Tyler Cowen's Blog, page 230

Assorted links

1. After the food court closes.

2. Thursday night, a dialogue between me and Megan McArdle about her new book.

3. How to build truly cheap housing for the poor.

4. Rafael Yglesias on…a bunch of stuff, including Woody Allen.  And how will authors (but not Rafael) respond to the demand for binge reading?

5. The weight of rain.

6. There is no Japanese great stagnation.  And buy shares in a football player.

Equilibrium vs. disequilibrium?

Adolfo Laurenti writes on Facebook:

Reminiscences from Tyler Cowen‘s macroeconomics class: “there are three ways to think about market equilibrium: (i) markets are always in equilibrium, (ii) markets are sometimes in equilibrium, and (iii) markets are never in equilibrium. And (i) and (iii) are much closer and alike than (i) and (ii) or (iii) and (ii).” Is this Tyler’s oral tradition only? I do not know if he put this down in writing anywhere. Anyone with a reference?

I meant that as a Quinean point of course.

Who or what can check or limit the ECB?

A loyal MR reader, with expertise in this area, writes to me:

But this suggests an interesting thought experiment (regardless of the legality of OMT): suppose an ECB central banker were to overstep her/his legal authority and in doing so created all sorts of cross-border obligations.  Would we have to `undo’ this policy?  How is this individual to be policed?

In the US, the Fed is accountable to Congress.  If ever the Fed overstepped its mandate, in theory, Congress could pass laws, subpoena officials, etc. to reign them in.  In the Eurozone, the ECB was created without political overseers.  Neither the Commission nor the European Parliament can change the ECB’s mandate; only a treaty change can do that.  So if the ECB oversteps its mandate, this is a much more serious issue than if the Fed misbehaves.

If treaty law, the ultimate form of legal pre-commitment in the EU, governing the ECB can simply be cast aside whenever it is time-inconsistent, how should EU nations approach future treaty negotiations?  Ignoring the treaty law could be very detrimental for the long-run institutional evolution of the EU.  Few economists are willing to publicly entertain this prospect.​

Free economics resources on-line

Here is a bleg from Austin Frakt:

I’m looking for free or cheap, but good, resources on economics, ones people might use for self-education. I’ve listed some about which I’m aware below, though I haven’t looked in detail at all of them, so the extent to which they—or that to which they link—are “good” is not fully known to me. I’m specifically not looking for health economics, and my interest is a bit tilted toward micro vs. macro, but not strongly. Nevertheless, if you’re aware of good stuff in the econ realm of any flavor, or have used any of the following, let me know what you think.

Marginal Revolution University
EconLib/EconTalk (My, now pretty old, review of EconTalk is here. I’ve also been aguest on the program.)
Economics For Dummies (Don’t laugh. Every Dummies book I’ve read, including this one, is good.)
Microeconoics Principles, by Rittenberg and Tregarthen (free, online text, which I have not examined closely)
Jon Gruber’s Principles of Economics (MIT Open Courseware)
WikiEducator’s list of free, online economics texts
A list of microeconomics e-books

Though they can be high-cost if bought new, feel free to mention textbooks you like. Sometimes one can find them used or older editions for prices that someone intending to self-educate might pay. For what it’s worth, the texts I’ve read most closely are by Cowen and Tabarrok. I was impressed by their micro book and also enjoyed their macro one, some of my thoughts on which are here. Also, I’ve read and contributed to Health Economics, by Santerre and Neun. With that bias in mind, I recommend it.

Comments are open (time limited).

Here is a free economics resources page from Walter Antoniotti.  Alex recommends this Preston McAfee text.

Does money make lottery winners more right-wing?

Lottery winners tend to switch towards support for a right-wing political party and to become less egalitarian, according to new research on UK data by Professor Andrew Oswald of the University of Warwick and Professor Nattavudh Powdthavee of the London School of Economic and the Melbourne Institute of Applied Economic and Social Research, University of Melbourne.

Their study, published as a new University of Warwick working paper under the title “Does Money Make People Right-Wing and Inegalitarian: A Longitudinal Study of Lottery Wins”, shows that the larger the win, the more people tilt to the right. The study uses information on thousands of people and on lottery wins up to 200,000 pounds sterling. The authors say it is the first research of its kind.

The article is here, via Charles Klingman.

The UAE will deliver some governmental services by drone

The United Arab Emirates says it plans to use unmanned aerial drones to deliver official documents and packages to its citizens as part of efforts to upgrade government services.

…Local engineer Abdulrahman Alserkal, who designed the project, said fingerprint and eye-recognition security systems would be used to protect the drones and their cargo.

Gergawi said the drones would be tested for durability and efficiency in Dubai for six months, before being introduced across the UAE within a year. Services would initially include delivery of identity cards, driving licenses and other permits.

There is more here, hat tip to the excellent Mark Thorson.

Assorted links

1. How to survive falling through ice, an illustrated guide.  And the fate of the Danish giraffe with ZMP genes, illustrated.

2. Is my job in another state?

3. Vending machine markets in everything: Vancouver, crack pipes.

4. “Choco Pies are an important mind-changing instrument…Other North Korea analysts have commented on the psychological meaning of Choco Pies to North Koreans…”

5. “The goal is to get all of the town’s citizens’ chronotypes in an online database.” (the culture that is Bad Kissingen)

6. An information age glossary.

7. The WaPo’s new narrative journalism project.  And Knausgaard in The New Yorker.

John Cochrane’s excellent essay on on-line education

You will find it here, it is one of the very best short pieces written on this topic.  Excerpt:

A lot of mooc is, in fact, a modern textbook — because the twitter generation does not read. Forcing my campus students  to watch the lecture videos and answer some simple quiz questions, covering the basic expository material, before coming to class — all checked and graded electronically — worked wonders to produce well prepared students and a brilliant level of discussion. Several students commented that the video lectures were better than the real thing, because they could stop and rewind as necessary. The “flipped classroom” model works.

