Tyler Cowen's Blog, page 115

The doubts are growing on Abenomics

Edward Hugh has a good post on this topic, here is one excerpt:

…there is simply no way incomes can rise across the entire economy because the baby boomers are now retiring to be replaced by fewer young workers with post labour reform entry-level wages. Japan’s overall consumer spending power will therefore fall, rather than rise as Abe hopes. “Individual companies may offer wage increases, but because of demographics it is simply impossible to increase the total amount that is paid out in wages,” says Obata. “On the contrary, that amount will shrink.”

And Japanese exports, after an initial boost, have flattened out, not good news.  Here is a further Edward Hugh post on the Japanisation of Europe.

Assorted links

1. Fixing climate change won’t be free.

2. Telegraph profile of Peter Thiel.

3. India should let up on Uber.

4. High-definition TV will soon be out of date.

5. Is government too large in Hong Kong?

What is the market failure in data storage and protection at the retail level?

There’s been another accident and data leak from Home Depot, and some people are claiming the company was negligent, so I was thinking what kind of market failure might be present.

One problem is this.  They store your credit card number whether you buy one thing at the store or make fifty trips over the course of two years.  So, if you don’t trust a store, at the margin you only get one chance to make a decision whether to give them your credit card number by shopping there or not.  You are comparing the total expected consumer surplus from having a relationship with the store at all against the data privacy risk.  Such blunt, once-and-for-all trade-offs are not always conducive to good marginal incentives.

If I made one purchase at Home Depot a year ago, I don’t seem to obtain more safety by refusing to make more purchases now, at least provided I am using the same credit card.  So many consumers have little incentive to turn against the lax retailer and so excess laxity persists.

The data protection market might work better if, in case you would make more shopping trips to the more trustworthy stores, that in turn would lead to your data being marginally better protected.  A bit like eating more of your meals in safer restaurants to minimize the chance of getting sick.  But the logic of storage, based on a one-time receipt of the critical information, means these marginal choices don’t matter so much (they should matter more for people who lose their credit cards a lot and get new reissued cards with new numbers, or matter more to the extent the company sequentially constructs separate databases; bravo to you if you lose your credit cards a lot, you are conferring a social external benefit on others by inducing companies to care more about data protection at the margin).

Ideally we would like a system where the intermediary would reissue a new credit card number to you each time you buy something.

In the meantime, the incentive is to concentrate all of your retail purchases on one card, and use that card somewhat indiscriminately at the margin.  At the same time you should concentrate all of your auto-renewals on a different card.  You would then hold one or two other cards in reserve, as back-ups for when these first-tier cards fail you.

I sometimes think that all of my credit card information is stolen, all of the time, for practical purposes.  My only protection is then the ubiquity of theft, the large number of competing credit cards available for use, and the incentives of the stationary bandit not to reap too high a harvest from the stolen information too quickly.  What is then the size of the “tax” I pay each year and how does it compare to standard yearly credit card fees?  After all, the credit card companies, they have my credit card number too.

Are you up for another, less cooperative round?

Just hours after Scotland voted “no” to independence from the United Kingdom, Catalonia’s regional parliament announced on Friday that it had passed a law, which Catalan leaders say authorizes them to hold a non-binding “consultation” on independence from Spain in November.

The law was passed with a vote of 106 to 28.

Spain’s central government and Spanish Prime Minister Mariano Rajoy, however, categorically oppose Catalonia’s campaign for a referendum, as the Spanish constitution doesn’t allow referendums that don’t include all Spaniards.

There is more here, and much more here.  My view is that we’ve been getting lucky on these European political events — in relative though not absolute terms — and sooner or later that streak of good fortune is bound to end.

The new Obama plan to combat antibiotic overuse

The Obama administration on Thursday announced measures to tackle the growing threat of antibiotic resistance, outlining a national strategy that includes incentives to spur the development of new drugs, tighter stewardship of existing ones and a national tracking system for antibiotic-resistant illness. The actions are part of the first major federal effort to confront a public health crisis that takes at least 23,000 lives a year.

The full story is here.

The Hill has more detail.  It is an executive order:

The president’s directive creates the Task Force for Combating Antibiotic-Resistant Bacteria, co-chaired by the secretaries of Defense, Agriculture and Health and Human Services.

The group is charged with implementing a plan to track and prevent the spread of antibiotic-resistant bacteria, promote better practices for the use of current drugs and push for a new generation of antibiotic medications.

To that end, the White House on Thursday announced a $20 million prize “to facilitate the development of rapid, point-of-care diagnostic tests for healthcare providers to identify highly resistant bacterial infections.”

The added incentive and the timeframe given to the task force indicate the urgency with which the administration is acting, said Dr. Eric Lander, who co-chairs the President’s Council of Advisors on Science and Technology.

