Results for “age of em”
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Paintings to see before you die

Here is a Guardian list, via CrookedTimber.  It is not bad, but surely Giotto’s Padua murals (this panel is clearer) should be added, Rembrandt’s Anatomy Lesson of Dr. Tuyp is far better than his Aristotle Contemplating the Bust of Homer, and how about Thomas Eakins’s The Gross Clinic?  I am not anti-Picasso but Guernica is in my view overrated.  How about this one?  El Greco’s Toledo picture is another contender

Try this list too.  Your thoughts?

Die Vereinigte Dienstleistungsgewerkschaft, or stronger unions for America?

Ezra Klein writes:

So what makes us [the United States]

different.  In a word, power.  Or the distribution of it. Europe has strong unions
and active governments; countervailing powers that wrest a portion of
the pie for their constituencies.  We don’t.

Many intelligent Democrat bloggers are converging upon this meme.

A few years ago five separate German trade unions, drawing heavily from service industries, merged to form the very large Vereinigte Dienstleistungsgewerkschaft.

Here is a propagandistic article about Die Vereinigte Dienstleistungsgewerkschaft.

It is hard for me to believe that the American hi-tech sector would create more prosperity — and I mean for the middle class, never mind the rich — if it had a Vereinigte Dienstleistungsgewerkschaft.

Here is an article about the current and forthcoming death of German trade unions.  Germany is now moving toward a two-tier labor market; guess which tier the new jobs are being created in?  I have never known a Vereinigte Dienstleistungsgewerkschaft to support the "creative destruction" which is the lifeblood of capitalist innovation.  Unions are better suited for a relatively static set of manufacturing tasks, precisely the jobs which are disappearing from Germany and also from the United States.  Read this too; German unionization is down to about one out of every five jobs.  Unions are declining more generally throughout the OECD.

Here is how German unions have responded to the Airbus crisis; it is not pretty.  Here is a German complaining about German unions.

German unions were an instrumental part of postwar recovery and democratization.  And I do not doubt the standard evidence that, in partial equilibrium terms, there is a union wage premium of about ten to fifteen percent (though, interestingly, such a premium cannot be found for Sweden, France, or Germany; union defenders claim that the collective bargaining benefits spill over into all sectors.  Maybe.). 

But today?  I do not see the appeal of a Vereinigte Dienstleistungsgewerkschaft, most of all for the relatively dynamic United States.  It would bring a one-time boost in some wages and a long run decline in growth and job creation.  That is not a good deal.  And if I imagine the counterfactual world in which I am a Democrat, I would not feel any differently about this question.

How good is the Nordic model?

Jeffrey Sachs has written a new paper on the Nordic model, extending his Scientific American article in praise of the welfare state.  It is listed as "not for quotation" so I won’t.  I agree with much of the paper, but I would emphasize a few propositions more:

1. Many ideas and innovations are international public goods.  This will make the Nordic model more sustainable over time.  Swedish society doesn’t have to be that innovative, although of course sometimes it is.

2. Societies differ a great deal in their innate level of cooperativeness.  This is a key to making the Nordic model work.  I wouldn’t try the Swedish model in France, much less in the United States.

3. The Nordic countries generally take a light hand in regulation, capital income taxation, and many of the public welfare programs pay people to work and not to sit at home on their behinds.  In fairness to Sachs, he does mention these points.  Furthermore given the extensive subsidies to child care, which encourage female labor force
participation, the high marginal tax rates do not discourage labor supply as we might at first think.

4. Government policy is often most usefully thought of as endogenous.  Higher levels of cooperativeness, and lower levels of corruption, mean that people will choose more government.  The government they get will work better than government works elsewhere.  The point is not that all choices are efficient, but rather there is a selection bias in the data we observe on government size and performance.  Nordic welfare states are large, in part, because they work relatively well.

5. The long-term consequences of a slightly lower growth rate are in any case troubling, no matter how well a society works at any moment in time.

Here is my previous post on the Nordic model.  Here is a post on Swedish stagnation.  Excerpt: "I’ve been to Stockholm several times and loved it.  That being said, how
attractive will this model remain when it offers only half of the per
capita income of the United States?"

