Results for “human challenge” 150 found
Realism on Infrastructure Investment
Keith Hennessey has an excellent post on government infrastructure investment. Here are his key points:
- Capital investment by government often pursues multiple policy goals, some of which conflict with maximizing productivity growth. If you’re investing for long-run growth you’ll invest differently than if you also have goals to maximize short-term job creation and to change the future balance of energy sources to reduce greenhouse gas emissions (for instance). The pursuit of multiple policy goals lowers the expected economic growth benefit of public capital spending.
- Geographic politics distorts and often dominates government investment in physical infrastructure. Highway funds and airport funds especially are allocated in part based on which Members of Congress have maximum procedural leverage over the spending bill. Even if you could somehow get Congress to stop earmarking infrastructure spending (good luck), and even if you could rely on the Executive Branch not to allow their own political goals to influence how they allocate funds, local geographic politics would come into play at the state level, since much federal infrastructure spending flows through State governments. This is where reality most falls short of a valid theoretical starting point for increasing productivity and long-term growth.
- Non-geographic politics can distort government capital spending. This is principally an Executive Branch concern, as we saw with the Obama Administration’s decision to throw good money after bad to postpone Solyndra’s failure. And rent-seekers come out of the woodwork, looking to leverage their connections to government officials to win infrastructure investment contracts.
- Once “investment” is favored, everything gets relabeled as investment. The Obama Administration has been particularly guilty of this; almost every spending increase they propose is an “investment” of some sort. We should allow them some rhetorical leeway, and we should recognize that government has other reasons to spend money than just to maximize future economic growth. At the same time, it’s misleading when they claim that increased government spending that serves other policy goals (some quite legitimate) also increases future economic growth.
- There’s a difference between government investments in the commons and government spending that primarily benefits individuals. A new airport benefits all who use it. A scientific research grant benefits the researcher and society as a whole if his research advances our understanding. A subsidized student loan is an investment in human capital, but the return on that investment accrues mostly to the student and his or her family. That’s not wrong, it’s just having a more limited effect on increasing long-term growth for society as a whole.
- Government investment in physical infrastructure is slow. The Administration learned this as they tried to force money out the door in 2009 for “shovel-ready jobs” that turned out not to be there. This doesn’t mean you don’t build roads and improve ports and airports, it just means the short-term fiscal stimulus argument for this type of spending is weak.
- Government investment in physical infrastructure is intentionally expensive because of “prevailing wage” requirements, championed by construction labor unions, that mandate the government must pay more for workers than an aggressive private firm might be able to find in the labor market.
- We should evaluate the marginal productivity benefits of additional investment. The President sometimes argues that building the national highway system was good for growth, therefore his specific proposal to increase highway spending is good for growth, too. But those are different investments, and we need to examine the marginal benefits (and rate of return) on the specific incremental investments he is now proposing. The transcontinental railroad definitely increased national economic growth, but that doesn’t mean the feds should subsidize a costly California bullet train with questionable growth benefits.
- International comparisons of government infrastructure are silly. U.S. government capital spending should be determined based on what will most increase U.S. productivity without comparison to what other countries are doing. If American ports are clogged and that is harming our trade and slowing American economic growth, then we should upgrade our ports. We shouldn’t instead improve our airports because other countries have shinier ones. We have a different geography, a different economy, and different infrastructure needs than does China, or Japan, or Dubai or France. It is crazy to suggest that the U.S. should build bullet trains because China is doing so.
- Government investment faces no market discipline. Capital investment in a private firm can face some of the above challenges—a CEO, for instance, might want a new facility built in his hometown rather than where it will produce the highest rate of return. Or a firm might reject an investment that would maximize its’ workers’ productivity because that investment is inconsistent with the firm’s broader strategic goals. But these firms ultimately face the discipline of the market to curb their excesses. Government does not, and in some cases policymakers are rewarded by their election markets to distort infrastructure investment even farther from its growth-maximizing ideal.
