Equality is a mediocre goal, aim for progress
That is the title of my latest Bloomberg column, here is one excerpt:
Take this all a step further and imagine that the next 30 years brings an enormous blossoming of medical innovation, outpacing the general rate of economic growth. Government revenue then might not grow rapidly enough to cover all or even most of these new medical miracles, some of which will be quite expensive, especially in their early stages. Governments will decline to cover more and more care.
This fiscal crunch is all the more likely if people live much longer but cannot work enough longer to fund their newly extended retirement spans.
To date, so much of the health care debate has been about whom to cover. Over time, it may be more and more about what to cover. It could be that all the citizens will have nominally the same insurance coverage, whether subsidized or guaranteed, but many medical and mental-health conditions will fall outside this coverage — leading to rampant inequalities in access.
It’s the best problem to have. It means that medical innovation has arrived at a very high rate. If we enter the future being able to cover most medical treatments with reasonable equality, that would be a sign we failed at the task of progress. In other words, successful futures are likely to be highly unequal futures, again because medical innovation will have outpaced government revenue. (Innovations that extend working years would ameliorate this effect by adding to government revenue.)
Do read the whole thing.
Conor Sen on the future of physical retail and e-commerce
…the future of the relative cost advantage between e-commerce and physical retail is looking less clear. For much of physical retail, there’s the prospect of falling rents, making running a brick-and-mortar store more viable. For e-commerce, it’s a surge in ad rates, or customer acquisition costs, plus shipping bottlenecks that will make “free shipping” more onerous to offer. And profit margins on an e-commerce sale were lower than the profit margin on an equivalent brick and mortar sale to begin with. All of this is happening when e-commerce is only around 10 percent of total retail sales. Presumably, these challenges will be even greater as that share grows.
In his view, we should look for a renewed focus on bricks and mortar. Here is the full column.
Tuesday assorted links
1. How Israel’s defense has changed.
2. Josh Barro on Trumpian upside.
3. China markets in everything: Helen Keller spectacles.
4. Physically stronger Norwegian men are more likely to be married.
5. Philosopher Agnes Callard is now on Twitter.
6. Eight-minute Taleb video, follow up to his chat with Caplan and Cowen.
My talk at MIT Sloan School on simulations and science
Here is the video, a bit short of an hour, you may recall this was my abstract:
What happens when a simulated system becomes more real than the system itself? Will the internet become “more real” than the world of ideas it is mirroring? Do we academics live in a simulacra? If the “alt right” exists mainly on the internet, does that make it more or less powerful? Do all innovations improve system quality, and if so why is a lot of food worse than before and home design was better in 1910-1930? How does the world of ideas fit into this picture?
By the end I considered whether we might make science better by first making it “worse.” I also covered The Phantom Tyler Cowen, and whether attempted refutation is the best way to approach a new idea.
Authoritarian gridlock
Legislative gridlock is often viewed as a uniquely democratic phenomenon. The institutional checks and balances that produce gridlock are absent from authoritarian systems, leading many observers to romanticize “authoritarian efficiency” and policy dynamism. A unique data set from the Chinese case demonstrates that authoritarian regimes can have trouble passing laws and changing policies—48% of laws are not passed within the period specified in legislative plans, and about 12% of laws take more than 10 years to pass. This article develops a theory that relates variation in legislative outcomes to the absence of division within the ruling coalition and citizen attention shocks. Qualitative analysis of China’s Food Safety Law, coupled with shadow case studies of two other laws, illustrates the plausibility of the theoretical mechanisms. Division and public opinion play decisive roles in authoritarian legislative processes.
That is from Rory Truex, via the excellent Kevin Lewis.
What will it take to reduce Bay Area housing costs?
A 2016 academic analysis by David Albouy, Gabriel Ehrlich and Yingyi Liu estimated that, in general, rents decrease by 3 percent for each 2 percent increase in the housing stock. (This estimate is close to the estimate of a lengthy blog post analysis at Experimental Geography, done two years ago, looking specifically at San Francisco’s history over the last six decades.)
If our goal is to reduce the average market-rate apartment rent to 27.5 percent of median household income (the midpoint between the 25-30 percent range that is normal), that means reducing the rent from $43,200 to $24,895, a 42.4 percent reduction. Using our ratio of a 2 percent housing stock increase leading to a 3 percent decrease in rents, that means, keeping all else equal, the Bay Area would theoretically need to increase the number of housing units overnight by 28.3 percent. (Let’s round up to 30 percent to make the subsequent calculations more intuitive).
