Tyler Cowen's Blog, page 28
March 15, 2015
Dalek Relaxation Tape
Your mileage may differ but this had me cracking up:
March 14, 2015
*Mahabharata: A Modern Retelling*
There is a new version of the Mahabharata, in blank verse rather than prose, translated/created by Carole Satyamurti. I’ve only read an initial sliver of it, but dramatically and linguistically it is very effective. This is a beautiful edition, and deserves serious consideration as a purchase for just about every library. I have yet to see any significant reviews of the work.
How much has the U.S. poverty rate declined?
Official percent poor in 1964: 19.0%
Official percent poor in 2013: 14.5%
Reduction to correct for:
Value of noncash benefits – 3.0%
Omission of refundable tax credits – 3.0%
Replacing CPI-U with PCE index – 3.7%
Adjusted percent poor in 2013: 4.8%
That is adapted from a Christopher Jencks review, “The War on Poverty: Was It Lost?”, in the 2 April 2015 New York Review of Books.
Do any of you know a good link-accessible version of comparable information? By the way, here is Ross Douthat on money and culture.
How much are larger business firms driving the increase in income inequality?
From Free Exchange at The Economist:
The benefits of size are thus enjoyed only by the most senior workers at a firm, who can extract a bigger premium for their skills and experience. A cleaner at a single shop does the same sort of work as those at a large chain. But managing a multinational firm such as Walmart requires a different—and much rarer—set of skills than that required to run a corner store. Over time this pushes up the salaries of the top brass at Walmart compared with corner-shop managers.
The authors find that the relationship between the growth in the size of companies and the level of inequality holds across the rich world. They looked at data from 1981 to 2010 on wages and the size of largest firms for 15 countries in the OECD, a club mostly of rich countries. The relationship between rising levels of income inequality and the size of firms was strong.
This effect is particularly noticeable in America and Britain, where firms have grown rapidly in recent decades. In America, for instance, the number of workers employed by the country’s 100 biggest firms rose by 53% between 1986 and 2010; in Britain the equivalent figure is 43.5%. On the other hand, in places where the size of firms has not changed much, such as Sweden, or where it has shrunk, such as Denmark, wage inequality has grown much less. Part of what is perceived as a global trend towards greater disparity in wages may actually be the result of the biggest firms employing a greater share of workers.
The piece is interesting throughout. The original source by the way is H. Mueller, E. Simintzi and P. Ouimet, “Wage inequality and firm growth”, LIS Working Paper 632 (March 2015), gated here, earlier version here. One implication is that we can expect quite high rates of income inequality from a mature Chinese economy. Another is that we simply shouldn’t expect the United States to be as equal as the smaller northern European polities.
Houston versus California
In my Econ Talk with Russ Roberts on private cities I said this about Houston:
If we think about, what are the best cities in the United States, particularly for the poor, it’s places like Houston, which have no zoning and which have very easy regulatory systems in which you can build. You can get a permit to build within a matter of days, compared to New York where you’ve got to go through a dozen different permitting processes and you have to hire specialized people whose only job is really to stand in line to help you get through the process….So, people of modest means can still buy a house in Houston. And they can’t do that in many other places in the United States because of zoning and not-in-my-backyard rules, a kind of secession of the rich, not in terms of gated communities but in terms of adding on rules and restrictions on how large your lot has to be in order to build a house, how many people can live in the house etc. All of these things have made it extremely expensive to buy in any of these cities, which use more top down planning.
The Economist illustrates with a remarkable statistic comparing Houston with all of California:
Unlike most other big cities in America, Houston has no zoning code, so it is quick to respond to demand for housing and office space. Last year authorities in the Houston metropolitan area, with a population of 6.2m, issued permits to build 64,000 homes. The entire state of California, with a population of 39m, issued just 83,000.
The TPP debate is alive and well
Here is Ezra on TPP:
5. Here’s how the White House sees it: there will either be a trade deal with America at the core of it that forces countries like Vietnam and Malaysia to live up to labor and environmental standards the Obama administration finds acceptable, or there will be a trade deal with China at the core of it that forces countries like Vietnam and Malaysia to live up to labor and environmental standards China finds acceptable. Which would you prefer?
6. There’s also a bigger foreign policy objective here. TPP is central to the Obama administration’s long-heralded “pivot to Asia.”…
Do read the whole thing, to not pursue some version of TPP is basically to turn our backs on much of Asia. Or think of TPP as an attempt to cartelize ASEAN nations and others in the region against Chinese one-by-one bilateral bargaining, most of all on geopolitical issues, not just labor and environmental standards.
Matt Yglesias comments, he says beware of economists (i.e., me) bearing foreign policy arguments. And here are Autor, Dorn, and Hanson on TPP, as Dani Rodrik pointed on on Twitter they offer a relatively mercantilist argument in favor of the agreement.
March 13, 2015
Did economic incentives destroy lower-income families?
That tale doesn’t seem to fit the data. DarwinCatholic reports:
There follows more hand-waving about how things are tough for those at the lower end of the economy. And they are. But here’s the problem. They always have been. The effect that we’re looking to explain is a massive decrease in marriage rates and increase in out-of-wedlock childbearing. If we’re going to explain that as driven by a bad economy, we’d expect to see the incomes of those people getting worse, right? But they haven’t.
There has been a near stagnation for the lowest quintile, but not general income declines. And if I understand the author correctly those figures do not include government benefits, and it is widely admitted that the “war on poverty” has brought some successful results. Or try this:
Since 1960 the out-of-wedlock birth rate for African Americans has increased by about 3.5x while the rate for Whites has increased by 10x. If you look at median incomes by race via the Census, you’ll see that inflation adjusted median income for African American men has gone up by 82% from 1960 to 2001, while for white men it’s only gone up by 35% (for women those numbers are 272% and 135% respectively.) This does have a certain inverse relation to what we see on out-of-wedlock births, in that white out of wedlock births have increased more, but again we have the problem that incomes have in fact gone up, while marriage and the family have clearly gone down.
Maybe “cultural factors” do play a role and it is not all about wages and the economics. In passing, here is your “Jordan fact of the day”:
The US shows up low on the list, while right at the top with 94% percent of children living with two parents is that well known northern European social democracy… Jordan.
The post is excellent and interesting throughout. For the pointer I thank Will. In the meantime, score one for David Brooks.
Is Scarborough, Ontario the dining capital of the world?
Wednesday night I was taken on a restaurant tour of Scarborough — four different places — plus rolls from a Sri Lankan locale, consumed in the office of the Dean of the Food Studies department to start off the festivities.
After that eating, and lots of driving around and looking, I concluded Scarborough is the best ethnic food suburb I have seen in my life, ever, and by an order of magnitude. I hope you all have the chance to visit Scarborough, Ontario.
If you are wondering where I went, that is beside the point.
Assorted links
1. A new claim that liberals are at least as happy as conservatives.
2. Complicated but interesting propositions about mobility and education.
3. Would further euro depreciation help Italy? (probably not)
4. The last woolly mammoths died out after the pyramids were built in Egypt.
5. Has Japan reached and passed peak suicide? Via Noah Smith.
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