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From my email, I will read this book

I won’t double indent, here is the email:

“Whatever It Is, I’m Against It,” Resistance to Change in Higher Education (Harvard Education Press; September 26, 2023; Price: $38.00), is a relentlessly frank look at higher education from the perspective of a long-time college president, dean, and faculty member.    

Rosenberg attempts, in this book, to answer a series of questions: 

  • Why is an industry so widely populated by people who consider themselves progressive so deeply conservative when it comes to its own work? 
  • Why are scholars whose disciplines are constantly evolving so resistant to institutional evolution? 
  • Why do colleges and universities that almost always speak in their mission statements about the transformative power of education find it so difficult to transform themselves? 
  • Why has virtually no fundamental practice within higher education—calendar, tenure processes, mode of delivery, grading—changed in meaningful ways for decades, if not centuries? 
     
    According to Rosenberg, the answers lie in the structures, practices, and cultures that have developed within higher education.  That is, there are reasons for the inability to change that go well beyond the temperament or competence of particular individuals.  If maintenance of the status quo is the goal, higher education has managed to create the ideal system.” 

The author is Brian Rosenberg and here is the Amazon listing.

Friday assorted links

1. New results for insect-scale robots.

2. Let’s build something better and more popular.  Most of the rest of the talk is counterproductive.  Maybe the AEA should try to raise some money and reverse this state of affairs?  Yes?  Should this situation not be considered a major failure of AEA efforts to date?  Is there any actual mechanism of accountability in the AEA to consider and remedy this failure?  How is it that nothing has been done for so long?  Why are the incentives within the AEA so unfriendly to building successful new projects?  How might um…an economist analyze the incentives there?

3. “In a series of papers, Blumberg articulated his theory that the brain uses rem sleep to “learn” the body.”  New Yorker link here.

4. DR is closing the border with Haiti entirely.

5. Claims about progress in artificial wombs.

Law-Abiding Immigrants

The subtitle is The Incarceration Gap Between Immigrants and the U.S.-Born, 1850–2020, and the authors are Ran Abramitzky, Leah Boustan, Elisa Jácome, Santiago Pérez, and Juan David Torres.  Here is the to-the-point abstract:

Combining full-count Census data with Census/ACS samples, the researchers provide the first nationally representative long-run series (1870–2020) of incarceration rates for immigrants and the U.S.-born. As a group, immigrants had lower incarceration rates than the US-born for the last 150 years. Moreover, relative to the U.S.-born, immigrants’ incarceration rates have declined since 1960: Immigrants today are 60% less likely to be incarcerated (30% relative to U.S.-born whites). This relative decline occurred among immigrants from all regions and cannot be explained by changes in immigrants’ observable characteristics or immigration policy. Instead, the decline likely reflects immigrants’ resilience to economic shocks.

Here is the full paper, via Anecdotal.

Disputes over China and structural imbalances

There has been some pushback on my recent China consumption post, so let me review my initial points:

There exists a view, found most commonly in Michael Pettit (and also Matthew Klein), that suggests economies can have structural shortfalls of consumption in the long run and outside of liquidity traps.

My argument was that this view makes no sense, it is some mix of wrong and “not even wrong,” and it is not supported by a coherent model.  If need be, relative prices will adjust to restore an equilibrium.  If relative prices are prevented from adjusting, the actual problem is not best understood as a shortfall of consumption, and will not be fixed by a mere expansion of consumption.

Note that people who promote this view love the word “absorb,” and generally they are reluctant to talk much about relative price adjustments, or even why those price adjustments might not take place.

You will note Pettis claims Germany suffers from a similar problem, America too though of course the inverse version of it.  So whatever observations you might make about China, the question remains whether this model makes sense more generally.  (And Australia, which ran durable trade deficits from the 1970s to 2017, while putting in a strong performance, is a less popular topic.)

Pettis even has claimed that “US business investment is constrained by weak demand rather than costly capital”, and that is from April 4, 2023 (!).

It would take me a different blog post to explain how someone might arrive at such a point, with historic stops at Hobson, Foster, and Catchings along the way, but for now just realize we’re dealing with a very weird (and incorrect) theory here.  I will note in passing that the afore-cited Pettis thread has other major problems, not to mention a vagueness about monetary policy responses, and that rather simply the main argument for current industrial policy is straightforward externalities, not convoluted claims about how foreign and domestic investment interact.