…For example, if it takes 20 years to make up our housing deficit, and underlying trend growth for the U.S. population is 0.7 percent per year (15 percent over 20 years), and the average household size remains 2.3 persons, then the Bay Area will need to grow households 30 percent more than the amount of households needed to accommodate trend U.S. population growth (i.e. 30 percent more than the underlying 15 percent population growth), for a total growth of housing stock of approximately 50 percent over 20 years.
Let’s state it plainly: The Bay Area must increase its total housing stock by 50 percent over the next 20 years to bring affordability down to a reasonable level.
That is from the excellent Patrick Wolff.
Derek Parfit’s photographs are going on display in London
Most of the paragraphs in this Jonathan Derbyshire FT article are excellent, here is one of them:
Sokolsky-Tifft recalls Parfit quoting a line from Homer in the middle of a talk. “He started to weep because he found it so beautiful. That was when I first started to get the idea that this was a man with a strange heart, for whom art was always bubbling beneath the surface of these logical arguments.”
And:
Parfit attributed his obsession with a handful of places — he once said that there were only 10 things in the world he wanted to photograph — to a condition called aphantasia, the inability to form mental images. He was unable to visualise things familiar to him, even his wife’s face when they weren’t together.
Recommended, the work is first-rate, as is the article, and subscribe to the FT if you must.
Richard Baldwin on the New Globalization
To really understand how this changed the nature of globalization, consider a sports analogy. Suppose we have two football teams, one that needs a quarterback but has too many linebackers, and one that needs a linebacker but has too many quarterbacks. If they sit down and trade players, both teams win. It’s arbitrage in players. Each team gets rid of players they need less of and gets players they need more of. That’s the old globalization: exchange of goods.
Now let’s take a different kind of exchange, where the coach of the better team goes to the field of the worse team and starts training those players in the off-season. This is very good for the coach because he gets to sell his knowledge in two places. You can be sure that the quality of the league will rise, all the games will get more competitive, and the team that’s being trained up will enjoy the whole thing. But it’s not at all certain that the players of the better team will benefit from this exchange because the source of their advantage is now being traded.
In this analogy, the better team is, of course, the G7, and not surprisingly this has led to some resentment of globalization in those countries. The new globalization breaks the monopoly that G7 labor had on G7 know-how…
That’s Richard Baldwin on the new globalization. His book, The Great Convergence is very good.
What should I ask David Brooks?
I will be having a Conversation with David on May 14, a public event in Arlington, Virginia. So what should I ask him? Just keep in mind this is the conversation with David I want to have, not the one you want me to have.
The monitoring culture that is China
…the workers wear caps to monitor their brainwaves, data that management then uses to adjust the pace of production and redesign workflows, according to the company.
The company said it could increase the overall efficiency of the workers by manipulating the frequency and length of break times to reduce mental stress.
Hangzhou Zhongheng Electric is just one example of the large-scale application of brain surveillance devices to monitor people’s emotions and other mental activities in the workplace, according to scientists and companies involved in the government-backed projects.
Concealed in regular safety helmets or uniform hats, these lightweight, wireless sensors constantly monitor the wearer’s brainwaves and stream the data to computers that use artificial intelligence algorithms to detect emotional spikes such as depression, anxiety or rage.
The technology is in widespread use around the world but China has applied it on an unprecedented scale in factories, public transport, state-owned companies and the military to increase the competitiveness of its manufacturing industry and to maintain social stability.
That is from STephen Chen at SCMP, via someone forgotten over at Twitter.
*The Mind is Flat*
The author is Nick Chater and the subtitle is The Illusion of Mental Depth and the Improvised Mind. I found this to be one of the most interesting books on the mind I have read. Overall the message is that your hidden inner life ain’t what you think:
According to our common-sense view, the senses map the outer world into some kind of inner copy, so that, when perceiving a book, table or coffee cup, our minds are conjuring up a shadowy ‘mental’ book, table or coffee cup. The mind is a ‘mirror’ of nature. But this can’t be right. There can’t be a 3D ‘mental copy’ of these objects — because they don’t make sense in 3D. They are like 3D jigsaw puzzles whose pieces simply don’t fit together. The mind-as-mirror metaphor can’t possibly be right; we need a very different viewpoint — that perception requires inference.
