origins of invention.

Worth a ponder…

Economic development in an “Average is Over” world

Here is my new paper on that topic (pdf, new link here), commissioned by the Asian Development Bank (but not yet approved or refereed by them).  The key question is what kind of development path will follow, given the realities of premature deindustrialization in emerging economies today.  Here is one bit from the paper:

…trickle-down growth from price discrimination and the erosion of intellectual property rents becomes more important as a source of economic improvement. I call this mechanism “cell phones instead of automobile factories.” Many economic ideas are subject to non-rivalrous use, as they can be deployed by many people once they exist. That phenomenon may sound separate from the substitution of capital for labor outlined above, but that is part of the same broader process. If the wealthier nations use smart software to displace imports from the developing world, poorer nations will benefit from the software in other ways, including a trickle-down of goods and services.

The cell phone (and by extension the smart phone) is a paradigmatic example of trickle-down consumption. The technologies behind the cell phone were invented across a variety of nations, none of them poor (although China contributed to the finishing process), and yet cell phones are extremely prominent in poor and lesser developed nations. Internationally, cell phones and smart phones have brought significant benefits and often at relatively low cost. In the poorer parts of Asia, cell and smart phones are available for much lower prices than in the West. Part of that is the result of price discrimination, such as when Samsung sets deliberately lower prices for most of Africa and the poorer parts of Asia. In other cases the poorer countries buy a somewhat lower quality product, but one still effective for many of their needs. The Blackberry was not long ago state of the art in the United States, but now it sells primarily in poorer countries, including Indonesia, Vietnam, and South Asia, in addition to parts of Africa, and of course it sells to these regions at lower prices.

And this:

Or in other words, rather than Indonesia or Cambodia exporting manufactures to buy imported goods, an alternative development path is that some of those imports trickle down and enter poorer countries at especially low prices. Poorer economies can’t get constant cost goods and services for any cheaper than they are available in wealthier countries and in fact they may have to pay more because of shipping costs, poor institutions, and less efficient retail systems. If the wealthy nations produce more cement, the trickle down benefits from that activity may be slight. But for declining cost commodities, it is a different story entirely.

The more the economies of the wealthy countries are focused on increasing returns to scale sectors, the more important this version of trickle-down growth will become. And for the last few decades, many of the most important innovations in the wealthy countries have been shifting into increasing returns to scale sectors, most notably in the tech world. The tech world is geographically clustered, and centered in Silicon Valley, which are both classic signs of an increasing returns to scale sector. Some of the outputs are given away for free (Google, Facebook), and others show high degrees of market concentration, with a single dominant supplier providing a network good (eBay, Facebook, Instagram, Twitter). When it comes to the hardware behind the tech sector, there is an emphasis on new models, upgrades, and differential pricing plans, again all signs of increasing returns to scale.

In the limiting case, if everything in the economy looks and acts like the tech sector, this source of growth could be quite significant indeed. In other words, a world where “software eats the world,” to borrow Marc Andreessen’s phrase, is a world where the developing nations end up doing pretty well, even if the traditional export-oriented path to convergence has gone away.

Most forms of economic growth are fundamentally imbalanced (Hirschman 1958), but in this “cell phones scenario” we see a new form of imbalance. The new imbalance would be based on increasing returns to scale goods, which would trickle down to poorer countries, vs. constant and increasing cost goods, which would not trickle down. Developing nations thus would be very well supplied with (cheaper versions of) increasing returns to scale goods, but have relatively stagnant supplies of constant and decreasing returns to scale goods.

Comments of course are welcome.  The paper also includes some brief discussions of how the main arguments might apply to China, India, the Philippines, and Central Asia, in line with its ADB origins.

The Number of Publicy Traded Firms Has Halved

In the past twenty years [the] U.S. has lost almost 50% of its publicly traded firms [from 6,797 in 1997 to 3,485 in 2013, AT]. This decline has been so dramatic, that the number of firms these days is lower than it has been in the early 1970s, when the real gross domestic product in the U.S. was one third of what it is today. This phenomenon has been a general pattern that has affected over 90% of U.S. industries.

A rather stunning finding from Grullon, Larkin and Michaely.

The total number of firms has dropped far less than the number of publicly traded firms, so in part this is probably due to laws affecting publicly traded firms in particular such as Sarbanes-Oxley. But there has also been a small drop in the total number of firms (depending on year measured) and concentration ratios have increased which suggests that competition might have fallen. (I wish the authors had looked more closely at the entire size distribution). Have international firms risen to offset the decline of publicly-trade firms? The authors discuss but discount the role of globalization. I don’t see, however, how their findings of small effects on output competition are consistent with big labor market effects. Nevertheless the bottom line is that as concentration rates have increased so have profits, as a recent CEA report also argues.

Is this all the after-effects of the Great Recession? I hope so but the decline in the number of publicly traded firms is also consistent with the research on long-run declining dynamism (including my own research on regulation and dynamism) which shows that startup and reallocation rates have been trending down for thirty years.

Guy Rolnick at Pro-Market also discusses these trends and adds another thought to keep you up at night:

…One question may even loom larger: given that more and more Americans’ pensions and long-term savings today are invested in the stock market in defined contribution schemes, have we created a pension model that is based on a growing share of investments in rent-seeking activities? Put another way, are we facing an economic model in which tens of millions of Americans’ pensions are relying on the ability of companies to extract rents from consumers and taxpayers?

Tuesday assorted links

1. Economist Peter Navarro endorses Trump.

2. Olivier Blanchard is worried about Japan.

3. “Dallas, with the highest concentration of [Craigslist] missed connections, has an impressive spread from Monday to Friday, with its inhabitants posting throughout the workday and late into the evening.”  For the country as a whole, the most lovelorn days seem to be Mondays.

4. Is Hillary likely to be prosecuted?  I’ve tried to avoid this topic, but I found this article both realistic and full of actual information.

5. Jonathan Haidt responds to critics.  And one interpretation of the new Chetty results.