Friday assorted links
1. What we learn from collecting lots of data on San Francisco rents. And here, both are excellent and useful pieces, basically SF is ****ed.
2. How do trees sleep? Paper here: “Quantification of Overnight Movement of Birch (Betula pendula) Branches and Foliage with Short Interval Terrestrial Laser Scanning.”
3. Review of Singapore’s driverless taxis to come. And Uber knows you are willing to pay more when your battery life is low.
4. Deirdre on public bathrooms.
5. The horror markets in everything the horror.
6. Cato vindicated, apology and also broader rethink of method is due.
New York City fact of the day
Nearly three-quarters of the existing square footage in Manhattan was built between the 1900s and 1930s, according to an analysis done by KPF, an architecture firm based in New York.
That is from the new Upshot piece “Forty Percent of the Buildings in Manhattan Could Not be Built Today.”
The Developmental Roots of Conformity Bias
Michael Tomasello reviews theories of learning–some suggest that liberalism may be unnatural:
…a consistent finding in comparative studies is that human children are much more concerned than are other great apes to copy the exact actions of others, including arbitrary gestures, conventions and rituals (Tennie et al. 2009). Indeed, this tendency is so strong…when children do not see a clear goal to an actor’s action, they imitate even more precisely than if they do see a goal…
Moreover, children quickly learn to enforce arbitrary conventions and rituals:
…young children are so concerned with conformity that they will even enforce it on others, even when they themselves are not affected and the action involved is merely an arbitrary convention. For example, if children learn that on this table we play the game this way and on that table we play it another way, if a puppet then plays the game the wrong way on the wrong table, they intervene and stop him (Rakoczy, Hamann, Warneken, & Tomasello, 2010; Rakoczy, Warneken, & Tomasello, 2008)….Interestingly, when actors violate conventional norms, 3-year-olds admonish them more often if they are in-group rather than out-group members, presumably because in-group members should know better and be more committed to how “we” do it (Schmidt, Rakoczy, & Tomasello, 2011).
The enforcement of conformity is so important for young children that 5-year-olds have more positive feelings toward a norm enforcer (even though he is acting aggressively) than they do toward someone who simply lets a norm violation go (even though he is behaving in a neutral manner; Vaish, Herrmann, Markmann, & Tomasello, 2016).
In the environment of evolutionary adaptedness (EEA) an individual could not survive outside the group of their birth and so conformity was a matter of life and death. Conform or be cast out. Conformity to arbitrary convention was not in fact arbitrary but signalled affiliation. Conformity banded groups together.
Today, however, conformity is often counter-productive. Trying to enforce the arbitrary conventions of one’s in-group impedes social cooperation on the scale that makes modernity possible. Conformity also slows the development of new ideas and new ways of doing things–the essence of growth and progress. Even though conformity is now counter-productive the desire to conform and to enforce conformity is buried deep–the atavism of social justice.
Individualism and liberalism are foundational ideas for modernity but these adult ideas battle the desire to conform in our childish hearts.
Hat tip: Rolf Degen on twitter.
*Polarized: Making Sense of a Divided America*
James E. Campbell has written an excellent book on this contested and…polarizing…topic. Here is just one of many good bits:
As they [some commentators] see it, party polarization has been asymmetrical. The Republican Party allegedly has been captured by right-wing zealots while the Democratic Party has remained a reasonable center-left party. The claim of asymmetrical party polarization is half-true and completely understandable. First, there should be no mystery to asymmetry. If the parties are very competitive, as they are, and the public is skewed to the conservative end of the ideological scale, the parties should be similarly skewed. In a center-right nation, the right-wing party should be further to the right than the left-wing party is to the left. If the two parties were equally ideological, the Democrats would be in a permanent minority. That said, the increased polarization of the parties cannot be entirely attributed to the Republican Party becoming more conservative. Before the Republicans began moving to the right, Democrats had moved further to the left. Party polarization followed the staggered nature of the realignment. In the 1970s, congressional Democrats moved significantly to the left, while there was little change in congressional Republicans. The Republican shift to the right came later and was augmented by the growth of conservatism in the public. The polarization of the parties was a two-step dance — maybe three big steps: One big step to the left and two smaller steps to the right.
