Tyler Cowen's Blog, page 159
June 25, 2014
Norwegian betting bite markets in everything
A Norwegian football fan has scooped a cool £500 after betting on Luis Suarez to bite somebody at the World Cup in Brazil.
Suarez has twice been spotted biting opponents in recent years, so the punter thought he’d put £3 on the striker to take a munch out of somebody at Brazil 2014.
And low and behold, towards the end of Uruguay’s clash with Italy, he bit Italy defender Giorgio Chiellini – triggering the bookmaker to pay out.
With odds of 175/1, it was a pretty amazing outcome, despite Suarez’s reliability for biting his rivals.
See above for the betting slip, all numbers are in Norwegian krone.
The link with photo is here. For the pointer I thank Carlos Cinelli.
My interview with Ralph Nader
I interviewed him. You will find the full version here, the edited version here. Not surprisingly, I prefer the full version. Here is one excerpt:
TC: If I look back at your career, I see you’ve been fighting various kinds of wars or struggles against a lot of different injustices. If you look back on all those decades, during which time you’ve been right about many things, what do you think is the main thing you’ve been wrong about?
RN: Oh, a lot of things. Nobody goes through these kinds of controversies without making bad predictions. I underestimated the power of corporations to crumble the countervailing force we call government. We always knew corporations like to have their adherents to become elected officials; that has been going on for a long time. But I never foresaw the insinuation of corporatism as a policy in one agency after another in government. Franklin Delano Roosevelt foresaw some of this when he sent a message to Congress when he started the temporary national economic commission to investigate consecrated corporate power. That was in 1938. In his message he said that whenever the government is controlled by private economic power, that’s facism. Now, there isn’t a department or agency in Washington where anyone has more power—over it and in it, through their appointees, and on Congress, through lobbyists and political action committees. Nobody comes close. There’s no organized force that comes close to the daily power to twist government in the favor of Wall Street and corporatism, and to disable government from adequately defending the health, safety and economic well-being of the American people.
TC: Let’s say we look at the U.S. corporate income tax. The rate on paper is 35 percent, which is quite high. When you look at how much they actually pay after various forms of maneuvering or evasion, maybe they pay 17–18 percent, which is more or less in the middle of the pack of OECD nations. So if corporations have so much political power in the United States, why is our corporate income tax still so high?
…Sweden, a country you cited favorably, taxes capital income much more lightly than the United States does—not just on paper but in terms of what’s actually paid.
I also ask him about the Flynn effect, whether America needs a new kind of sports participation, and how much American churches have resisted corruption through corporatization, among a variety of other topics. I tried to avoid the predictable questions.
By the way, you can buy Nader’s new book, Unstoppable: The Emerging Left-Right Alliance to Dismantle the Corporate State. I very much enjoyed my preparation for this interview, which involved reading or rereading a bunch of his books and also a few biographies of him.
Cross-national intelligence and the cross-bureaucratic Coase theorem
The sharing of intelligence information has exploded since 9/11, so one way to avoid national restrictions on your intelligence service is to have someone else’s intelligence service do the actual spying. Henry Farrell reports:
There’s been relatively little discussion of whether there is a problem in principle with international surveillance, and most of what there has been has concerned the question of whether or not privacy is a universalhumanright. But the recent Der Spiegel revelations combined with some earlier material points to a narrower but very troubling set of problems for liberal democracies. Cross national cooperation between intelligence services has exploded post-September 11. This cooperation is not only outside the public space but, very often, isn’t well known to politicians either. Such cooperation in turn means that intelligence services are in practice able to evade national controls on the things that they do or do not do, directly weakening democracy.
Henry concludes:
This implies that national security liberalism, to the extent that it ever was a credible position, isn’t any more. Liberals who embrace national security and extensive foreign intelligence gathering do so on the rationale that there is a clear distinction between national politics (where we owe obligations to our fellow citizens not to torture them or invade their privacy) and international politics (where they believe that at best a much weaker set of rights and obligations applies). But if national intelligence agencies are working across borders, creating a pool of shared information that systematically undermines national protections, then national security liberalism is at best incoherent, and at worst active apologetics on behalf of measures that not only corrode global rights, but the national level rights that they claim to care about too.
There is more here.
June 24, 2014
Arrived in my pile
Morten Jerven, Poor Numbers: How We Are Misled by African Development Statistics and What To Do About It.
This seems to be the place to start on this topic.
Peter de Keyzer, Growth Makes You Happy: An Optimist’s View of Progress and the Free Market.
