Tyler Cowen's Blog, page 269

Getting rid of old regulations is much too hard

That is the topic of my latest New York Times column, which is entitled “More Freedom on the Airplane, if Nowhere Else.”  It opens with this example:

It is sometimes the small events that reveal the really big problems lurking beneath the surface. That’s the case with the Federal Aviation Administration’s recent decision to grant airlines the liberty of allowing the use of electronic devices during takeoff and landing.

You still won’t be able to call on your cellphone during those times, but, if the airline allows it, you will be able to read on your Kindle or play Angry Birds throughout the flight.

That’s the good news. What’s the deeper problem? Our new Kindle freedoms, however minor they may seem, show how hard it is to clear away the old, unnecessary regulations that are impeding the economy.

After all, the previous restriction on electronics during flights was broadly unpopular in a way that cut across partisan lines. Yet, for many years, the public’s complaints did not bring concrete change, mostly because of regulatory inertia. (If you’re worried about safety, by the way, the airlines can still, at their discretion, demand that these devices be turned off when deemed necessary.)

Here is another bit from the piece:

Many regulations, when initially presented, can sound desirable.  The problem is that, taken in their entirety, excess rules divert attention from pressing issues like the need for innovation and new jobs.

Michael Mandel, an economist at the Progressive Policy Institute, compares many regulations to “pebbles in a stream.” Individually, they may not have a big impact. But if there are too many pebbles, a river’s flow can be thwarted. Similarly, too many regulations can limit business activity. When the number of rules mounts, it can become hard for a business to know whether it is operating within the law’s confines. The issue is all the more problematic when federal, state and local constraints all apply.

Our public sector is overregulated, too. For instance, the tangle known as government procurement has exacerbated problems with the Affordable Care Act’s health insurance exchanges. The required formal processes made it difficult to hire the best possible talent, led to nightmare organizational charts and resulted in blurred lines of accountability. It’s hard to turn on a dime and fix such problems overnight, no matter how pressing the need.

Read the whole thing.

Assorted links

1. Swarms of everyday objects sometimes look alive.  And what are the ten biggest breakthroughs in physics over the last 25 years?

2. There is talk of a new Borjas paper criticizing immigrant complementarity.  I cannot myself click through to the actual paper.  Note: new George Borjas piece on the wage effects of immigration actually is here.

3. Did the Great Divergence have late medieval origins?

4. Robert Pippin reviews Žižek on Hegel: “…one of the most curious things about Hegel’s basic position is that it can be fairly summarized by saying that there is no independent, positive position. Rather it is the right understanding of the other logically possible positions.”

5. I wonder if they will smell (there is no great stagnation).

6. What is the shadow cast by the Asian financial crisis?

Sentences to ponder

Prescription painkillers now kill more Americans than heroin and cocaine combined, according to the CDC.

That is from Andrew Sullivan.

Nettlesomeness, and the first half of the Carlsen-Anand match

After six games, Carlsen leads by two points, with four draws added to the tally.  Anand seems hell bent on founding a campaign to abolish the advantages of playing with the white pieces.

I find two aspects of the match notable so far.  First, in the last two endgames Carlsen has been outplaying the computer programs (and Anand), sometimes for dozens of moves in a row.  That isn’t easy, to say the least.  And kudos to Alan Turing for realizing early on, in his 1953 paper, that chess-playing computer programs would face special difficulties in understanding some endgames.  The sequences required to establish the importance (or not) of a measurable material advantage can stretch beyond the time horizon of the program, for instance, and the endgame tablebases take us only so far.

Second, Carlsen is demonstrating one of his most feared qualities, namely his “nettlesomeness,” to use a term coined for this purpose by Ken Regan.  Using computer analysis, you can measure which players do the most to cause their opponents to make mistakes.  Carlsen has the highest nettlesomeness score by this metric, because his creative moves pressure the other player and open up a lot of room for mistakes.  In contrast, a player such as Kramnik plays a high percentage of very accurate moves, and of course he is very strong, but those moves are in some way calmer and they are less likely to induce mistakes in response.

Nettlesomeness is an underrated concept in our world, and kudos to Ken for bringing it to our attention.  It should play a larger role in formal game theory than it does currently.  It’s already playing a decisive role in the world of chess.

Addendum: Here are some of Ken’s metrics for “nettlesomeness.”

Best fiction books of 2013

Every year I offer my picks for best books of that year, today we are doing fiction.  I nominate:

1. Karl Knausgaard, My Struggle: Book Two: Man in Love.

2. Claire Messud, The Woman Upstairs.  Great fun.

3. Amy Sackville, Orkney.  Not every honeymoon works out the way you planned.

4. Mohsin Hamid, How to Get Filthy Rich in Rising Asia.

5. Kathryn Davis, Duplex: A Novel.  Non-linear, not for all.

Since I think the Knausgaard is one of the greatest novels ever written, I suppose it also has to be my fiction book of the year.  (Except, um…it’s not fiction.)  But otherwise I found many books disappointing, perhaps because my own expectations were out of synch with contemporary writing.