Pettis also implicates labor exploitation as a (the?) major factor behind trade surpluses, and furthermore he considers this to be a form of “protectionism.”  Now you can play around with scholar.google.com, or ChatGPT, all you want, and you just won’t find this to be the dominant theory of trade surpluses or even close to that.  As a claim, it is far stronger than what a complex literature will support, noting there is a general agreement that lower real wages (ceteris paribus) are one factor — among many — that can help exports.  This point isn’t wrong as a matter of theory, it is simply a considerable overreach on empirical grounds.  Of course, if Pettis has a piece showing statistically that a) there is a meaningful definition of labor exploitation here, and b) it is a much larger determinant of trade surpluses than the rest of the profession seems to think…I would gladly read and review it.  Be very suspicious if you do not see such a link appear!

Another claim from Pettis that would not generate widespread agreement is: “…in an efficient, well-managed, and open trading system, large, persistent trade imbalances are rare and occur in only a very limited number of circumstances.” (see the above link)  That is harder to test because arguably the initial conditions never are satisfied, but it does not represent the general point of view, which among other things, considers persistent differences in time preferences and productivities across nations.

Now, it does not save all of this mess to make a series of good, commonsense observations about China, as Patrick Chovanec has done (Say’s Law does hold in the medium-term, however).  And as Brad Setser has done.

In fact, those threads (and their citation) make me all the more worried.  There is not a general realization that the underlying theory does not make sense, and that the main claim about the determinants of trade surpluses is wrong, and that it requires a funny and under-argued tracing of virtually all trade imbalances to pathology.  And to be clear, this is a theory that only a small minority of economists is putting forward.  I am not the dissident here, rather I am the one delivering the bad news.

So the theory is wrong, and don’t let commonsense, correct observations about China throw you off the scent here.

The Ramaswamy plan for a commodity-backed dollar

I am not convinced by it, here is one excerpt from my latest Bloomberg column:

Ramaswamy has called for the US Federal Reserve to stabilize the dollar in relation to the price of commodities, rather than to the consumer price index. That formula is unlikely to bring monetary stability (or tame business cycles) in part because commodity prices themselves are notoriously unstable.

Consider the five years leading up to 1994, when consumer prices increased more than 19% but most commodity prices fell. Or the years from 2004 to 2008, when commodity prices rose by about three times but US price inflation rates were roughly constant, in the range of 2%. In other time periods, the relationship between commodity prices and consumer inflation is murky…

I am reminded of economist Robert Hall’s 1982 “ANCAP” proposal to stabilize the dollar with a commodity basket. Hall argued that a bundle of ammonium nitrate, copper, aluminum and plywood (thus ANCAP) had proved stable in terms of the dollar in times past. He was right about that. But the rise of China and other nations brought an unprecedented commodity price boom. Had the US tried to stabilize the value of the dollar in terms of those commodities, the Fed would have had to apply significant deflationary pressure to stabilize the relevant commodity price index. Actual monetary policy would have been a disaster.

There is much more at the link.

State Capacity as an Organizational Problem

We study how the organization of the state evolves over the process of development of a nation, using a new dataset on the internal organization of the U.S. federal bureaucracy over 1817-1905. First, we show a series of facts, describing how the size of the state, its presence across the territory, and its key organizational features evolved over the nineteenth century. Second, exploiting the staggered expansion of the railroad and telegraph networks across space, we show that the ability of politicians to monitor state agents throughout the territory is an important driver of these facts: locations with lower transportation and communication costs with Washington DC have more state presence, are delegated more decision power, and have lower employee turnover. The results suggest that high monitoring costs are associated with small, personalistic state organizations based on networks of trust; technological shocks lowering monitoring costs facilitate the emergence of modern bureaucratic states.

That is from a new NBER working paper by Nicola Mastrorocco and Edoardo Teso.