There is also this:
A five- or ten-percentage-point shift in ideological preferences may seem like “small potatoes,” but a nation that is 40% moderate and 60% ideological (liberal or conservative) operates quite different politically from one that is a 50-50 split.
By the way, it is sometimes noted, or noticed, that left-leaning thinkers have become crazier lately. I think overall that is true. It may be a sign that America is switching from a center-right to a center-left nation, given Campbell’s analysis above.
Recommended, due out in June from Princeton University Press. And here is Timothy Taylor on polarization.
When does Robert Cottrell just stop reading? (from the comments)
I considered the question of when one should just stop reading, and here is Robert’s take:
I read full-time to edit The Browser, and I abandon a hundred articles for every one that I finish. I generally stop if I hit “eponymous”, or “toxic”, or “trigger warning”, or “make no mistake”. Summary labelling of anything in an article as “complex” means that the writer does not understand or cannot explain the material. I don’t often read beyond headlines that use the words “surprising”, “secret”, “really”, “not” or “… and why it matters”. Any headline ending in a question mark is a bad sign. I know writers don’t usually write their own headlines, but the headline represents a best effort to say what is useful in the article by a sympathetic person who has been paid to read it.
Robert is one of the best readers I know.
China fact of the day
In 2015, total nominal credit expansion was nearly 4 times greater than total nominal GDP expansion.
That is from Christopher Balding, more of interest at the link.
Thursday assorted links
Patents, Prizes and Subsidies
Thinking about the Solow model and the limits of capital accumulation as a force for growth leads naturally to thinking about ideas and the institutions that create incentives to produce and use new ideas. Here is Patents, Prizes and Subsidies, the latest video from our Principles of Macroeconomics course at MRU–based, of course, on our textbook, Modern Principles.
My favorite part of this video is Tyler doing a cameo as an armchair economist.
Is an imploding EU an argument for Brexit?
It’s not clear the EU is imploding, but let’s just say it were, or that it will. That still makes “remain” better than “leave.” As the implosion proceeds, the United Kingdom would end up with a rather gracious out, and one which does not drive Scotland away, once other nations would start leaving or radically paring back the terms of their participation. Along the way, “ever closer union” would not be a threat to sovereignty. Conversely, if the country votes for “leave” in June, it will be perceived as yet another domino in the cascade of anti-globalist nationalism and would bring a rather sudden shock to London as a financial center and relations across the Irelands.
Look at it this way: there is no general case for being the first rat to leave a sinking ship, if that ship has stores of food. And the United Kingdom, with its own currency and set of distinct historical traditions, can leave whenever it wants and resort to its perpetual life raft.
Option value! It’s not enough that leaving be better than staying. Since “wait and see” is an option, leaving has to be much better than staying, given the mathematics of the expected value of irreversible decisions. I just don’t see that case has been made.
Here is my earlier post on Brexit.
How does China use the QWERTY keyboard?
Chinese “input” uses the QWERTY keyboard in an entirely different manner. In China, the QWERTY keyboard is “smart,” in the sense that it makes full use of modern-day computer power to augment and accelerate the input process. First of all, the letters of the Latin alphabet are not used in the same limited way that we use them in the alphabetic world. In China, “Q” (the button) doesn’t necessarily equal “Q” (the letter). Instead, to press the buttons marked Q, W, E, R, T, Y (or otherwise) is, strictly speaking, a way to give instructions to a piece of software known as an “Input Method Editor” (IME), which runs quietly in the background on your computer, intercepts all your keystrokes, and uses them as guidelines to try and figure out which Chinese characters the user wants. Using the most popular IME around today — Sougou Pinyin — the moment I strike the letter Q, the system is off and running, trying to figure out what I want. With the first clue, the IME immediately starts showing me options or “candidates” in a pop-up menu that follows me along on screen — in this case, Chinese characters, names, or phrases whose phonetic value begins with Q, such as Qingdao or Qigong.
The moment I hit the second button — let’s say U — the IME immediately changes up its recommendations, now giving me only characters that have pronunciations starting with “Qu.” There is no set, standard way to manage this process, moreover. There are many IMEs on the market, and each IME has many customizable settings. Some IMEs don’t use phonetics at all, in fact, but instead use Latin letters to indicate certain shapes or structural properties of the Chinese characters you want. And on top of all of this, there are countless abbreviations and shortcuts you can use to speed up the process (e.g., typing “Beijing” will get you the capital of China, but so will “bjing,” “beij,” or simply “bj”). And then, of course, there is “predictive text,” which as I have shown elsewhere, was developed and popularized in China decades before it was in the West.
