Tyler Cowen's Blog, page 300

The Great Reset (free Facebook won’t make up for this)

In 2012, real median household income was 8.3% lower than in 2007, the year before the most recent recession.

Here is the link.  There are further details here, which notes that the median family income was higher in 1989.  Ryan Avent has some good charts.

Italy fact of the day

Italians’ relatively low Internet usage—37% of Italians have never used Internet, compared with an EU average of 22%—present a unique challenge, says Donatella Treu, CEO of Italian business daily Il Sole 24 Ore.

Here is more, mostly about the economic problems newspapers are facing in Europe.

Assorted links

1. Peak names, and the half-life of Shaquille.

2. How many jobs are vulnerable to automation?  And Jim Olds on Average is Over.  And me on Washington Post TV.  “Average is Over, Boys and Girls.”

3. An hour of myself, and then with Joseph Stiglitz in the second half, on inequality.

4. Guelph family lives like its 1986.

5. Why did the Indian economy stagnate under British rule?

6. Chinese live crab vending machines.

7. Mosaicism (very interesting).

Is New Zealand busting out of the Great Stagnation?

Or is this a terrifying novelty for a country which doesn’t have very strict liability law?

…a planned launch of a jetpack in New Zealand next year has bureaucrats scratching their heads, particularly as the machine’s makers say the thing can travel up to 7,000 feet in the air at speeds of 50 miles an hour.

“Think of it like a motorcycle in the sky,” says Peter Coker, chief executive of Martin Aircraft Co. Ltd., which has spent 30 years developing the Martin Jetpack here. The Martin jetpack is unique in that it is not rocket powered but has a gasoline engine driving twin-ducted fans. The latest P12 prototype, a far sleeker and shinier model than the earlier versions, will allow a pilot to fly for up to half an hour.

New Zealand is taking the prospect of jetpacks in its airspace seriously, even though the product’s price—more than $150,000—means that just a few dozen have been reserved. Most of those are going to overseas customers.

And yet there is a problem, even in “regulation light” New Zealand:

“If you land in someone’s paddock, you will always land on their prime sheep,” Mr. Kenny says, stressing that liability insurance for pilots is a must.

…Still up in the air is whether they will eventually be allowed to fly over built-up areas. The latest prototype has been certified for manned test flights in New Zealand, but it can’t be flown more than 20 feet above ground or more than 25 feet above water.

The article has other points of interest.  Here are related pieces.

Russian shot in quarrel over Kant’s philosophy

An argument in southern Russia over philosopher Immanuel Kant, the author of “Critique of Pure Reason,” devolved into pure mayhem when one debater shot the other.

A police spokeswoman in Rostov-on Don, Viktoria Safarova, said two men in their 20s were discussing Kant as they stood in line to buy beer at a small store on Sunday. The discussion deteriorated into a fistfight and one participant pulled out a small nonlethal pistol and fired repeatedly.

The victim was hospitalized with injuries that were not life-threatening. Neither person was identified.

It was not clear which of Kant’s ideas may have triggered the violence.

The link is here, and for the pointer I thank Michael Rosenwald.

The German export powerhouse

Sonja Miskulin has forgotten her beloved cat, Pooki. She can’t remember whether she has grandchildren and has no memory of her nine-hour journey one recent Sunday to forever leave behind her home in Germany.

Suffering from dementia, the wheelchair-bound former translator celebrated her 94th birthday in a Polish nursing home last month. Her daughter sent her there in a bid for a better life and more affordable care.

Miskulin has joined the vanguard of a controversial movement: emigrant nursing home residents. The “Grandma export” trend has set hands wringing in Germany, where Munich’s leading newspaper denounced it as “gerontologic colonialism” and compared it to nations exporting their trash. Yet more families like Miskulin’s say it’s their best option to provide a dignified old age for elderly parents — and save money — amid a lack of affordable quality care at home. One in five Germans would now consider going abroad for a nursing home, according to a March survey by TNS Emnid, one of Germany’s biggest pollsters.

“I can only say, children, when your parents get older, send them to Poland,” said Miskulin’s 66-year-old daughter, Ilona von Haldenwang.