A Natural Disaster Does Not Increased Measured GDP

It’s common to be told that a problem
with the GDP statistic is that natural disasters increase measured GDP. Sadly, even some textbooks say this but as a
general matter it’s false. The broken
windows fallacy is a fallacy for measured as well as real GDP because the money
spent on new windows would have been spent on other goods and services.

Imagine that you are your friends are going to see a jazz
concert but on your way to the concert you have a little disaster, a fender
bender. Instead of seeing the show, you
and your friends have a miserable time waiting for the tow truck to come to
have your car fixed. Spending on the tow
truck and the auto repair counts as
GDP but it does not add to GDP
because it is counter-balanced by a decrease in spending on jazz, wine and cheesecake. Nothing Tyler says (see above) about
gross substitutability changes this fact.

Consider a bigger disaster, the 9/11 attack. First, the point already mentioned, the
resources used in the cleanup count as GDP but don’t add to GDP to the extent
that they would have been employed on other projects. Now it is true that some of the workers could
work overtime which they otherwise would not – this would tend to increase
measured GDP more than real GDP since leisure is not measured in the national
income and product accounts. Even this
factor, however, must be balanced against the overwhelming fact that the
destruction of the twin towers meant that tens of thousands of the most
productive people in the United States were forced into unemployment or death. Since GDP can also be measured as the sum of wages, rents, interest etc.
the immediate effect of all the unemployed and dead was to reduce GDP. Similarly, Hurricane Katrina has destroyed
more jobs in New Orleans than it
has added (and not all the added jobs represent real additions) hence the
Hurricane reduced measured and real GDP.

Also it is not true, as some sources claim, that destroyed
resources don’t count in the NIPA statistics – firms and the government count at
least some (but not all) destroyed resources as depreciated capital and thus measured Net Domestic Product automatically decreases with a disaster.  (n.b. corrected from earlier where I had said GDP instead of NDP).

Tyler asks “if a new hotel is
built, why should the gdp consequences depend on whether the lot had always
been vacant or a previous hotel on that lot was destroyed by a storm?” Answer: it doesn’t. In neither case can you assume that GDP goes
up. GDP is analogous to an individual’s
expenditures on goods and services. If Tyler buys a new CD does that raise Tyler’s
expenditures? Not if it doesn’t raise
his income. If all you did to measure
GDP was to count new hotels, new shopping malls, new spending then you would
far over-estimate GDP. GDP is a net
concept you have to count all expenditures precisely because some of the new
spending is offset by reduced spending elsewhere in the economy. It’s only after you have totaled that you can
calculate the increase in GDP.  (Note also Tyler’s error, if the new CD doesn’t represent a net increase in expenditures it can’t increase income on net either.)

If you follow through on the false logic you will
find yourself saying crazy things like crime increases GDP because of the money that people spend on locks. Of course, locks count as GDP but if people
weren’t buying locks they would be buying other goods so locks don’t add to GDP. GDP measures production it doesn’t measure
how production contributes to happiness.

There are plenty of problems with the GDP statistic and Tyler and I agree
that it’s conceivable that through a Keynesian effect or intertemporal substitutability
of labor that GDP could rise from a natural disaster but for this to work is
has to outweigh all the effects that I have listed and this is unlikely. Thus what we should teach our undergrads is
that measured and real GDP falls with a natural disaster.

When should the government report future liabilities?

The FASAB has asked that the United States government start including future Medicare and Social Security liabilities in current budget deficit figures:

Monday, the Federal Accounting Standards Advisory Board released a proposal in which the government would have to account for the cost of future Social Security payments year by year as people build up entitlements.

Seen in advance of its release by the Financial Times, the switch in accounting practices would be an international accounting anomaly, as most other governments treat social insurance as a political commitment to pay future benefits rather than a financial liability, the newspaper said.

The FASAB is made up of six independent members who support the proposal and three opposing members from the U.S. Treasury, the White House Office of Management and Budget and the Government Accountability Office.

Here is an FASAB press release.  Here is a longer story.  Of course the reported deficit would go up by hundreds of billions of dollars a year.

