Noah Smith and I debate the future of immigration into America

Over at Bloomberg:

Noah Smith: …Your conclusion was that although most Americans might have warm feelings toward immigrants in the abstract, the minority who are intensely anti-immigrant will prevail.

I think there are reasons to doubt this conclusion. The first reason is that illegal immigration and low-skilled immigration — the types that people tend to feel most negatively about — are both way down from a decade ago. Because these unpopular inflows are simply less of an issue, the pressure for restriction might abate quickly. Meanwhile, with U.S. fertility rates low, the U.S. needs skilled immigrants to come in and pay taxes to support the comfortable retirements of the elderly native-born. We might be seeing a situation similar to the mid-1800s, in which the needs of the U.S. economy override a brief bout of nativism.

Tyler Cowen: I still don’t see a renewed dose of immigration increases in America’s immediate or even midterm future. Immigration has become a major issue all around Europe, and pretty uniformly it is helping right-wing parties, not the left. Democrats fear this scenario for the U.S., even if immigration is polling pretty well at the moment. And so Democrats will keep some distance from the issue, more than one might have thought a few years ago.

Democrats also have begun to rethink the demographic-dividend strategy, based on the premise that immigrants will continue to vote for the Democrats in disproportionate numbers. According to one estimate, in 2016 perhaps as many as 28 percent of Latinos voted Republican, more than many observers had been expecting. The very successes of assimilation mean that many immigrants will end up voting Republican. Furthermore, a lot of recent legal arrivals are among the strongest opponents of illegal immigration into this country. I increasingly doubt that Democrats will be willing to bet the farm on a political strategy to boost immigration.

There is much more at the link.

Which happiness results are robust?

Timothy N.Bond and Kevin Lang have a report from the front:

We replicate nine key results from the happiness literature: the Easterlin Paradox, the ‘U-shaped’ relation between happiness and age, the happiness trade-off between inflation and unemployment, cross-country comparisons of happiness, the impact of the Moving to Opportunity program on happiness, the impact of marriage and children on happiness, the ‘paradox’ of declining female happiness, and the effect of disability on happiness. We show that none of the findings can be obtained relying only on nonparametric identification. The findings in the literature are highly dependent on one’s beliefs about the underlying distribution of happiness in society, or the social welfare function one chooses to adopt. Furthermore, any conclusions reached from these parametric approaches rely on the assumption that all individuals report their happiness in the same way. When the data permit, we test for equal reporting functions, conditional on the existence of a common cardinalization from the normal family. We reject this assumption in all cases in which we test it.

I can’t recall the last time a single paper so influenced my overall view of a field.  Their critique is even stronger than the abstract makes it sound.

Chinese sentences of the day another view of Trump

I have just spent a week in Beijing talking to officials and intellectuals, many of whom are awed by his skill as a strategist and tactician…He [Yafei] worries that strategic competition has become the new normal and says that “trade wars are just the tip of the iceberg”.

…In Chinese eyes, Mr Trump’s response is a form of “creative destruction”. He is systematically destroying the existing institutions — from the World Trade Organization and the North American Free Trade Agreement to Nato and the Iran nuclear deal — as a first step towards renegotiating the world order on terms more favourable to Washington. Once the order is destroyed, the Chinese elite believes, Mr Trump will move to stage two: renegotiating America’s relationship with other powers. Because the US is still the most powerful country in the world, it will be able to negotiate with other countries from a position of strength if it deals with them one at a time rather than through multilateral institutions that empower the weak at the expense of the strong…

My interlocutors say that Mr Trump is the US first president for more than 40 years to bash China on three fronts simultaneously: trade, military and ideology. They describe him as a master tactician, focusing on one issue at a time, and extracting as many concessions as he can. They speak of the skillful way Mr Trump has treated President Xi Jinping. “Look at how he handled North Korea,” one says. “He got Xi Jinping to agree to UN sanctions [half a dozen] times, creating an economic stranglehold on the country. China almost turned North Korea into a sworn enemy of the country.” But they also see him as a strategist, willing to declare a truce in each area when there are no more concessions to be had, and then start again with a new front.