I suspect a media advisor would have encouraged her to reword that last bit.  The full article is here, and for the pointer I thank Florens.

Is the return on publicly-held companies now lower?

Assume that the net average return on all companies has stayed about the same.  Yet because the wealthy are wealthier than before (economic growth plus rising inequality), they have less need to go public for reasons of liquidity.  Thus if they have private information that their private companies will remain profitable for a while longer, they will keep them private and earn those extra-normal returns.

That means on average publicly-held companies will earn lower average returns than before.  Which in turn will increase income inequality between the top one percent and the top twenty percent.  Which may in turn make this effect even stronger.

So should you buy into the Twitter IPO?

Assorted links

1. The abuse of the “i word” (“intimate”) in fiction reviews.

2. Bookless library opens in Texas.

3. Where will the jobs of the future be?  And Gauti Eggertsson has a blog.  And you could construe this episode as further evidence that most tenured faculty are overpaid.

4. The culture that is Dutch, may prisons someday be a thing of the past?

5. Locavore felines, plus an intermediary.

6. Just pick a row and then choose the closest parking space.

7. Reconsidering Gabriel Kolko.

A simple theory of recent American intellectual history

Throughout the 1970s and most of the 1980s, the so-called “right wing” was right about virtually everything on the economic front.  Most of all communism, but also inflation, taxes, (most of) deregulation, labor unions, and much more, noting that a big chunk of the right wing blew it on race and some other social issues.  The Friedmanite wing of the right nailed it on floating exchange rates.

Arguably the “rightness of the right” peaks around 1989, with the collapse of communism.  After that, the right wing starts to lose its way.

Up through that time, market-oriented economists have more interesting research, more innovative journals, and much else to their credit, culminating in the persona and career of Milton Friedman.

I’ve never heard tales of Paul Samuelson’s MIT colleagues mocking him for his pronouncements on Soviet economic growth.  I suspect they didn’t.

Starting in the early 1990s, the left wing is better equipped, more scholarly, and also more fun to read.  (What exactly turned them around?)  In the 1990s, the Quarterly Journal of Economics is suddenly more interesting and ultimately more influential than the Journal of Political Economy, even though the latter retained a higher academic ranking.  The right loses track of what its issues ought to be.  There is no real heir to the legacy of Milton Friedman.

The relative rise of the Left peaks in 2009, with the passage of Obamacare and the stimulus.  From that point on, the left wing, for better or worse, is a fundamentally conservative force in the intellectual arena.  It becomes reactive and loses some of its previous creativity.

Over those years, right wing thought, on the whole, became worse and more predictable and also less interesting.  But excess predictability now has infected the left wing also.  Attacking stupid ideas put forward by Republicans, whether or not you think that is desirable or necessary, has become their lazy man’s way forward and it is sapping their faculties.

Yet I am not pessimistic about discourse.  Our time is a wonderful era for independent thinkers, and many of them are bloggers, too.  It’s as if we have created a new political spectrum in a very small sliver of the world, a perhaps inconsequential eddy in a much larger and often unpleasant vortex.

The Political Legacy of American Slavery

That is a new paper (pdf) by Avidit Acharya, Matthew Blackwell, and Maya Sen, here is the abstract:

We show that contemporary differences in political attitudes across counties in the American South trace their origins back to the influence of slavery’s
prevalence more than 150 years ago. Whites who currently live in Southern counties that had high shares of slaves population in 1860 are less likely to identify as Democrat, more likely to oppose affirmative action policies, and more likely to express racial resentment toward blacks. These results are robust to accounting for a variety of attributes, including contemporary shares of black population, urban-rural differences, and Civil War destruction. Moreover, the results strengthen when we instrument for the prevalence of slavery using measures of the agricultural suitability to grow cotton. To explain our results, we offer a theory in which political and racial attitudes were shaped historically by the incentives of Southern whites to propagate racist institutions and norms in areas like the “Black Belt” that had high shares of recently emancipated slaves in the decades after 1865. We argue that these attitudes have, to some degree, been passed down locally from one generation to the next.