Take that Thomas Reid! By the way:
This perspective has a further, intriguing and direct prediction: that we can only count colours slowly and laboriously…the apparent richness of colour is itself a trick — that our brains seem to be able to encode no more than one colour (or shape, or orientation) at a time. But this is what the data tell us.
Here is perhaps the clincher:
…all of us perceive the world through a remarkably narrow channel — roughly a single word, object, pattern or property at a time.
So much of the rest is the top-down processing function of our minds filling in the gaps.
By the way, if you are told to shake your head up and down, nodding in agreement, while reciting a plausible argument, you will assign a higher truth value to that claim. And emotion is more a “creation of the moment” rather than “an inner revelation.” If you cross a dangerous bridge to meet up with a woman, thus raising your adrenalin levels, you are more likely to develop a crush on her, that sort of thing.
I cannot evaluate all of the claims in this book, and indeed I am partly skeptical in light of the rather scanty treatment given to cross-sectional variation across heterogeneous individuals. Still, the author cites evidence for his major claims and applies reasonable and scientific arguments throughout. I can definitely recommend this book to those interested in serious popular science treatments of the mind, and it is not simply a rehash of other popular science books on the mind.
The top link above is for U.S. Amazon orders, due out in August, I was very happy to have ordered from AmazonUK.
I believe this book was first recommended to me by Tim Harford.
Sunday assorted links
The Mirage of Data Portability
In The Facebook Trials: It’s Not “Our” Data I wrote:
Facebook hasn’t taken our data—they have created it.
…Moreover, it’s the prospect of profits that has led Facebook and Google to invest in the technology and tools that have created “our data.” The more difficult it is to profit from data, the less data there will be. Proposals to require data to be “portable” miss this important point. Try making your Facebook graph portable before joining Facebook.
In an important post, Will Rinehart, adds detail:
Contrary to the claims of portability proponents, however, it isn’t data that gives Facebook power.
…Facebook’s technology stack, the suite of technologies that it uses behind the scenes, clearly shows the importance of scaling, as much of the architecture was developed in-house to address the unique problems facing Facebook’s vast troves of data. Facebook created BigPipe to dynamically serve pages faster, Haystack to efficiently store billions of photos, Unicorn for searching the social graph, TAO for storing graph information, Peregrine for querying, and MysteryMachine to help with end-to-end performance analysis. Nearly all of this design is open for others to use, and has been a significant boon to programmers in the ecosystem. The company also invested billions in content delivery networks to quickly deliver video, and it split the cost of an undersea cable with Microsoft to speed up information travel.
The vast investment that Facebook has put into programs for understanding and processing its users’ data points to the fundamental flaw in the argument for data portability.
…Requiring data portability does little to deal with the very real challenges that face the competitors of Facebook, Amazon, and Google. Entrants cannot merely compete by collecting the same kind of data. They need to build better sets of tools to understand information and make it useful for consumers.
Therapy sentences to ponder
If you’re doing a specific therapy for a specific problem (as opposed to just trying to vent or organize your thoughts), studies generally find that doing therapy out of a textbook works just as well as doing it with a real therapist.
That is from Scott Alexander, who considers ways of saving money on mental health care.
What are we learning from the Greek economic recovery?
Greece’s prospects look a lot brighter today. Gross domestic product grew by 1.4% last year, the first substantial annual rise since 2007, led by a sharp rise in investment. Business surveys show activity, new orders and hiring intentions at levels not seen for years. Economists expect around 2% growth this year.
Here is the full story (WSJ). To the extent Greece’s problem was “demand only,” you would expect a much higher rate of bounce back. To the extent Greece’s problem was in addition a) bad policy finally biting, interacting with the end of a boom, and b) multiple equilibria, with the world deciding Greece is a “Balkans economy” rather than a “West European” economy, you would expect growth rates of…one to two percent.
But if we start seeing 5-7 percent growth on the bounce back, that would imply a demand shortfall per se was the main culprit. Keep in mind that (with some problematic measurement issues involved) at one point Greek per capita gdp had fallen by about 25 percent.