That is highly speculative, to say the least.  And perhaps you should not be happy if China sees your strategy as strong, since China itself generally does a poor job cultivating allies and also undervalues them.  In any case, that is from Mark Leonard at the FT.

Wednesday assorted links

Facts about economics papers

The average length of a published economics paper has more than tripled over the past four decades, and some academics are sick of wading through them. At this year’s American Economics Association conference, Massachusetts Institute of Technology professor David Autor compared a 94-page working paper about the minimum wage to “being bludgeoned to death with a Nerf bat” and started a Twitter hashtag, #ThePaperIsTooDamnedLong.

…Between 1970 and 2017, the average length of papers published in five top-ranked economics journals swelled from 16 pages to 50 pages, according to an analysis by University of California, Berkeley economists Stefano DellaVigna and David Card.

Longer papers can include more-robust statistical analysis, engage in multifaceted arguments or address complex topics. Some economists speculate paper inflation is also the product of the laborious peer-review process, in which other economists act as referees and read drafts, then demand any number of additions before publication…

Economists also tend to write defensively, including redundant material even in early versions of papers to head off possible quibbles that might come up during the review process, said Samuel Bazzi, an economics professor at Boston University.

That is from Ben Jeubsdorf at the WSJ.  One question is whether longer papers are better from a scientific point of view.  A second and more important question is whether long papers are better for attracting genius talent to the economics profession.

For the pointer I thank the excellent Samir Varma.

Every law is violent

Stephen Carter’s great column, written after the killing of Eric Garner who was being arrested for selling loose cigarettes, needs to be read and reread and periodically shouted from the rooftops:

…Every law is violent.  We try not to think about this, but we should.  On the first day of law school, I tell my Contracts students never to argue for invoking the power of law except in a cause for which they are willing to kill. They are suitably astonished, and often annoyed. But I point out that even a breach of contract requires a judicial remedy; and if the breacher will not pay damages, the sheriff will sequester his house and goods; and if he resists the forced sale of his property, the sheriff might have to shoot him.

This is by no means an argument against having laws.

It is an argument for a degree of humility as we choose which of the many things we may not like to make illegal. Behind every exercise of law stands the sheriff – or the SWAT team – or if necessary the National Guard. Is this an exaggeration? Ask the family of Eric Garner, who died as a result of a decision to crack down on the sale of untaxed cigarettes. That’s the crime for which he was being arrested. Yes, yes, the police were the proximate cause of his death, but the crackdown was a political decree.

The statute or regulation we like best carries the same risk that some violator will die at the hands of a law enforcement officer who will go too far. And whether that officer acts out of overzealousness, recklessness, or simply the need to make a fast choice to do the job right, the violence inherent in law will be on display. This seems to me the fundamental problem that none of us who do law for a living want to face.

But all of us should.

I thought of this column today after reading about Santa Barbara’s ban on plastic straws:

On Tuesday, the Santa Barbara City Council unanimously passed a bill that prohibits restaurants, bars, and other food service businesses from handing out plastic straws to their customers. …Santa Barbara… has banned even compostable straws, permitting only drinking tubes made from nonplastic materials such as paper, metal, or bamboo. The city also has made a second violation* of its straw prohibition both an administrative infraction carrying a $100 fine and a misdemeanor, punishable by a maximum fine of $1,000 and up to six months in jail. Each contraband straw or unsolicited plastic stirrer counts as a separate violation, so fines and jail time could stack up quickly.

…Assistant City Attorney Scott Vincent tells me criminal charges would be pursued only after repeat violations and if there were aggravating circumstances.

Is eliminating corporate tax havens such a good idea?