- Government capital investment financed by raising taxes on private capital investment will slow long-term economic growth. While in theory there probably are government infrastructure investments with very high rates of return, all of the above reasons suggest that in practice the actual rate of return on government-directed investment is going to be lower than in the private sector. If you advocate raising capital taxes (on capital gains and dividends, for instance, as Senate Democrats appear poised to do) at the same time you argue for increased government capital spending, you’re shifting capital investment from the private sector to the public sector. That will slow long-run economic growth rather than increase it.
As Hennessey notes and as I second this is not a denial that “smart government capital investment can increase productivity and contribute to faster long-run economic growth.” Instead, it’s an argument for caution but also for more thought about how to make government investment smarter. See also Tyler’s related comments.
Let the Tacocopters Fly!
Very good piece by Ryan Avent at the Economist:
Consider the tacocopter. The tacocopter is a not-quite-real-not-quite-a-joke business idea that became a brief internet sensation back in March. The concept is stunningly simple: order tacos on your iPhone and a quadracopter drone will deliver them to your doorstep. As you can read here, the plan would face technical and (especially) regulatory hurdles if implemented today. Yet the potential, for this or similar experiments, is obvious. Cheap, agile drone technology is available now. Building apps is trivially easy. Mapping and location technology and data are getting better all the time. If not drone copters, perhaps 3D printers or autonomous vehicles. It’s a short leap from the ridiculous to the transformative. And the ideas needed to transfer these technologies to everyday life are increasingly the domain of entrepreneurs rather than academics. One doesn’t need 20 years of study to spot profit opportunities.
…I’m most inclined to think that its the pace of societal evolution that is most binding: growth proceeds at the fastest pace that legal and social institutions can tolerate.
Think of the challenges that would face the would-be tacocopter entrepreneurs. Consider that issues surrounding liability and law, rather than technology, now appear to be the biggest obstacle to autonomous vehicles. Look at the legal struggles faced by innovative services like Uber and Airbnb. Disruptive innovations are bumping against a broad array of regulatory hurdles that built up during a very different era of economic growth.
As I argued in Launching our regulatory system has gotten so large and complex that its main effects are now unintended. In short, the product of the regulatory system is a result of human action but not of human design.
An email from Philip Tetlock
Dear Tyler,
I wanted to thank you for encouraging your readers last year to volunteer for the Intelligence Advanced Research Projects Agency (IARPA) forecasting tournament. The Year 1 results are in–and they contained more than a few surprises. Most surprising was how well our forecasters performed. They collectively blew the lid off the performance expectations that IARPA had for the first year. Their original hope was that in Year 1 the best forecasting submissions might be able to outperform the unweighted average forecasts of the control group by 20%. When we created weighted-averaging algorithms that gave more weight to our most insightful and engaged forecasters, these algorithms beat that baseline by roughly 60% (exceeding IARPA’s expectations for Year 4).
Our forecasters did so well that some thoughtful observers now doubt it is possible to do much better — which is why we have taken the unusual step of skimming the best forecasters from our year 1 experimental conditions to create teams of “super forecasters.” These teams will be functioning more as research collaborators than as research participants (they will have access to our algorithms but the discretion to override the algorithms with their own judgment). In my view, these “super forecasters” are distinguished by three characteristics: (1) an intense curiosity about the workings of the political-economic world; (2) an intense curiosity about the workings of the human mind; (3) cognitive crunching power (“fluid intelligence” and a capacity for “timely self correction”).
Of course, the decision to skim off our best forecasters into elite teams — coupled with the inevitable attrition rate in a time-consuming exercise of this sort — means that we are in the market for new forecasters, ideally potential future “super-forecasters.” So we are launching a new recruiting drive.
My hope is that you might mention this project again to your readers and encourage them to visit the registration page at www.goodjudgmentproject.com/register.
If you would like more details about our project, please just ask (I didn’t want to inundate you with details and the Year 1 results are, of course, preliminary (distinguishing skill from luck is a perpetual challenge)).