Elizabeth Gilbert and Donna Tartt produced decent plane reads, but I wouldn’t call them favorites.  The new Thomas Pynchon I could not stand more than a short sample of.  I sampled many other novels but didn’t like or finish them.  I read or reread a lot of Somerset Maugham, which was uniformly rewarding.  The Painted Veil may not be the best one, but it is a good place to get hooked.  I reread quite a bit of Edith Wharton and it rose further in my eyes.  Ethan Frome and The Age of Innocence are my favorites, more intensely focused than the longer fiction.  I loved discovering the Philip Pullman trilogy and vowed to give George Martin another try this coming year.

How different are Democratic and Republic appointees to the Fed’s Board of Governors?

John Sides talks with Julio Suarez, who has been researching the topic:

Recently they don’t look much different at all. When you take the average member appointed by a Democratic president and the average member appointed by a Republican president, you observe what you expect: Since 1936, Democratic appointees are slightly more dovish than Republican appointees, although the difference is not statistically significant. The average score for a Democratic appointee is -0.22 vs. -0.08 for a Republican appointee.

There is more here, including a graph and a link to the underlying data.

How to fix (some of) the Obamacare mess

Ross Douthat writes:

…it does seem like there is a semi-plausible policy response to the rate shock issue, which wouldn’t roll back the ongoing plan cancellations but might make cheaper plans available to buyers going forward: Obamacare’s regulations could be rewritten to allow insurers to sell less comprehensive plans on the exchanges. This wouldn’t require doing away with every new regulation, or rolling back the pre-existing condition guarantee, which is what liberals argue the Upton bill currently being considered in the House would do. But it could involve heeding the recent hint from the University of Chicago’s Harold Pollack, a card-carrying Obamacare advocate, that perhaps in the wake of the last month’s developments the government should ”revisit just how minimal the most minimal insurance packages should be,” which in turn could open the door to allowing many more people to buy the kind of high-deductible catastrophic plans that the law currently allows insurers to only sell to twentysomethings.

These moves would not let everyone keep their existing plans, as the Upton and Landrieu bills aspire to do — but there is really nothing that the White House can responsibly do, given the law’s underlying design, that would resolve that problem. What partial deregulation would accomplish, though, is to allow some of the lower-cost plans the law abolishes to be actually revived and made available on the exchanges as “bronze” options in 2014 and 2015, rather than just temporarily grandfathered for a year or so outside them.

The post has other points of interest as well.

Assorted links

1. Dept. of Uh-Oh, ultimately.

2. New study on ocean acidification.

3. James Scott reviews Jared Diamond on traditional societies.  And man outruns cheetah.

4. The negative income tax experiments of New Jersey and Seattle.  And related attempts from Canada.

5. Criticisms of Silicon Valley venture capital funding.

A life well-lived

This is from the obituary of economist Alexander L. Morton:

At 42, Mr. Morton was well on pace in the ascension of his chosen career ladder. He had a doctorate in economics from Harvard, had taught at the Harvard Business School and was finishing a four-year assignment as director the office of policy and analysis at the Interstate Commerce Commission.

He then quit.

He had made enough money in real estate deals and investments to guarantee an independent income for himself. For his remaining 28 years, he was almost constantly on the move, visiting dozens of countries and often going off the expected paths from Western travelers.

And this:

He rarely spoke about himself and never discussed in detail his reasons for retiring in mid-career as an economist to pursue a life of travel. But his sister said he was ready for a change, had the savings to and had done as much as he wished to in the field of transportation deregulation.

To continue along the same path, would have been a case of “been there, done that,” she said.

Here is Alex’s earlier post on traveling more.  Maybe Alexander L. Morton had some really good lunch partners.

Should the U.S. destroy its stockpile of ivory?

Here is one of the latest developments in economic policy:

The US government hopes to send a crushing message to anyone involved in the illegal ivory trade — by decimating a 6-ton stockpile of seized elephant ivory.

In an announcement posted online, the US Fish and Wildlife Services (FWS) describes plans to “pulverize” a cache of ivory on November 14th. All of the ivory was obtained, the agency notes, from law enforcement efforts to crack down on trafficking over the last two decades. “Destroying this ivory tells criminals who engage in poaching and trafficking that the United States will take all available measures to disrupt and prosecute those who prey on, and profit from, the deaths of these magnificent animals,” reads a statement on the FWS website.

There is more here, via Viktor Brech and Bruce Ryan and Kaushal Desai.

Bruce suggests the government announce it has created an artificial form of ivory, to lower expected prices and discourage future poaching.  If they can get away with that lie, great.  Otherwise, we all know the 2000 Kremer and Morcom piece entitled simply “Elephants”:

Many open-access resources, such as elephants, are used to produce storable goods. Anticipated future scarcity of these resources will increase current prices and poaching. This implies that, for given initial conditions, there may be rational expectations equilibria leading to both extinction and survival. The cheapest way for governments to eliminate extinction equilibria may be to commit to tough antipoaching measures if the population falls below a threshold. For governments without credibility, the cheapest way to eliminate extinction equilibria may be to accumulate a sufficient stockpile of the storable good and threaten to sell it should the population fall.

That emphasis is added.  Sell it, not destroy.

The (gated) AER version of the paper is here.  The Montclair State version is here.  A few comments and responses are here.

In other words, our government is pursuing symbolic value but at the same time implementing the wrong incentives.

Here is a piece on elephant music-making.