Juan Carlos Suárez Serrato says maybe not:

We show that eliminating firms’ access to tax havens has unintended consequences for economic growth. We analyze a policy change that limited profit shifting for US multinationals, and show that the reform raised the effective cost of investing in the US. Exposed firms respond by reducing global investment and shifting investment abroad — which lowered their domestic investment by 38% — and by reducing domestic employment by 1.0 million jobs. We then show that the costs of eliminating tax havens are persistent and geographically concentrated, as more exposed local labor markets experience declines in employment and income growth for over 15 years. We discuss implications of these results for other efforts to limit profit shifting, including new taxes on intangible income in the Tax Cuts and Jobs Act of 2017.

Here is the NBER paper.

Educational sentences to ponder

Of course, poor kids can still soar in school, and rich ones can flunk out, but few would deny that money is a powerful influence on people’s futures. Now, consider that household income explains just 7 percent of the variation in educational attainment, which is less than what genes can now account for. “Most social scientists wouldn’t do a study without accounting for socioeconomic status, even if that’s not what they’re interested in,” says Harden. The same ought to be true of our genes.

And:

“Education needs to start taking these developments very seriously,” says Kathryn Asbury from the University of York, who studies education and genetics. “Any factor that can explain 11 percent of the variance in how a child performs in school is very significant and needs to be carefully explored and understood.”

The researchers are to the point:

What policy lessons or practical advice do you draw from this study?

None whatsoever. Any practical response—individual or policy-level—to this or similar research would be extremely premature and unsupported by the science.

Here is the story, via Michelle Dawson.  Here is the underlying paper, here are the FAQ.

Cafeteria protectionism

When Facebook moves into its new offices in Mountain View this fall, a signature Silicon Valley perk will be missing — there won’t be a corporate cafeteria with free food for about 2,000 employees.

In an unusual move, the city barred companies from fully subsidizing meals inside the offices, which are part of the Village at San Antonio Center project, in an effort to promote nearby retailers. The project-specific requirement passed in 2014, attracting little notice because the offices were years away from opening.

It came in response to local restaurants that said Google, the city’s biggest employer, was hurting their businesses by providing free meals, according to John McAlister, a Mountain View councilman.

Here is the story, via Anecdotal.  I spent two days once eating the food at Menlo Park Facebook, and thought it was quite good.

Higher education update occasionally we innovate

Income-share agreements:

To pay for his professional flight degree at Purdue University in Indiana, Andrew Hoyler had two choices. He could rely on loans and scholarships. Or he could cover some of the cost with an “income-share agreement” (ISA), a contract with Purdue to pay it a percentage of his earnings for a fixed period after graduation.

And:

Around a third of graduate education in America is now online, according to Richard Garrett of Eduventures, a consultancy. Many universities take a do-it-yourself approach, but the better-known ones tend to go into partnership with the OPMs. 2U, a ten-year-old startup, led the way, and has been followed into the business by, among others, Pearson, an educational publisher, and Coursera (which started off as a provider of MOOCs). Coursera joined up with UoI to create its online MBA programme.

Both are from The Economist.

For Epistocracy

Vox’s Sean Illing has an excellent interview with Jason Brennan about his book Against Democracy:

…Illing: Let’s return to the “competence principle.” Why does the right to competent government trump other fundamental rights, like the right to participate in the democratic process?

Brennan: I think the real question is why should we assume there’s a right to participate in democratic process? It’s actually quite weird and different from a lot of other rights we seem to have.

We have the right to choose our partner, to choose our religion, to choose what we’re going to eat, where we live, what job we’ll do, etc. While some of these things do impose costs on others, they’re primarily about carving out a sphere of autonomy for the individual, and about preventing other people from having control over you.

A right to participate in politics seems fundamentally different because it involves imposing your will upon other people. So I’m not sure that any of us should have that kind of right, at least not without any responsibilities.

So how do we create an epistocracy?

Brennan:…Here’s what I propose we do: Everyone can vote, even children. No one gets excluded. But when you vote, you do three things.

First, you tell us what you want. You cast your vote for a politician, or for a party, or you take a position on a referendum, whatever it might be. Second, you tell us who you are. We get your demographic information, which is anonymously coded, because that stuff affects how you vote and what you support.