That was then, this is now
In 2004, I wrote this to Alex:
The United States remains a strong and prosperous country. Our infrastructure, national culture of innovation, human capital, and economic dynamism are unparallelled in world history. The Bush fiscal policies, whatever their irresponsibilities, costs, and drawbacks, haven’t changed those core facts.
So I walked down to Alex’s office and issued him the following challenge: if you think I am wrong, sell all your stocks and go short on U.S. Treasury securities (and long on Brazil, if you wish!). With all the money you will make, you can buy out my half of this blog.
In my own defense, 2004 was the year when the available run of productivity statistics was looking the best, and there was no reason to think the 2001-2004 numbers were biased or misleading.
For the pointer I thank…Alex.
p.s. he didn’t do it.
Assorted links
1. What “Inside Job” got wrong.
2. Brave Emperor Penguin performs superhuman feat and challenges restrictive New Zealand immigration policy. There is currently no move to deport the penguin.
3. What is that poetry magazine doing with the $200 million?
4. The Dover Sole price guide.
5. The cost of the death penalty. And follow-up on James Verone.
The Global War on Drugs has Failed
The global war on drugs has failed, with devastating consequences for individuals and societies around the world.
…End the criminalization, marginalization and stigmatization of people who use drugs but who do no harm to others. Challenge rather than reinforce common misconceptions about drug markets, drug use and drug dependence.
…This recommendation applies especially to cannabis, but we also encourage other experiments in decriminalization and legal regulation that can accomplish these objectives and provide models for others.
…Break the taboo on debate and reform. The time for action is now.
- Asma Jahangir, human rights activist, former UN Special Rapporteur on Arbitrary, Extrajudicial and Summary Executions, Pakistan
- Carlos Fuentes, writer and public intellectual, Mexico
- César Gaviria, former President of Colombia
- Ernesto Zedillo, former President of Mexico
- Fernando Henrique Cardoso, former President of Brazil (chair)
- George Papandreou, Prime Minister of Greece
- George P. Shultz, former Secretary of State, United States (honorary chair)
- Javier Solana, former European Union High Representative for the Common Foreign and Security Policy, Spain
- John Whitehead, banker and civil servant, chair of the World Trade Center Memorial Foundation, United States
- Kofi Annan, former Secretary General of the United Nations, Ghana
- Louise Arbour, former UN High Commissioner for Human Rights, President of the International Crisis Group, Canada
- Maria Cattaui, Petroplus Holdings Board member, former Secretary-General of the International Chamber of Commerce, Switzerland
- Mario Vargas Llosa, writer and public intellectual, Peru
- Marion Caspers-Merk, former State Secretary at the German Federal Ministry of Health
- Michel Kazatchkine, executive director of the Global Fund to Fight AIDS, Tuberculosis and Malaria, France
- Paul Volcker, former Chairman of the United States Federal Reserve and of the Economic Recovery Board
- Richard Branson, entrepreneur, advocate for social causes, founder of the Virgin Group, co-founder of The Elders, United Kingdom
- Ruth Dreifuss, former President of Switzerland and Minister of Home Affairs
- Thorvald Stoltenberg, former Minister of Foreign Affairs and UN High Commissioner for Refugees, Norway
The report of The Global Commission on Drug Policy is very strongly worded and the commissioners are so stellar it will be difficult to ignore.
What do we know about population and technological progress?
Bryan Caplan writes:
The more populous periods of human history–most obviously the last few centuries–clearly produced more scientific, technological, and cultural innovations than earlier, less populous periods. More populous countries today produce many more scientific, technological, and cultural innovations that less populous countries… Here’s a challenge for you: Name the most credible measure of idea production that isn’t at least moderately positively correlated with population.
Is this about the absolute number of ideas generated or ideas as a percentage contributor to economic growth? If we are estimating the costs and benefits of greater population, or the future of economic growth rates, the latter is arguably the more important variable. In any case, most plausible theories of economic growth imply that higher populations should lead to higher rates of ideas generation, as measured in terms of value. Ideas are non-rival and can be enjoyed by the entire group, thus yielding a higher social rate of return. There are also larger markets to pay for the ideas or award more fame to the inventors.