Read the whole thing.

The Swiss vote for immigration curbs: how much immigration is possible without a backlash?

Here is the news:

A narrow majority of voters in Switzerland on Sunday approved proposals that would reintroduce restrictions on the number of foreigners who are allowed to live and work in the country, a move that could have far-reaching implications for Switzerland’s relations with the European Union.

You will note:

Switzerland, which is not part of the European Union, has one of the highest proportions of foreigners in Europe, accounting for about 27 percent of the country’s population of about eight million.

In my view immigration has gone well for Switzerland, both economically and culturally, and I am sorry to see this happen, even apart from the fact that it may cause a crisis in their relations with the European Union.  That said, you can take 27% as a kind of benchmark for the limits of immigration in most or all of today’s wealthy countries.  I believe that as you approach a number in that range, you get a backlash.

That number will be higher when there is a frontier or a shortage of labor.  Those conditions do not generally hold in today’s wealthy countries.  Adam Ozimek reproduces data on immigration as a flow and stock relative to citizens, and as a stock Switzerland was third highest in the world with Luxembourg at over 32% and Israel over 27%.  I would say Israel does not count as their flows are largely a religious/ethnic unification from the former Soviet Union, in part with the purpose of protecting them against other potential population flows, to put it diplomatically.

The United States is 12th on the list with 12.1% foreign-born.  Referring to the flow of immigrants, Adam notes:

Instead of 1 million immigrants a year, these numbers suggest we could be letting in as many as 3 million a year and we would still not rank in the top 5.

And there I think you have the relevant range for what a more liberal immigration policy would look like or could look like.  I wonder by the way if for some reason small countries have an easier time swallowing high levels of migration, politically or culturally speaking, than do big countries.  That’s counterintuitive, but it’s what Adam’s tables seem to be suggesting.  (Is it because the small country is more culturally unified and thus somehow more secure?)  If you look at the top twelve countries in terms of receiving a flow of immigrants, only Spain is significantly above the 20 million population mark, with countries such as Iceland, Ireland, and New Zealand prominent (and I suspect a more recent measurement would boot Spain off this list altogether).  That would narrow the range of potential immigration increases even further for the United States.

One of my objections to the open borders idea is that I think it would be negative for sustainable, actually realized flows of immigration.

Addendum: Here is the distribution of voting across Switzerland, the Italian section was most anti-immigrant.  Here is Rachman on why the Swiss should not be punished.  Here is an excellent detailed analysis by Dennis MacShane.  Overall I see this as a broader political earthquake which will spread throughout Europe.

Yana guest post on Singapore

This is from Yana and by Yana, and she passed it along to me just after returning from India, though she wrote it in Singapore:

So I’m in Singapore this week and it’s always been my dream to come here. I love their health care system. I love their food. I love that it came out of left field (here is Singapore 50 years ago, and here’s Singapore today). But the underlying question I love is “why?”

Many people point out that there’s plenty not to love about Singapore, like their mandatory military service and capital punishment for drug users. But these critiques rely on the assumption that democracy and negative liberty are necessary conditions for economic flourishing. Once you’re Singapore everything gets a lot fuzzier. While complaining about Singapore’s autocratic management and lack of freedoms, nobody is asking whether Singapore might be a place we want. Namely, an apolitical society by design, great to live in by global standards but emerging due to strong, and sometimes strong-handed, public policy.

People run in circles discussing whether Singapore is replicable based on its public and economic policies. It seems to me that a third set of institutions running in parallel is what actually makes Singapore so unique and probably impossible (or at least very difficult) to replicate: the Peranakan culture and its predilection for commerce and trade.

Peranakan culture is a pan-Asian blend of descendants of merchants and traders from China, Malaysia, Indonesia and India. It is the culture both of Lee Kwan Yew’s family as well as that of a sizeable percentage of Singaporeans. This culture is a very powerful conduit for passing down a relatively rare trait: a positive view of commercial activity as the machine of wealth creation and basis of improving one’s life. We see this in a rare few historical settings, including the Industrial Revolution in Scotland as well as the American founding. It comes through in Singapore’s public policy, casual discussions with cab drivers (one volunteered to me that “Singapore is the best managed city in Asia”), in the museums, and in daily interaction with a wide variety of merchants. Young Singoporeans love to complain that Singapore is too boring, too orderly, and too strict on personal freedoms, but I’ve yet to hear any complaints about commercial society.

So when Peranakan culture was combined with the British Enlightenment model of governance in the 19th century, the result was truly unique. A set of cultural institutions characterized by positive attitudes towards commerce, innovation and globalization was combined with robust political economy in the form of strong rule of law, property rights and free trade.

Yet unlike so many other former colonies (my current home of India comes to mind), Singapore did not reject these values during its transition to independence. Most other colonies reacted intellectually, if not downright violently, against many of the values promoted by the British. But in Singapore, the continuity of broadly liberal attitudes toward trade and commercial society following independence was supported by continuity in liberal economic policy and enforced by deep-seated cultural attitudes.

To put it bluntly: Singaporeans more or less went along with the policies laid before them. Today that means a thriving economy in Asia with population growth of over 200% since the 1960s, the world’s second largest port, and a significantly more human flourishing than for many people in surrounding countries that didn’t take this leap. I just hope it can last.