In other words, for the computer age the Chinese system of characters has worked out quite well, and in some ways may be superior to the Roman alphabet. The piece is Jeffrey Wasserstrom interviewing Tom Mullaney, and is of interest more generally.
What are the most cited books in the social sciences?
There is also this:
Here is the source, full text and explanation here. There is much more of interest at that final link.
Wednesday assorted links
1. Employers cannot force workers to be happy.
2. Earpiece translates foreign languages.
4. After twelve years, Japan is making a new Godzilla movie. And markets not in everything if you’re Pakistani.
5. Will Wilkinson on social justice. A very good piece.
6. The economics of Elsevier. And more here. The upside is this: such services become obsolete over time, and if SSRN received lots of money from Elsevier, that is an incentive for someone else to do better, with an eye toward an eventual buy out. We will see how big the lock-in effect is, but I am not convinced it is enormous, if a better system were to come along. See Joshua Gans.
The Rent Seekers Never Sleep
In The Rise and Decline of Nations Mancur Olson argued that collusive arrangements accumulate slowly, reducing efficiency and economic growth. It’s difficult to defeat collusions, however, because the organized-winners fight harder than the unorganized-losers. But there is a way. Ironically, collusions get weaker in groups.
The base-closing principle tells us that the way to defeat collusions is to bundle them and force their existence on a single up or down vote. That’s one reason why general agreements on tariffs and trade, GATT agreements, are important. Trade agreements increase efficiency not simply because of comparative advantage, increasing returns to scale, and increased diversity but because general agreements are necessary to defeat the rent seekers.
Unfortunately, as Gary Hufbauer and Euijin Jung point out, we haven’t had a successful GATT since 1986 and the time between GATT rounds has been getting longer and longer. Moreover, just as Olson would have expected, collusions–what Hufbauer and Jung call “micro-protections”–have grown.
In the wake of the Great Recession of 2008–09, micro-protectionism has run rampant, often skirting the letter of WTO rules. This phenomenon is driven by political promises to create more jobs and to protect domestic firms and industries, notably evident in Buy America statutes and copy-cat local content legislation across the globe. As an illustration, table 2 reports that the imposition of 117 local content requirement measures identified since 2008 is estimated to affect $928 billion of global trade in goods and services in 2010, perhaps reducing global exports by $93 billion.
Local content requirements are just one form of trade restrictive measures introduced since the Great Recession…Macroeconomists are wrong to dismiss the quantitative importance of these poison pills, perhaps individually small but collectively deadly. The fact that highly visible tariff barriers have not been erected on a large scale does nothing to diminish the cumulative impact of thousands of opaque measures designed to keep out imports.
Micro-protections are especially important where trade most needs to increase, in services. There is vast scope for the expansion of world trade but we need a general agreement on trade, especially one focused on breaking down local markets for services.
The rent-seekers never sleep so simple measures of trade protectionism understate the prevalence of micro-protections but simple measures of the gains from trade understate the benefits of defeating strangling collusions.
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.
Used book perfume markets in everything
“Book smell” is now a thing in the perfume world, like vanilla or sandalwood. In the last few years, dozens of products have appeared on the market to give your home or person the earthy scent of a rare book collection.
Sweet Tea Apothecaries sells Dead Writers Perfume, which promises to evoke the aroma of books old enough for their authors to have passed to the great writers’ retreat in the sky. Perfumer Christopher Brosius’s “In the Library” product line makes your home and body smell just like that. The high-end fragrance Paper Passion claims to capture the “unique olfactory pleasures of the freshly printed book,” though for roughly $200 per bottle it’s a lot cheaper to just buy a freshly printed book.
The appeal of old books’ smell has been studied in depth. Wood-based paper contains lignin, a chemical closely related to vanillin, the compound that gives vanilla its fragrance. As the pages age and the compounds break down, they release that signature scent. An experienced rare book handler can date a volume by scent alone, according to the International League of Antiquarian Booksellers.
Here is the full story by Corinne Purtill.