Here is a famous Michael Kremer paper arguing for a version of Caplan’s position. That all said, it is far from obvious that Caplan is correct:
1. The measured rate of technological progress, as it contributes to gdp, seems to have peaked in the 1930s. At that time total population, including the population of scientists, was much lower than today. “Effective” total population was yet lower, given the backward nature of transportation and communications and trade at the time, compared to today.
2. A recent paper by Ashraf and Galor (it’s also worth reading for other reasons) concludes: “…population density in pre-industrial times was on average higher at latitudinal bands closer to the equator.” Yet the countries closer to the equator did not end up being the drivers of industrial progress, even though they sometimes had higher rates of progress in agricultural times. Northern Europe, with the exception of the Dutch Republic, was never the star for population density. This paper also indicates that technology drives population growth — more than vice versa — and that “time elapsed since a region’s neolithic breakthrough” predicts later technological progress fairly well.
If you add an extra baby to most societies, ceteris paribus, the rate of expected idea generation does indeed go up in theory. But how important a factor is that, compared to other influences on ideas generation?
Or: at very gross time scales (“the last few hundred years” vs. “the dark ages”) a positive relationship holds between population and ideas production, or at very gross numerical comparisons (“one million people” vs. “ten people”). But viewed at finer granulations (by the way, the evidence in the Kremer paper is quite gross; e.g., pp. 710-712), the relationship isn’t nearly as strong as one might expect. In the time series, it’s been largely a negative relationship for the last eighty years or so, as mentioned above.
What model might give you a positive relationship between population and innovation at grosser scales but not finer scales? Let’s say there are various technological “platforms,” such as “fire,” “agriculture,” and “fossil fuels,” and maybe someday “uploads.” At any point in time, growth rates depend on how much a region has exhausted the potential of its current platform. This is largely independent of current population. That said, larger population areas may have a greater chance of progressing to the next platform, so there is a long-term, gross correlation between population size and levels of technology. Furthermore, if all regions have more or less exhausted the current platform, the larger region has a greater chance of leading the next breakthrough and thus being first to have the new and higher growth rate, even if most of the time it doesn’t have a higher growth rate for technological progress. That view is hardly anti-population, but it explains why you will find screwy population-innovation correlations all over the place. Finally, further breeding, as a recipe for progress, is an extreme lottery ticket and it only works at some special margins.
Dennis is Not More Likely to be a Dentist
Pelham, Mirenberg and Jones (2002) found that the names Jerry, Dennis and Walter were the 39th, 40th, and 41st most frequent male names in the 1990 census (moreover the absolute frequency of (Jerry+Walter)/2 was almost identical to that of Dennis). But in a nationwide search they found 482 dentists named Dennis but just 257 named Walter, and 270 named Jerry, a highly statistical significant difference. Hence the meme was born, “Dennis is more like to be a Dentist.”
The expected number of dentists named Dennis, however, depends not on the frequency of Dennis in the 1990 Census but on the entire stock of people named Dennis over the past ~70 years and similarly for Walter and Jerry. If, for example, no one was ever named Jerry prior to 1989 but in 1990 the name skyrocketed to prominence following the appearance of Seinfeld then there would be no dentists named Jerry despite Jerry being a popular name in the 1990 census.
Following this logic, Uri Simonsohn proposes that instead of comparing the number of dentists named Dennis to those named Jerry or Walter we compare the number of dentists named Dennis to the number of lawyers named Dennis. Making this comparison, Simonsohn finds that Dennis’s are just as overrepresented among lawyers as among dentists, thus the Dennis is a dentist finding is most likely due to a spurious cohort effect.