Under rational expectations, this purely nominal change should be neutral.  In the abstract, more transparency in government is desirable.  Over the longer run, government would treat promises of future benefits more like expenditures and subject them to greater critical scrutiny.   

More practically, if these benefits are counted in the current budget as liabilities, it will be politically harder to cut them in the future.  However it might not be harder to tax them, which is one but not the only way of cutting them.

If you think that tax hikes are the way to address our crushing future financial burden, you should favor this proposal.  If you prefer spending cuts, it is a harder call. 

I don’t doubt that financial markets would quickly adjust to the new levels for announced deficits.  Most voters might not ever know the difference — how many of them could name the size of the deficit right now?  But this change would draw the attention of the informed public to our future fiscal and demographic problems.  How much faith should we have in these people, relative to what our government will do on its own?

I am inclined to take a chance on this one, but I don’t think it is a simple call. 

By the way, the government is not obliged to accept this directive, but there is a great deal of precedent for following FASAB recommendations.

Larry Summers watch

Via Daniel Drezner:

A few months after stepping down as president of Harvard University, Lawrence H. Summers has joined a $25 billion hedge fund management firm, D.E. Shaw & Co., as a part-time managing director.

Summers will remain on the Harvard faculty while he works for D.E. Shaw on strategic initiatives and high-level portfolio management, according to the company.

Joycean blogging

This paper, via Jorge, argues that a credit crunch, and an increase in contract non-enforceability, are major reasons why NAFTA did not benefit Mexico more.  Each Beck album takes a longer time to appreciate than the last one; I’m finally coming around on The Information.  Here is a further smackdown on the TV-autism study.  Panama has voted to expand the Canal; after the Grand Canyon and Iguassu, it is the most impressive sight I have seen.  Go.  A New York Times article notes that Portuguese has 230 million speakers, far more than German or Japanese; yet it is still considered a minor language.  Will Wilkinson, who has been busy lately, has a good post on positive-sum status gamesThe Wall Street Journal had a front page article today on the trend to pull the elderly out of nursing homes and pay their relatives, or in some cases their ex-wives, to care for them.  The Business of Health and The Cure: How Capitalism Can Save American Health Care are two new market-oriented books on American health care; the latter has a blurb from Milton Friedman.  Chutes and Ladders examines the upward mobility of (some of) the working poor; buy it here.  Starbucks succeeds by helping customers feel good about themselves.

Why law associates work so hard

I have learned a new mechanism to explain the organization of knowledge-based, client-intensive partnerships:

From the property rights perspective, large law firms are poorly suited to sustaining employment relationships because they have no enforceable means of controlling the firm’s key knowledge asset–client relationships.  The up-or-out partnership systems that have evolved over time in these firms offer an awkward but workable resolution to this problem.  By restricting partnership size to maximize surplus per partner and by making senior attorneys residual claimants, law firms limit the opportunity for sub-groups of partners to grab and leave with the firm’s clients.  This action, however, creates additional demand for inexperienced associates who serve as (imperfect) substitutes for their more experienced counterparts.  The result is that more associates are hired than can be promoted into a stable partnership.  Those associates who do not succeed outgoing partners will be dismissed before they acquire sufficient client knowledge to themselves pose a threat of grabbing and leaving.  That law firms find it worthwhile to commit to the costly practice of firing qualified attorneys in order to retain control over client relationships points to the general importance of control over assets in more conventional employment relationships.

The property rights model, in contrast to other explanations, can explain the coincidence of up-or-out promotion rules and partnerships in large law firms.  At the root of our model is the claim that law firms cannot rely upon legal mechanisms to establish control over client relationships.  We demonstrate that this is, in fact, the case under U.S. law.  In addition, the property rights model suggests two propositions that are supported by the available historical, institutional and econometric evidence: (1) up-or-out appeared first in large corporate law firms who specialized in delivering large scale, complex legal services to valuable, long-term clients, and (2) large law firms practice a style of law that limits contact between associates and clients.  Finally, the property rights model can account for the otherwise anomalous absence of up-or-out personnel policies in government agencies and large corporate litigation departments [TC: I like this latter point].

