Tyler Cowen's Blog, page 23

Assorted links, books and otherwise

1. I enjoyed my page browse through Becoming Steve Jobs, which seems fun, readable, and informative, but it’s not what I feel like reading right now.  But if you think you might want to read it, you probably should.

2. Charles C.W. Cooke’s The Conservatarian Manifesto: Libertarians, Conservatives, and the Fight for the Right’s Future is all the rage right now.  Books which attempt to redefine or carve up the political spectrum aren’t exactly my thing, but this one is well-written and vital.  Here is a Reason interview with Cooke.  Here is a NYT interview with Cooke.

3. The new edition of David Boaz’s The Libertarian Mind is out.

4. The best piece so far on Lee Kwan Yew; how much and how rapidly will it matter that the focal point has passed away?

5. Hopes grow for climate-proof beans.

6. John Nash shares the Abel Prize in mathematics.

The problem of liens on Bitcoin

Izabella Kaminska writes:

George K Fogg at law firm Perkins Coie has been thinking about the problem of past claims (or liens) on bitcoins for nearly 14 months now.

His conclusion: under the United States’ UCC code (uniform commercial code) as long as bitcoins are treated as general intangibles, no high value investor can be sure that an angry Tony Soprano won’t show up one day to claim the bitcoins they thought they received in a completely unencumbered manner are in fact his. In fact, it’s only if and when Tony Soprano publicly renounces his claim to the underlying bitcoin collateral he is owed that the bitcoins stand a chance of being treated as unencumbered. Until then, a hot potato claim risk exists for every future acquirer of Soprano’s bitcoin.

Indeed, given the high volume of fraud and default in the bitcoin network, chances are most bitcoins have competing claims over them by now. Put another way, there are probably more people with legitimate claims over bitcoins than there are bitcoins [emphasis added]. And if they can prove the trail, they can make a legal case for reclamation.

This contrasts considerably with government cash. In the eyes of the UCC code, cash doesn’t take its claim history with it upon transfer. To the contrary, anyone who acquires cash starts off with a clean slate as far as previous claims are concerned. It is assumed, basically, that previous claims on cash are untraceable throughout the system. Though, liens it must be stressed can still be exercised over bank accounts or people.

There is more at the FT link here.  And I have a simple question for all you Bitcoin partisans out there: how large is the largest private sector transaction on Bitcoin to date?  I’m not “anti-Bitcoin,” and I am glad the regulators have allowed the experiment to proceed, still I’m not persuaded by the arguments that it is going to be a big deal.

The CRISPR revolution seems to be here, is this the coming of eugenics?

You will find a Qanta primer here.  Here is an excerpt:

In the same month, separate teams of scientists at Harvard University and the Broad Institute reported similar success with the gene-editing tool. A scientific stampede commenced, and in just the past two years, researchers have performed hundreds of experiments on CRISPR. Their results hint that the technique may fundamentally change both medicine and agriculture.

Some scientists have repaired defective DNA in mice, for example, curing them of genetic disorders. Plant scientists have used CRISPR to edit genes in crops, raising hopes that they can engineer a better food supply. Some researchers are trying to rewrite the genomes of elephants, with the ultimate goal of re-creating a woolly mammoth. Writing last year in the journal Reproductive Biology and Endocrinology, Motoko Araki and Tetsuya Ishii of Hokkaido University in Japan predicted that doctors will be able to use CRISPR to alter the genes of human embryos “in the immediate future.”

Thanks to the speed of CRISPR research, the accolades have come quickly. Last year MIT Technology Review called CRISPR “the biggest biotech discovery of the century.” The Breakthrough Prize is just one of several prominent awards Doudna has won in recent months for her work on CRISPR; National Public Radio recently reported whispers of a possible Nobel in her future.

Even the pharmaceutical industry, which is often slow to embrace new scientific advances, is rushing to get in on the act. New companies developing CRISPR-based medicine are opening their doors. In January, the pharmaceutical giant Novartis announced that it would be using Doudna’s CRISPR technology for its research into cancer treatments. It plans to edit the genes of immune cells so that they will attack tumors.

How immediately will this come for ordinary use?  Here is the big package of articles from Science.  The Chinese already have done it with monkeys.

Here are my earlier remarks on eugenics.  Here is a group of scientists calling for a moratorium on the technique, at least until rules can be established.  Here are further articles on CRISPR.  There are further comments here.

I believe the implications of all this — and its nearness to actual realization — have not yet hit either economics or the world of ideas more generally.  This is probably big, big news.

How has the language of World Bank reports changed?

From The New Left Review, Moretti and Pestre report:

Three new semantic clusters characterize the language of the Bank from the early 1990s on. The first—and most important—has to do with finance: here, alongside a few predictable adjectives (financial, fiscal, economic) and nouns (loans, investment, growth, interest, lending, debt), we find a landslide of fair value, portfolio, derivative, accrual, guarantees, losses, accounting, assets; a little further down the list, equity, hedging, liquidity, liabilities, creditworthiness, default, swaps, clients, deficit, replenishment, repurchase, cash. In terms of frequency and semantic density, this cluster can only be compared to the material infrastructures of the 1950s–60s; now, however, work in agriculture and industry has been replaced by an overwhelming predominance of financial activities.