Steven D. Gjerstad and Vernon L. Smith, Rethinking Housing Bubbles: The Role of Household and Bank Balance Sheets in Modeling Economic Cycles. They present a bank balance sheet account of the Great Recession, with a good deal of background coming from the experimental economics direction.
In 100 Years, Leading Economists Predict the Future, edited by Ignacio Palacios-Huerta.
Robert Howse, Leo Strauss: Man of Peace.
Sentence to Ponder and Ponder and Ponder
Does any sentence better illustrate the human condition in all its political, social and biological complexities than this sentence?
New York state lawmakers have passed a bill banning residents from taking “tiger selfies” — a rising trend on dating websites in which single men post photos of themselves posing with the ferocious felines in hopes of impressing potential mates.
Dissertations are waiting to be written.
Why you should not confuse sympathy with policy
I was disappointed but not surprised by this passage by Gary Silverman:
What I like about Obamacare is that it shows some respect for “those people” – as Hudson called them in Giant – who are good enough to work the fields and mow the lawns, and build the roads and sew the clothes, and diaper the babies and wash the dishes, but somehow aren’t good enough to see a doctor from time to time to make sure there is nothing wrong inside.
That is in fact what most of politics is about, namely debates over which groups should enjoy higher social status and which groups should receive lower social status. Of course critics of Obamacare have their own versions of desired status reallocation, typically involving higher status for the economically productive.
Here is another example of the argument from sympathy, by Norman Podhoretz, applied to a very different field of discourse:
Provoked by the predictable collapse of the farcical negotiations forced by Secretary of State John Kerry on the Palestinians and the Israelis, I wish to make a confession: I have no sympathy—none—for the Palestinians. Furthermore, I do not believe they deserve any.
I am not in this post seeking to adjudicate ACA or U.S. policy in the Middle East. The easy target is to go after these two authors, but I am interested in different game. The deeper point is that virtually all of us argue this way, albeit with more subtlety. A lot of the more innocuous-sounding arguments we use all the time come perilously close to committing the same fallacies as do these quite transparent and I would say quite obnoxious mistaken excerpts. One of the best paths for becoming a good reader of economics and politics blog posts (and other material) is to learn when you are encountering these kinds of arguments in disguised form.
June 23, 2014
Where did the productivity slowdown come from?
John Fernald has a new NBER paper on this question. Here is the abstract:
U.S. labor and total-factor productivity growth slowed prior to the Great Recession. The timing rules out explanations that focus on disruptions during or since the recession, and industry and state data rule out “bubble economy” stories related to housing or finance. The slowdown is located in industries that produce information technology (IT) or that use IT intensively, consistent with a return to normal productivity growth after nearly a decade of exceptional IT-fueled gains. A calibrated growth model suggests trend productivity growth has returned close to its 1973-1995 pace. Slower underlying productivity growth implies less economic slack than recently estimated by the Congressional Budget Office. As of 2013, about ¾ of the shortfall of actual output from (overly optimistic) pre-recession trends reflects a reduction in the level of potential.
The ungated version is here (pdf).
Assorted links
1. Are fish smarter and more sentient than we think?
2. The rental housing shortage.
3. Reddit forum on what’s the most ****ed up thing you’ve ever done for money.
4. Mystery object (?) on Titan, Saturn’s moon.
5. Francisco Goldman is skeptical about Mexico’s reforms. And the economics of the paywall at the FT.
6. Is Western civilization hardy or fragile? And how often do men think about sex?
7. Conflicting data on the Chinese economy.
Peter Lindert on Piketty
He has an NBER review essay on the book. Here is one bit:
Piketty’s “r > g” device, for all its amazing rhetorical power, does not take us very far. Our task of explaining and predicting inequality movements is not made any easier by the requirement that we must first predict both a “rate of return” and the growth rate of the economy. The formula r – g takes us no further than we were transported fifty years ago by the concept of total factor productivity as a “source” of growth. It will be another “measure of our ignorance.”
Here is more:
Oddly, however, for the twentieth century trends that he and his collaborators have documented so well, the relevance of the wealth/income and capital/income ratios for the income distribution is less compelling. Across countries, the levels and movements of this ratio do not correlate well with those in income inequality. Over time, there is more correlation, within Britain, or France, or Germany, or the United States. Yet, as we shall see later, the same overall movements will show up when we look at the inequality movements in incomes that have little to do with wealth, such as wage rates or in middle/lower income ratios.
The essay is interesting throughout and you will see at the end that Lindert is no friend of inequality and no enemy of highly progressive taxation. By the way, here is a Lindert essay on three centuries of inequality in Britain and America (pdf). Here is Lindert, with Williamson, on whether globalization makes the world more unequal. He knows this area very well.
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