“This is a pretty tight timeline to now come up with a national game plan,” Lander said.

There is also this:

In December, the Food and Drug Administration (FDA) unveiled a plan to phase out the use of antimicrobials for the purpose of fattening chickens, pigs or other animals destined for human consumption. But the plan relies in part on voluntary industry cooperation, and advocates argue the government’s efforts are lagging behind even some industry players.

Here is the new full 78 pp. report to the President on antibiotic resistance (pdf).

This initiative — or its failure — is potentially a more important health issue than Obamacare, yet it will not receive 1/1000th of the attention.  Without reliable antibiotics, a lot of now-routine operations would become a kind of lottery.

Here are previous MR posts on antibiotic resistance.  I would note it is difficult to judge such a plan at the current level of detail.  It is better than nothing, but any initial plan is going to be not nearly enough, relative to an ideal.  By the way, Alex tells me there is also a British prize, discussed here.

Kabaddi, or the culture that is India

Breath control is the essential skill for success in kabaddi, a game with ancient roots in which teams take turns sending a raider across midcourt who, on a single breath, tries to tag a member of the opposing team and return safely to his team’s half of the court before taking another breath. To prove to officials that he or she is not inhaling, the raider must chant “kabaddi, kabaddi” throughout the attack. The best players can do it for several minutes.

Kabaddi’s rules would seem irredeemably arcane until one learns that 435 million Indian television viewers watched the Star Sports Pro Kabaddi League during its inaugural five-week run this year. Or that the league’s final attracted, for however brief a duration, 86 million Indian viewers, surpassing the tallies for the 2014 World Cup and the Wimbledon finals.

There is more here, from The New York Times, the article also explains the Thai sport of sepaktakraw.  Here is Wikipedia.  You can watch (and hear) some kabaddi here.

Ireland is finally seeing some catch-up growth

Ireland’s economy is now growing at its fastest rate in seven years, according to the latest Quarterly National Accounts.

The figures, published this morning by the Central Statistics Office, show the economy expanded by 7.7 per cent in GDP terms in the year to the end of June.

This is the strongest rate of annualised growth recorded in the economy since early 2007.

The Irish Times story is here, there is more detail here.

German airline markets in everything

In case you don’t like Wiener Schnitzel and doner kebab:

Now Germany’s Air Food One is a subscription service that lets anyone get airline meals delivered to their home once a week.

Offered by online grocery Allyouneed.com, members can choose between two options — classic or vegetarian — just like on a real flight. The service has teamed up with LSG Sky Chefs, which provides airline food for Lufthansa, to prepare a different meal each week that matches the business class menu on airplanes. For example, this week it’s serving Arabic seafood or panserotti with porcini mushrooms. The meals are delivered every Wednesday evening and are suitable for freezing. When it comes time to cook, members can simply place the meal in the oven. The idea is that the healthy subscription meals can be ordered by busy professionals who would otherwise be ordering a takeaway. Additionally, the service lets LSG Sky Chefs get rid of the excess meals not needed by its flying customers, avoiding waste and acting as an advertisement for its food quality.

The full story is here, and for the pointer I thank Michael Rosenwald.

Assorted links

1. Very unlikely markets in everything (not even sure I should believe it, though perhaps some of you have extreme faith in signaling and adverse selection models).

2. Clive Crook makes the best case for Scottish independence I have seen.

3. Attach your iPad directly to your face (department of why not?).

4. Chimpanzees and war.

5. Average is Over, child millionaire edition.

6. The FOMC word count.

7. Should we hope to die at age 75?

Do I wish to revise my time management tips?

I wrote this in 2004 on MR:

Here are my suggestions:

1. There is always time to do more, most people, even the productive, have a day that is at least forty percent slack.

2. Do the most important things first in the day and don’t let anybody stop you.  Estimate “most important” using a zero discount rate.  Don’t make exceptions.  The hours from 7 to 12 are your time to build for the future before the world descends on you.

3. Some tasks (drawing up outlines?) expand or contract to fill the time you give them.  Shove all these into times when you are pressed to do something else very soon.

4. Each day stop writing just a bit before you have said everything you want to.  Better to approach your next writing day “hungry” than to feel “written out.”  Your biggest enemy is a day spent not writing, not a day spent writing too little.

5. Blogging builds up good work habits; the deadline is always “now.”

Rahul R. asks me if I would like to revise the list.  I’ll add these:

6. Don’t drink alcohol.  Don’t take drugs.

7. At any point in your life, do not be watching more than one television show on a regular basis.

8. Don’t feel you have to finish a book or movie if you don’t want to.  I cover that point at length in my book Discover Your Inner Economist.

I think I would take back my old #5, since I observe some bloggers who have gone years, ten years in fact, without being so productive.