In addition, to testing the name-profession link Simonsohn reexamines many of the classics of the implicit egoism literature and finds many of them (not all and he does not challenge the experimental results) wanting. Virginia is not more likely to move to Virginia, for example. The Simonsohn paper is impressive and a great resource for anyone wanting to teach the difficulties of doing causal statistical research.
Why is Finland so rich?
James, a loyal MR reader, has a request:
Why is Finland, with its tax distortions and subsidies, as rich as it is?
1. Finland’s taxes and subsidies do not much discourage the adoption of cutting-edge technologies and thus Finland has moved relatively close to “the frontier.” Ed Prescott and Stephen Parente have a very important paper about the difference between interventions which have this effect and those which do not. It’s one of the best papers on economic development.
2. Finland’s high taxes do discourage male labor supply and that is one reason why the country is not as wealthy, in per capita terms, as the United States.
3. There are extensive day care and child care subsidies, which in part counteracts the effects of high taxes on female labor supply.
4. Finland has one of the best educational systems in the world and high levels of human capital. You might re-ask your same question about living standards in Russia, which had far worse economic policies than Finland, yet is not too far from first world standards in the major cities.
5. Finland invested in communications and IT at exactly the right time. For a relatively small economy this had a huge payoff.
6. Some people might cite Finnish industrial policy as having driven growth; I am not sure how significant it was.
7. An open economy, with lots of trade, is usually much freer than traditional statistics will make it seem. International markets are a disciplining force and they cannot be ruled by the domestic government.
8. That all said, I am not especially optimistic about Finland. Their current investment and R&D stats are not those of an economy on the move. They will be hit hard by aging and they have not made immigration policy work in their favor. Public sector productivity is not as high as you might think (see also the McKinsey report). Do they have another big success on the way? Can they get further productivity gains in cell phones and timber? It’s not obvious. They’ll do “well enough,” however, see #1.
Here is a McKinsey study of Finland (pdf). Here is a good Charles Sabel essay (pdf) on the economic future of Finland.
Chat with a computer, about a free market economy
John – Are you into sports.
[ Af:0 At:10 Sp:0] Sports is not my cup of tea. I prefer intellectual challenges like Go.
John – Who's the world Go champion.
[ Af:0 At:10 Sp:0] Sorry. I can't help you. A celebrity of some sort?
John – Do you play chess?
[ Af:0 At:10 Sp:0] I don't play any games except Go.
John – Can we play Go on here?
[ Af:0 At:10 Sp:0] About playing… Does it make sense to you that we reward athletes more than scientists?
John – Television coverage makes that possible.
[ Af:0 At:10 Sp:0] It's a free market economy. And people value entertainment more than serious things like science and education.
John – And your point is?
One judge thought that "Suzette" was more human than a competing human decoy, but I would have been suspicious of the line about a "free market economy." There is more here, including more of the dialogue, and also here.
I thank Michelle Dawson for the pointer; here is my paper with Michelle on the Turing test.
Lomborg vs. Lomborg
The world's most high-profile climate change sceptic is to declare that global warming is "undoubtedly one of the chief concerns facing the world today" and "a challenge humanity must confront", in an apparent U-turn that will give a huge boost to the embattled environmental lobby.
…But in a new book to be published next month, Lomborg will call for tens of billions of dollars a year to be invested in tackling climate change. "Investing $100bn annually would mean that we could essentially resolve the climate change problem by the end of this century," the book concludes.
…In an interview with the Guardian, he said he would finance this investment through a tax on carbon emissions that would also raise $50bn to mitigate the effects of climate change, for example by building better sea defences, and $100bn for global healthcare.
The full story is here.
Can people distinguish pâté from dog food?
The forward march of science continues:
Considering the similarity of its ingredients, canned dog food could be a suitable and inexpensive substitute for pâté or processed blended meat products such as Spam or liverwurst. However, the social stigma associated with the human consumption of pet food makes an unbiased comparison challenging. To prevent bias, Newman's Own dog food was prepared with a food processor to have the texture and appearance of a liver mousse. In a double-blind test, subjects were presented with five unlabeled blended meat products, one of which was the prepared dog food. After ranking the samples on the basis of taste, subjects were challenged to identify which of the five was dog food. Although 72% of subjects ranked the dog food as the worst of the five samples in terms of taste (Newell and MacFarlane multiple comparison, P<0.05), subjects were not better than random at correctly identifying the dog food.