Every now and then Bryan Caplan writes a short essay (and here), dumping on the idea of state capacity, suggesting instead the alternative of “state priorities,” but I don’t think his argument is coherent.  I think of state priorities as the demand side, and state capacity as the supply side.  Of course both matter.  Sometimes, in a partial equilibrium setting, state priorities will seem to be the only thing that matters.  For instance, when the I-95 bridge collapsed outside of Philadelphia, it was repaired very quickly, in part because the governor made repair a priority.  Enough resources were at hand, including enough legal resources to manage the changes in procedure.  Most systems have some amount of slack.  But when America tries to upgrade its infrastructure more generally, it is limited by both the supply side and the demand side, or in other words state capacity really matters.  It’s not just that we don’t have a Mars colony, we don’t have enough lawyers and bureaucrats to lawfully repeal a large number of regulations at once.

Don’t Doubt: Saint Thomas in India

Christianity in India has roots at least as old as in Italy. Millions of Christians in Kerala today believe that their tradition traces back directly to Thomas, one of the 12 apostles of Jesus, who traveled to India in the first century AD. According to the Acts of Thomas, the apostles divided the world and drew lots to decide their respective regions for spreading the gospel. Thomas, drew India but, ever the doubter, he demurred. “It’s too hot and the food isn’t kosher”, he said, more or less. Jesus appeared to Thomas, however, and bade him “go to India!” Amazingly, he still demurred–what a doubter!–but by a minor miracle just as this was happening an Indian merchant arrived in Jerusalem calling for a master architect and builder to return with him to India. Finally, with this sign, Thomas’s doubts were allayed and his India adventures began.

For a long time, The Acts of Thomas were considered to be more of an unreliable fantasy novel than a historical account and of course the Acts does contain fantastical stories. Nevertheless, the Acts of Thomas have gained credence over time as certain names and places mentioned in the Acts and once thought to be purely imaginary, turned out to be accurate historical references. As William Dalrymple writes in an excellent piece:

…a series of remarkable discoveries have gone a long way to prove that the story contained in the Acts seems to be built on surprisingly solid historical foundations. First, British archaeologists working in late 19th-century India began to find hoards of coins belonging to a previously unknown Indian king: the Rajah Gondophares, who ruled from AD19 to AD45. If St Thomas had ever been summoned to India, it would have been Rajah Gondophares who would have done it, just as the Acts had always maintained.

The fact that the Acts had accurately preserved the name of an obscure Indian rajah, whose name and lineage had disappeared, implied that it must contain at least a nucleus of genuine historical information. Archaeological discoveries have since confirmed many other details of the story, revealing that maritime contacts between the Roman world and India were much more extensive than anyone had realised.

Aside from the Acts, a considerable amount of oral history and circumstantial evidence suggests that by AD 50-52, Thomas arrived on the Malabar coast of what is today Kerala and he began converting an older Jewish population as well as Hindus to Christianity. Indeed, the evidence is strong that the followers of Thomas in India have preserved one of the oldest versions of Christianity. Dalrymple again:

If St Thomas had carried Christianity to India, it is likely that he would have taken a distinctly more Jewish form than the Gentile-friendly version developed for the Greeks of Antioch by St Paul and later exported to Europe. Hence the importance of the fact that some of the St Thomas Christian churches to this day retain Judeo-Christian practices long dropped in the west – such as the celebration of the solemn Passover feast.

Hence also the significance of the St Thomas Christians still using the two earliest Christian liturgies in existence: the Mass of Addai and Mari, and the Liturgy of St James, once used by the early Church of Jerusalem. More remarkable still, these ancient services are still partly sung in Aramaic, the language spoken by Jesus and St Thomas.

The more you investigate the evidence, the more irresistible is the conclusion that whether or not St Thomas himself came to India, he certainly could have. And if he didn’t make the journey, it seems certain that some other very early Christian missionary did, for there is certainly evidence for a substantial Christian population in India by at least the third century.

Not only is there is a substantial presence of Christians in India from at least the third century, many early Western and Eastern Christian sources attest that it was Thomas who was sent to India. Kurikilamkatt writes:

From the third century onwards it had become an undeniable and incontrovertible tradition and belief in the Christian world that Thomas preached in India. And these Fathers and early writers had no doubt that the Thomas they speak about was the apostle who declared for the first time in history that his master was the Lord and God.

Historians tend not to trust oral history but to me it’s the oral histories, the genealogies of Indians who trace their lineage back to someone who was personally converted by Saint Thomas, and the songs that are most convincing. Indians have orally preserved the vedas for some four thousand years so I trust them on Saint Thomas. In the 4th or early 5th century, Saint Jerome wrote that “Christ lives everywhere. With Thomas in India and Peter in Rome.” And of the two, I’d put more money on Thomas.