…The second cluster has to do with management—a noun that, in absolute terms, is the second most frequent of the last decade (lower than loans, but higher than risk and investment!). In the world of ‘management’, people have goals and agendas; faced with opportunities, challenges and critical situations, they elaborate strategies. To appreciate the novelty, let’s recall that, in the 1950s–60s, issues were studied by experts who surveyed and conducted missions, published reports, assisted, advised and suggested programmes. With the advent of management, the centre of gravity shifts towards focusing, strengthening and implementing; one must monitor, control, audit, rate (Figure 2); ensure that everything is done properly while also helping people to learn from mistakes. The many tools at the manager’s disposal (indicators, instruments, knowledge, expertise, research) enhance effectiveness, efficiency, performance, competitiveness and—it goes without saying—promote innovation.

The concept of governance is another clear winner in more recent times, and furthermore the reports seem to overuse the word “and” relative to the word “the.”  That I can believe.  The article is interesting throughout, hat tip goes to Avinash Celstine.

Claims about America

The grand confluence of Protestantism has dwindled to a trickle over the past thirty years, and the Great Church of America has come to an end.

…The death of Mainline Protestantism is, as we’ve noted, the central historical fact of our time: the event that distinguishes the past several decades from every other period in American history.  Almost every one of our current political and cultural oddities, our contradictions and obscurities, derives from this fact: Mainline Protestantism has lost the capacity to set, or even significantly influence, the national vocabulary or the national self-understanding.

That is from Joseph Bottum, An Anxious Age: The Post-Protestant Ethic and the Spirit of America.

The Tea Party, the great stagnation, etc., maybe you can find it all right here.

Don’t worry people, just joking on that one…

The reallocation of talent in the American economy

At the Massachusetts Institute of Technology, a premier source of young recruits, only 9.9 percent of undergraduates went into finance in 2013, compared with the 31 percent that took jobs on Wall Street in 2006, before the financial crisis. Software companies, meanwhile, hired 28.1 percent of M.I.T. graduates in 2013, compared with 10.5 percent in 2006.

That is from Popper and Dougherty in the NYT, via Binyamin Appelbaum.

*Superpower: Three Choices for America’s Role in the World*

That is the new Ian Bremmer book, with the subtitle Three Choices for America’s Role in the World.  It can be Indispensable America (our postwar role), Moneyball America (pick priorities and accomplish them), or Independent America (limited foreign policy aspirations but lots of nation-building at home and trade abroad), and Ian prefers the latter — “I believe it’s time for Americans to redefine our value to the world.”  Most of all he thinks we have to choose, and articulate the reasons for our choice; right now we are left with Question Mark America, arguably the worst of all worlds.

As you would expect from a focus on foreign policy, he builds a good case for TPP, starting on p.114, from a broadly social democratic point of view, very much worth the read.

The most notable feature of this book is that Bremmer constructs the very best case for each of the foreign policy approaches, not just his favorite, and in this sense he makes the maximum effort to instruct the reader.  We could use a lot more of this approach.  He is also one of the very best people to follow on Twitter.

Assorted links

1. What is the relationship between the economics blogosphere and academic economics?, Alex on Quora.

2. There is no great glue stagnation.

3. For fiscal consolidations, tax boosts hurt consumer confidence but spending cuts are more positive (pdf).

4. The Chinese cement comparison.

5. Thais pay tribute to Mexican gangs.

The under-representation of women in the movies and on TV

Will Radford and Mathias Gallé have a new and interesting paper on this topic, here is one excerpt:

Law and corporate professions had around 15% of female representation…the medical domain (doctors) had a female probability of 0.23…Religion does not score at the bottom with regards to female presentation (although very low with 0.08). From the professions we selected, Engineering was the lowest (0.05). The highest scoring profession was IT (0.52), which is partly due to the fact that many computer voices were female (computer had 460 female occurrences, versus 247 male ones; and enterprise computer from “Star Trek” was almost exclusively female)

By the way, the number of female writers and directors (in their IMDB database) was at a six year low in 2014.

If you look at most frequent roles for gender, women are assigned hostess, girl, woman, waitress, and mother.  For men, the list swings toward narrator, announcer, doctor, detective, bartender, soldier, and police officer.

In 1980-200, the top “newly popular” role (for both sexes) was “additional voices.”  For the time period 2000-present it was “zombie,” next was “housemate.”

The paper is here (pdf), hat tip goes to Samir Varma.

Here is a new and interesting article on whether there is greater female influence over cinematic box office these days.

New arguments on a carbon tax

From Adam Ozimek, here are some very good points, which I had not previously pondered:

…what a carbon tax does is push the required cost threshold up. This would allow solar to become the more profitable source of energy in the US sooner and increase the speed of its dominance here.

However, a carbon tax would raise the threshold in the US relative to the threshold for developing countries.  In other words, the race for solar companies in the U.S. becomes to be cheaper than dirty energy + a carbon tax, which is a higher threshold than being cheaper than dirty energy alone, which is the threshold in many developing countries.

It is easy to see how this could cause downward march in solar costs to slow, and as a result solar would reach the threshold for China, India, and other developing countries perhaps much much later.

If this is true, it would suggest that for clean energy to become globally dominant faster it’s better for the U.S. to just subsidize solar innovation and let the untaxed U.S. market price of dirty energy stand as a strong incentive for solar to drive costs lower.

To see this, consider a world where solar was already dominant in the U.S. with current technology and costs, perhaps via a total ban of dirty energy. The supply curve of the installed base of solar technology would be much more price inelastic than the supply curve of today’s installed base of dirty energy due to higher fixed costs and lower marginal costs.  This means a steeper residual demand curve for marginal innovators that provides less market share rewards for marginal declines in price, and therefore lower rewards for marginal cost cutting.

In this way, a carbon tax could make global warming worse.

From Jerry Taylor at the new Niskanan Center, here is a paper on the conservative case for a carbon tax.