The title of the paper is, appropriately: Can
People Distinguish Pâté from Dog Food?
Labor market outcomes for transgendered individuals
Yes economists study this too:
We use the workplace experiences of transgender people – individuals
who change their gender typically with hormone therapy and surgery – to
provide new insights into the long-standing question of what role
gender plays in shaping workplace outcomes. Using an original survey of
male-to-female and female-to-male transgender people, we document the
earnings and employment experiences of transgender people before and
after their gender transitions. We find that while transgender people
have the same human capital after their transitions, their workplace
experiences often change radically. We estimate that average earnings
for female-to-male transgender workers increase slightly following
their gender transitions, while average earnings for male-to-female
transgender workers fall by nearly 1/3. This finding is consistent with
qualitative evidence that for many male-to-female workers, becoming a
woman often brings a loss of authority, harassment, and termination,
but that for many female-to-male workers, becoming a man often brings
an increase in respect and authority. These findings challenge the
omitted variables explanations for the gender pay gap and illustrate
the often hidden and subtle processes that produce gender inequality in
workplace outcomes.
Here is the article. I’m not so sure this solves the identification problem, since it ends up looking at atypical individuals (those who switch to female may not be the same personality types as those who switch to male). But, on this topic, what do I know?
I thank Zuzanna for the pointer.
Predictions about religion
In their arguments with Christopher Hitchens and Richard Dawkins, the
faithful have been defending the existence of God. That was the easy
debate. The real challenge is going to come from people who feel the existence
of the sacred, but who think that particular religions are just
cultural artifacts built on top of universal human traits. It’s going
to come from scientists whose beliefs overlap a bit with Buddhism.
That’s from David Brooks.
Ron Paul as President
Bryan Caplan defends the prospect of a Ron Paul presidency. Here is Megan McArdle. Here’s yet another perspective. Here is Ezra Klein. Here is Paul himself.
The Ron Paul phenomenon reminds me of the old America First movement, with Misesian 100 percent reserve banking theory on top. He is making (one version of) libertarianism much more popular by allying it with nationalist and also states’ rights memes. That includes his stances on immigration, NAFTA, China, devolution of powers, and "The Constitution." Even when the policy recommendations stay libertarian, I fear that the wrong emotions will have the staying power. Evaluating a politician is not just about policy positions; for instance personally I am skeptical of most forms of gun control but I worry when a candidate so emphasizes a pro-gun stance.
Many libertarians see the Paul candidacy as their chance to have an impact and they may well be right. There is also no one else for them to support. But, raw milk or not, I am not myself tempted to take a stance this year in favor of any of the candidates, Paul included. Liberty is lacking in the United States but I’d like to see it more closely bundled with reasonableness, moderation, and yes pragmatism; I
am looking to advance on all fronts at the same time. Call me fussy if you wish.
I fear that Ron Paul is so taken with his own ideas that he is unable to see how or when his views might ever be wrong; it is in that sense I consider him insufficiently intellectual. (Admittedly all the other candidates are too open to whatever is politically popular at the moment.) Openness also means ability to improvise, which is a critical leadership quality; many of the challenges of the presidency are the surprises, 9/11 being one example of many.
The America Firsters, by the way, were right about many things, but
they were very wrong about a few very big things, such as World War II
and the civil rights movement. They also suffered a virtually total
eclipse for decades. I don’t see nationalist and states’ rights memes as a path toward a future with more human liberty.
Ron Paul is changing the ideological landscape of American politics and the fabric of modern classical liberalism. No matter what your point of view, I recommend that you take the Ron Paul phenomenon very seriously indeed.
Addendum: Here are good remarks from Arnold Kling and Steve Horwitz.