After founding seven churches in Kerala, Thomas journeyed to the eastern region of the Indian peninsula, near present-day Chennai. Here Thomas’s mission was ended when he refused to bow down to Kali and was killed. Even so he was held in such reverence that his place of death was marked and his body kept and entombed. Fifteen hundred years later the Portuguese built a cathedral over his tomb, both of which you can still visit today as I did recently. Even for those not of Christian faith or any religious affiliation, connecting with 2,000 years of history and considering the distances Thomas traveled is quite moving, especially when it happens in a place which stills seems far from the Christian world.

What I’ve been reading

Maria Blanco and Alberto Mingardi have produced a very useful volume, Show and Biz: The Market Economy in TV Series and Popular Culture (2000-2020), providing an updated look at the (somewhat) rising popularity of business and capitalism in U.S. popular culture.

David O’Brien, Exiled in Modernity: Delacroix, Civilization, and Barbarism.  A very good book planting Eugene Delacroix — both his paintings and writings — squarely in a “progress studies” tradition.  Like so much other 19th (and also 18th) century art.  Good color plates too.

Andrea Dworkin, Right-Wing Women.  Do you judge books by their degree of insight, or based on whether you agree with where they end up?  This volume is a litmus test for that question, and I give it either an A or an F minus, depending on your standard.  In my view, Dworkin remains an underrated and intellectually honest (if overly consistent) feminist thinker.  This one is from 1978, still interesting albeit repulsive if you try to apply any moral judgment to it.  But don’t!  If you are looking for reductios in support of reactionary points of view, this is the best place to start.  Better yet is to drop all the consistency requirements and end up somewhere in between.

Simon Shorvon, The Idea of Epilepsy: A Medical and Social History of Epilepsy in the Modern Era (1860-2020).  A remarkably thorough and intelligent treatment of a topic that now has a near-perfect stand-alone book.

There is Alan S. Kahan, Freedom from Fear: An Incomplete History of Liberalism.

And Michael J. Bonner, In Defense of Civilization: How Our Past Can Renew Our Present.

Vikash Yadav, Liberalism’s Last Man: Hayek in the Age of Political Capitalism.

Seth D. Kaplan, Fragile Neighborhoods: Repairing American Society, One Zip Code at a Time, forthcoming in October.

What should I ask Brian Koppelman?

I will be doing a Conversation with him, here is Wikipedia:

Brian William Koppelman (born April 27, 1966) is an American showrunner. Koppelman is the co-writer of Ocean’s Thirteen and Rounders, the producer for films including The Illusionist and The Lucky Ones, the director for films including Solitary Man and the documentary This Is What They Want for ESPN as part of their 30 for 30 series, and the co-creator, showrunner, and executive producer of Showtime‘s Billions and Super Pumped: The Battle for Uber…

So what should I ask him?

Clean Hands, Clear Conclusions: Ignaz Semmelweis as a Pioneer of Causal Inference

My next series is a few things at once. It’s a reminder that sometimes people will do everything in their power to present evidence supporting scientific facts, be unpersuasive and be sent to a mental hospital by their best friend where they spend the next two weeks being beaten by guards mercilessly and then die. But it’s also a discussion of difference-in-differences, and perhaps the challenges of estimation if you’re not entirely clear what the treatment is. And the last thing is just a puzzle I wanted to share in the context of trying to make a broader point about precisely what is implied by the identification elements of a traditional difference-in-differences design.

An excellent introduction to Ignaz Semmelweis, a pioneer in causal inference and medicine, by Scott Cunningham.

The political impact of social media has been grossly overrated

Finally the truth is coming out.  A series of new research papers, surveyed in the NYT, present a pretty sobering reality.  Here is just one excerpt:

One of the studies was titled “How do social media feed algorithms affect attitudes?” In that research, which included more than 23,000 Facebook users and 21,000 Instagram users, researchers replaced the algorithms with reverse chronological feeds, which means people saw the most recent posts first instead of posts that were largely tailored to their interests.

Yet people’s “polarization,” or political knowledge, did not change, the researchers found. In the academics’ surveys, people did not report shifting their behaviors, such as signing more online petitions or attending more political rallies, after their feeds were changed.