And the third thing you do is take a quiz of very basic political knowledge. When we have those three bits of information, we can then statistically estimate what the public would have wanted if it was fully informed.

Under this system, it’s not really the case that you have more power than I do. We can’t really point to any individual and say you were excluded, or your vote counted for more. The idea is to gauge what the public would actually want if it had all the information it needed.

Lots to think about. Read the whole thing.

Trump wants to blame the Fed, not control it

That is the title and topic of my latest Bloomberg column.  Here is one short bit:

In essence, Trump wants a fall guy. He may be secretly afraid that his “trade war” and general political volatility — or just plain bad luck — will damage the U.S. economy. If that happens, Trump will need a political target to absorb the criticism. With midterm elections around the corner, he doesn’t want to point the finger at Congress. Hillary Clinton can no longer serve as a plausible target. So the Fed is the convenient scapegoat. The last thing he wants is for the Fed to do exactly as he says, because then he would have no one to blame but himself. He did stress, “I’m letting them do what they feel is best.”

Do read the whole thing, it represents a revision from my earlier view.

Is Portugal an anti-austerity story?

A recent NYT story by Liz Alderman says yes, but I find the argument hard to swallow.  Here’s from the OECD:

The cyclically adjusted deficit has decreased considerably, moving from 8.7% of potential GDP to 1.9% in 2013 and to 0.9% in 2014. This is better (lower) than the OECD average in 2014 (3.1%), reflecting some improvement in the underlying fiscal position of Portugal.

Or see p.20 here (pdf), which shows a rapidly diminishing Portuguese cyclically adjusted deficit since 2010.  Now I am myself skeptical of cyclically adjusted deficit measures, because they beg the question as to which changes are cyclical vs. structural.  You might instead try the EC:

…the lower-than-expected headline deficit in 2016 was mainly due to containment of current expenditure (0.8 % of GDP), particularly for intermediate consumption, and underexecution of capital expenditure (0.4% of GDP) which more than compensated a revenue shortfall of 1.0% of GDP (0.3% of GDP in tax revenue and 0.7% of GDP in non-tax revenue)

Does that sound like spending your way out of a recession?  Too right wing a source for you?  Catarina Principle in Jacobin wrote:

…while Portugal is known for having a left-wing government, it is not meaningfully an “anti-austerity” administration. A rhetoric of limiting poverty has come to replace any call to resist the austerity policies being imposed at the European level. Portugal is thus less a test case for a new left politics than a demonstration of the limits of government action in breaking through the austerity consensus.

Or consider the NYT article itself:

The government raised public sector salaries, the minimum wage and pensions and even restored the amount of vacation days to prebailout levels over objections from creditors like Germany and the International Monetary Fund. Incentives to stimulate business included development subsidies, tax credits and funding for small and midsize companies. Mr. Costa made up for the givebacks with cuts in infrastructure and other spending, whittling the annual budget deficit to less than 1 percent of its gross domestic product, compared with 4.4 percent when he took office. The government is on track to achieve a surplus by 2020, a year ahead of schedule, ending a quarter-century of deficits.

This passage also did not completely sway me:

“The actual stimulus spending was very small,” said João Borges de Assunção, a professor at the Católica Lisbon School of Business and Economics. “But the country’s mind-set became completely different, and from an economic perspective, that’s more impactful than the actual change in policy.”

Does that merit the headline “Portugal Dared to Cast Aside Austerity”?  Or the tweets I have been seeing in my feed, none of which by the way are calling for better numbers in this article?

I would say that further argumentation needs to be made.  Do note that much of the article is very good, claiming that positive real shocks help bring recessions to an end.  For instance, Portuguese exports and tourism have boomed, as noted, and they use drones to spray their crops, boosting yields.  That said, it is not just the headline that is at fault, as the article a few times picks up on the anti-austerity framing.

I’m going to call “mood affiliation” on this one, at least as much from the headline and commentary surrounding the article as the author herself.

Monday assorted links