Here is the paper.  Here is another version with abstract.

Pumping Neurons

So I’m in the local Best Buy and I see that the Nintendo DS has Brain Age on display, it tests your "brain age" with a series of mental exercises.  Heh, I’m up for a workout so I run the game which does things like show you the word blue but written in red and you are supposed to say the color (not the word).  The store is noisy, however, so the damn microphone isn’t picking up my answers.   It gives me a brain age of 95!  What the #$$!%!.  So I run the game again and this time I’m shouting into the machine, blue, red, no I said red damn it, green, green, green…  Well, I managed to get my brain age down some but by now people were looking at me real funny.

    Anyway, if you want to try some of these exercises you can now join an online gym and workout at home.  The Washington Post has a brief review of some of the sites including MyBrainTrainer, Happy-Neuron and Brain Builder.  Of course, you know my recommendation for the best website to improve your brain power.

Does television viewing trigger autism?

Gregg Easterbrook says yes, citing this new study.  Here is part of the abstract:

…we empirically investigate the hypothesis that early childhood television viewing serves as such a trigger [for autism].  Using the Bureau of Labor Statistics’ American Time Use Survey, we first establish that the amount of television a young child watches is positively related to the amount of precipitation in the child’s community.  This suggests that, if television is a trigger for autism, then autism should be more prevalent in communities that receive substantial precipitation.  We then look at county-level autism data for three states – California, Oregon, and Washington – characterized by high precipitation variability.  Employing a variety of tests, we show that in each of the three states (and across all three states when pooled) there is substantial evidence that county autism rates are indeed positively related to county-wide levels of precipitation.  In our final set of tests we use California and Pennsylvania data on children born between 1972 and 1989 to show, again consistent with the television as trigger hypothesis, that county autism rates are also positively related to the percentage of households that subscribe to cable television.  Our precipitation tests indicate that just under forty percent of autism diagnoses in the three states studied is the result of television watching due to precipitation, while our cable tests indicate that approximately seventeen percent of the growth in autism in California and Pennsylvania during the 1970s and 1980s is due to the growth of cable television.  These findings are consistent with early childhood television viewing being an important trigger for autism.

I am unconvinced.  Precipitation, in these states, is a coastal phenomenon and is proxying for heterogeneity in the gene pool.  Perhaps the coastal areas attract a more "autism-ready" group of individuals.  In fairness to the authors, they do try to control for income and education and population density and diagnosis capacity, among other variables.  Note two worrying features in the results: in California precipitation is not correlated with autism rates at all (there is a north vs. south split for rain, rather than the coast vs. inland), and precipitation is a better predictor of autism than cable viewing is directly. 

Here is the latest autism news on the genetic front.

Addendum: Steve Levitt is also skeptical.

The behavioral economics of pain

The two main lessons, as I read this paper, are a) pain is less bad when the sufferer can see the endpoint, and b) pain is less bad when the sufferer feels in control to some measure.

The concluding discussion of "happiness economics" is on the mark:

…my personal reflections are only in partial agreement with the literature on well being (see also Levav 2002).  In terms of agreement with adaptation, I find myself to be relatively happy in day-to-day life – beyond the level predicted (by others as well as by myself) for someone with this type of injury.  Mostly, this relative happiness can be attributed to the human flexibility of finding activities and outlets that can be experienced and finding in these, fulfillment, interest, and satisfaction.  For example, I found a profession that provides me with a wide-ranging flexibility in my daily life, reducing the adverse effects of my limitations on my ability.  Being able to find happiness in new ways and to adjust one’s dreams and aspirations to a new direction is clearly an important human ability that muffles the hardship of wrong turns in life circumstances.  It is possible that individuals who are injured at later stages of their lives, when they are more set in terms of their goals, have a more difficult time adjusting to such life-changing events.