And:

In another paper, researchers found that reducing the amount of content in 23,000 Facebook users’ feeds that was posted by “like-minded” connections did not measurably alter the beliefs or political polarization of those who participated.

“These findings challenge popular narratives blaming social media echo chambers for the problems of contemporary American democracy,” the study’s authors said.

In a fourth study that looked at 27,000 Facebook and Instagram users, people said their knowledge of political news fell when their ability to reshare posts was taken away in an experiment. Removing the reshare button ultimately did not change people’s beliefs or opinions, the paper concluded.

This entire episode is one of the more egregious instances of an anti-business, anti-tech falsehood taking root and being repeated endlessly.  Of course, some of us having been saying this for years — the basic point is not hard to grasp if you are someone who…writes for a public audience…

The Amy Finkelstein and Liran Einav health care plan

I am away from my review copy, so I am pleased that Matt Yglesias has offered ($) a good “standing on one foot” summary of the plan, as outlined in the new book We’ve Got You Covered: Rebooting American Health Care, by Amy Finkelstein and Liran Einav:

They call for:

  • A universal basic insurance system, covering both catastrophic and routine care but at a bare bones/no frills level of service.
  • A global budget, set by Congress, to determine how much money the basic plan has to spend on meeting the public’s basic needs, paired with expert panels to decide which services to cover.
  • An additive system of private top-up insurance that people could (and they anticipate mostly would) buy into to secure access to shorter wait times and more creature comforts.

The book offers a “think it through using first principles” approach, so perhaps the authors will be frustrated by my invocation of a “how has politics been going lately?” kind of response.  Nonetheless I see that Obamacare cost the Democrats dearly in more than one election, it had to be defanged (the mandate) to survive, it was supposed to be the new comprehensive framework that actually could pass (it did), and the most influential Americans just love their employer-provided private health insurance.

Whether you think those facts are good or bad, I take them as my starting point for health care reform.  This book does not.

I observe also that Obamacare passed, and American life expectancy fell.  I do not blame Obamacare for that, but I do notice it.  As a result, I have grown increasingly interested in “how can we boost biomedical scientific progress?” and increasingly less interested in “how can we reform health insurance coverage again?”  All the more because we seem to be living in a biomedical progress of science golden age.

One of the Democratic Party frustrations with conservatives during the ACA debates was witnessing them tolerate or even support Romney’s Massachusetts plan, but oppose Obamacare.  That I can understand.  One of the conservative frustrations with ACA was the fear that it would just be the first step in a never-ending, upward-ratcheting series of efforts to spend ever more on health insurance coverage, which has positive but only marginal implications for health itself.  After all, where exactly do the moral arguments for spending more on health insurance coverage stop?

Is there a politically feasible version of the Finkelstein and Einav plan that can spend less or the same?  Is there a politically feasible version of the plan period?  How much trust will there be in the promise that if I give up my private health insurance coverage, it will be replaced by something better?  How much trust should there be?

But again, the authors here have a very different perspective on the sector and how to do health care policy.

Austin Vernon on electric vehicles > hybrids

From my email, I will not indent but please note this is all from Austin:

“I don’t agree with electric vehicle mandates or subsidies, but the recent push against pure battery electric vehicles from free market commentators is bizarre. The arguments against them because of mineral shortages, battery shortages, or manufacturing emissions completely abandon free market principles. These arguments will lead to failure because they are obviously wrong after minimal investigation.A more effective argument would be that electric cars are so popular and production is growing so fast that there is no need for mandates. The market will provide the goods through better technology, increased output, and substitution. A company like GM will have no chance of paying its debt if it doesn’t make compelling electric cars. Then hammer home use cases that make no sense for batteries, like a farmer that needs a semi-truck for harvest. It will run nearly 24/7 for a week or two and then sit idle for the rest of the year. An electric truck would impose a significant economic penalty while barely saving emissions.Some of the errors:1. The majority of electric vehicles in the world use lead-acid batteries, not lithium-ion batteries. Low-speed electric vehicles are popular in China even though the government does not love them. They start at $1000 and might have 100 km of range. They are the Model T of electric cars, except with much better performance at a fraction of the cost of the Model T. They are modern marvels of economic growth. We don’t have these vehicles in rich countries because they would be illegal, and we can afford higher-performance vehicles. There are some exceptions, like golf carts in Peachtree City, GA.2. Electric cars are a great value. Low-speed electric vehicles obviously provide value to have so many sales. Something like a Tesla Model 3 has the performance of a BMW 3 series with a total cost of ownership more like a Camry. The next generation of electric cars that Chinese automakers and Tesla are designing will have highway-capable performance with an ownership cost below any gasoline car available and entry level purchase prices.3. The market is screaming for batteries that don’t use nickel or cobalt, and companies are delivering. Even Tesla thinks 2/3 to 3/4 of their cars will use lithium iron phosphate batteries. Only luxury vehicles and some semi trucks will use nickel batteries (and cheaper manganese might substitute for some of the nickel). The performance of lithium iron phosphate battery vehicles has improved because companies are figuring out how to make their cars more efficient and remove unnecessary packaging and structure from the packs to reduce weight. Sodium-ion batteries lack the performance of lithium batteries but are much better than lead-acid batteries that power most electric cars. Consumers will happily trade up as they get richer.4. We can build more factories and mines. Look at all the factory announcements! There is lots of lithium in the Earth’s crust! Let the market cook!5. The leading companies are now profitable without subsidies. Protectionists, unions, and car makers that still aren’t good at making battery cars drive lobbying for subsidies.6. The price of an item signals information about its availability! The need for scale is driving new manufacturing technology. Tesla hopes to produce 20 million cars yearly (car sales are ~80 million globally). They recently highlighted improvements like motors that use iron magnets instead of rare earth ones, higher voltage systems to reduce copper wiring, and a novel assembly technique to reach this scale. These are in addition to previously announced simplifications in battery manufacturing and a focus on lithium iron phosphate batteries. Electric cars need to be inexpensive to sell in the tens of millions. And that means using cheap, available materials that use less energy and labor to produce.7. Hybrid cars are an engineering travesty. They are more expensive and complex than either an internal combustion car or a pure electric car. There will be adequate fast chargers with a seamless experience now that almost every major North American carmaker is adopting Tesla’s chargers. A hybrid owner pays thousands of dollars more for a car, has to go to gas stations, needs oil changes, etc. A battery car owner might fast charge a few times a year while they eat lunch or shop when their vehicle range isn’t enough for the day’s driving. The battery car is way more convenient. Even many cases like semi trucks can get by with pure batteries because there is plenty of time to charge during government-mandated breaks. Someone with work or leisure that requires frequent highway driving for hours straight but doesn’t have mandated breaks should buy a regular gasoline car.8. Two-wheel and three-wheel vehicles are popular globally. But they are not big enough to support complicated hybrid powertrains. Highway-speed motorcycles are challenging to electrify. Mopeds, rickshaws, and e-bikes are easy.9. A new battery cathode technology might increase energy density and dramatically reduce battery costs. But this technology isn’t necessary to electrify ground vehicles on economics and consumer preference alone.10. Few people care about emissions in their revealed preferences. It’s all about selling stuff people want to buy. Governments will remove mandates if electric cars aren’t ready for the median voter. The worst case for freedom is that electric cars are incredibly successful, and we hurt the outliers that still need gasoline or diesel vehicles. Broadly attacking electric cars doesn’t help!”

Mission Impossible 7 (no real spoilers)

Eh.  It has some good scenes, but there was no movie in the movie, as they say.  I do understand this is a film and also a visual event, but the evil AI should have been kept abstract, rather than visualized in such a corny, stupid fashion.  That reminded me of Hitchcock’s Spellbound, which is also too visually literal.  This installation of the MI series uses a bunch of Hitchcock tricks, some expected James Bond, and then a bunch of LOTR moral and “power corrupts” themes, which don’t fit the kinetic emphasis in the on-screen action.  Most of all, I am struck by the great lengths they go to in order to portray lone individuals as decisive over the final outcomes.  In a Bond movie there is a wire to be cut, a button to be pressed, and a specific villain to be vanquished in a remote island lair, with a stomach punch-invulnerable henchman along the way.  OK enough, but here they have to work far harder.  They even solve for the strategic game between the AI and the good guys, and it still isn’t clear who is a decisive agent in the action.

And so the movie ends with “part I and uncertainty,” as even 2 hours 40 minutes was not enough to get a single individual to matter.  Modelmakers, take note.