However, these reflections also point to substantial disagreements with the current literature on well-being.  For example, there is no way that I can convince myself that I am as happy as I would have been without the injury.  There is not a day in which I do not feel pain, or realize the disadvantages in my situation.  Despite this daily awareness, if I had participated in a study on well-being and had been asked to rate my daily happiness on a scale from 0 (not at all happy) to 100 (extremely happy), I would have probably provided a high number, probably as high as I would have given if I had not had this injury.  Yet, such high ratings of daily happiness would have been high only relative to the top of my privately defined scale, which has been adjusted downward to accommodate the new circumstances and possibilities (Grice 1975).  Thus, while it is possible to show that ratings of happiness are not influenced much based on large life events, it is not clear that this measure reflects similar affective states.

As a mental experiment, imagine yourself in the following situation.  How you would rate your overall life satisfaction a few years after you had sustained a serious injury.  How would your ratings reflect the impact of these new circumstances?  Now imagine that you had a choice to make whether you would want this injury.  Imagine further that you were asked how much you would have paid not to have this injury.  I propose that in such cases, the ratings of overall satisfaction would not be substantially influenced by the injury, while the choice and willingness to pay would be – and to a very large degree.  Thus, while I believe that there is some adaptation and adjustment to new life circumstances, I also believe that the extent to which such adjustments can be seen as reflecting true adaptation (such as in the physiological sense of adaptation to light for example) is overstated.  Happiness can be found in many places, and individuals cannot always predict their ability to do so.  Yet, this should not undermine our understanding of horrific life events, or reduce our effort to eliminate them.

Here are Dan’s papers, and here.  Here are Dan’s riddles.

Why no patent or copyright for new food recipes?

A loyal MR reader writes in:

Why do we have IPRs for literature, the arts and music but not for food dishes?  Of course, I’m not talking about a copyright on the Ham & Cheese sandwich, I’m talking about innovative new dishes…I’m not arguing that we SHOULD have IPRs for food, just wondering what the big difference is (if any) between the culinary arts and other arts…I realize it would be difficult to enforce such rights at mom & pop type places…but it would be possible to enforce those rights at big name places and large chains.

Food relies so much on execution, or at the national chain level on marketing, that the mere circulation of a recipe does not much diminish the competitive advantage of the creative chef.  Try buying a fancy cookbook by a celebrity chef and see how well the food turns out.  (In contrast, an MP3 file is a pretty good substitute for a CD.)  Most chefs view their cookbooks as augmenting the value of the "restaurant experience" they provide, not diminishing it.  Furthermore industry norms, and the work of food critics, will give innovating chefs the proper reputational credit.  It is not worth the litigation and vagueness of standards that recipe patents would involve.

Here is a recent article on recipe copyright

Here is an academic paper on how norm-based copyright governs the current use of recipes.  French chefs will ostracize "club members" who copy innovative recipes outright.  Now the fashion industry wants IP protection as well.

Why hasn’t South Africa done well?

Dani Rodrik reports:

South Africa has undergone a remarkable transformation since its
democratic transition in 1994, but economic growth and employment
generation have been disappointing.  Most worryingly, unemployment is
currently among the highest in the world. While the proximate cause of
high unemployment is that prevailing wages levels are too high, the
deeper cause lies elsewhere, and is intimately connected to the
inability of the South African to generate much growth momentum in the
past decade.  High unemployment and low growth are both ultimately the
result of the shrinkage of the non-mineral tradable sector since the
early 1990s.  The weakness in particular of export-oriented
manufacturing has deprived South Africa from growth opportunities as
well as from job creation at the relatively low end of the skill
distribution.  Econometric analysis identifies the decline in the
relative profitability of manufacturing in the 1990s as the most
important contributor to the lack of vitality in that sector.

Here is a non-gated version of the paper.  The bottom line is that South Africa is de-industrializing. 

If you read only one book by Orhan Pamuk

The White Castle is short, fun, and Calvinoesque.  Not his best book but an excellent introduction and guaranteed to please.  Snow is deep, political, and captures the nuances of modern Turkey; it is my personal favorite.  The New Life isn’t read often enough; ideally it requires not only a knowledge of Dante, but also a knowledge of how Dante appropriated Islamic theological writings for his own ends.  My Name is Red is a complex detective story, beloved by many, often considered his best, but for me it is a little fluffy behind the machinations.  The Black Book is the one to read last, once you know the others.  Istanbul: Memories and the City is a non-fictional memoir and a knock-out.