Tyler Cowen's Blog, page 86
November 19, 2014
Assorted links
1. Disney, the economics of Frozen, and how to monetize the parent-child bond.
2. An early detection system for musical popularity?
3. Steve Landsburg on Grothendieck, and more here.
4. Image recognition software improves.
5. The most extreme commute (New Zealand to Iceland).
6. Better than net neutrality.
Increasing the “velocity” of automobiles
That is borrowing a phrase from Arthur Marget, of course I do not mean mph:
A San Francisco-based company is putting yet another spin on the Washington area’s sharing economy, giving travelers flying out of Dulles International Airport free parking and a car wash in exchange for permission to rent their cars to other drivers.
FlightCar launches Wednesday at Dulles and two other U.S. airports. Participating travelers can drop off their cars at a designated lot near Dulles. In exchange for letting FlightCar offer a vehicle for rent, the travelers receive free parking, a Town Car ride to the airport, a car wash and per-mile payment if the vehicle is rented — to a pre-screened driver — while they’re away.
There is more here.
Conservative vs. liberal jobs
Robin Hanson reports:
My last post got me thinking about the liberal vs. conservative slant of different jobs. Here are two sources of data.
Consider some jobs that lean conservative: police, doctor, religious worker, insurance broker. These seem to be jobs where there are rare big bad things that can go wrong, and you want to trust workers to keep those from happening. That explanation can also makes some sense of these other conservative jobs: graders & sorters, electrical contractors, car dealers, truckers, coal miners, construction workers, gas service station workers, non-professor scientist. Conservatives are more focused on fear of bad things, and protecting against them.
Now consider a set of jobs that lean liberal: professor, journalist, artist, musician, author. From these you might focus on the fact that these jobs have rare but big upsides. So the focus here might be on the small chance that a worker will be come a rare huge success. This plausibly seems the opposite of a conservative focus on rare big losses.
But consider these other liberal jobs: psychiatrist, lawyer, teacher. Here the focus might be just on people who talk well. And that can also make sense of many of the previous list of liberal jobs. It might also makes sense of another big liberal job: civil servant.
I’m not suggesting these are the only factors that influence which jobs are liberal vs. conservative, but they do seem worth exploring.
Which other factors might help explain the distribution of conservative vs. liberal jobs?
November 18, 2014
What one thing could we do to best boost future economic growth?
In my article for a Cato Symposium I cite foreign policy:
It is possible that we are still living inside the biggest bubble of them all and that is called “the peace bubble.” I’ve also heard this described as the bubble of “Pax Americana,” although that is a more partisan take on the role of America in global peace. You might think the chance of this being a “peace bubble” is say only five or ten percent. Maybe so, but still in expected value terms that is still the most important issue to worry about. The breaking of that peace bubble on a larger scale could endanger all of the progress and accumulated well-being of the human race, including the United States.
Let’s not forget that over the next one hundred years, if the world remains relatively peaceful, it is unlikely that most global innovation will come from the United States. China in particular may assume a major role as a generator of new ideas, just as the United States supplied a wide variety of useful innovations to Great Britain starting in the mid to late 19th century. Even if a “Fortress America” could survive geopolitical turmoil in the broader world, it would be a much poorer place. We rely on the rest of the world for inspiration, for creation, for appreciation, for increasing market size and thus the spurring of American innovations, and of course we rely on the rest of the world for innovations more directly. A future America in a chaotic world is much, much poorer and riskier than a future America in a peaceful world.
I should note that I am indebted to John Nye and Garry Kasparov for this notion of Pax Americana as the biggest bubble of them all. There are several other arguments in the piece, for instance:
When electing a President or a Congress, foreign policy should be by far our number one concern. That said, I don’t think there is any simple formula for getting foreign policy right. Unlike many libertarians, I do not adhere to a strictly non-interventionist stance on foreign policy. I believe in alliances among the world’s relatively free and (one hopes) peaceful nations. I believe that American intervention has at some critical times led to much greater freedom and prosperity. Without the current and past American security umbrella, for instance, I believe much of Asia would be a far less free place than it is today, starting but not ending with Taiwan and South Korea.
I am, however, also skeptical of conservative or hawkish claims that we simply need to get tough with the bad guys in the world. A market-oriented economist, as I view myself, should be well aware of the general arguments about the difficulty of government planning and the importance of unforeseen, unintended consequences from government action. Furthermore government policies, once they get underway, are often hijacked by special interest groups or by voters who are uninformed, misinformed, or who react emotionally rather than analytically. We should not be especially optimistic about the ability of our government to pull off successful foreign interventions.
Daniel Larison comments on me here (when I write “For better or worse,” that means I am not judging a possible Syria intervention, contra Larison. Otherwise the popularity of drones is a good example of American squeamishness, another example being our early withdrawal from Iraq.) The broader symposium is here, it has many quality contributors. Here is Eli Dourado on incentive pay for Congress.
Addendum: Arnold Kling comments.
Good sentences about automation and jobless recoveries
The model also predicts that recessions accelerate the decline in routine occupations—firms prefer to destroy routine jobs during a downturn, when the opportunity cost of restructuring is low. This acceleration can account for recent cyclical changes of the labor market: routine job losses are concentrated in recessions and the ensuing recoveries are jobless.
That is from Miguel Morin, a recent Columbia Ph.d. The entire paper is of interest. And here is a relevant blog post by Scott Sumner on “near recessions.”
Defining Diversity Down
Marc Andreessen make some excellent points about diversity in a wide-ranging interview:
The critique of Silicon Valley is also that it isn’t very diverse. At Twitter, for instance, 90 percent of the tech employees are male and more than 50 percent of them are white.
I think these discussions are totally valid. Now, I disagree with many of the specific points.
What’s your take?
Shall we? Let’s launch right into it. I think the critique that Silicon Valley companies are deliberately, systematically discriminatory is incorrect, and there are two reasons to believe that that’s the case. No. 1, these companies are like the United Nations internally. All the diversity studies say that the engineering population is like 70 percent white and Asian. Let’s dig into that for a second. First, apparently Asian doesn’t count as diverse. And then “white”: When you actually go in these companies, what you find is it’s American people, but it’s also Russians, and Eastern Europeans, and French, and German, and British. And then there are the Chinese, Japanese, Koreans, Thais, Indonesians, and Vietnamese. All these different countries, all these different cultures. To believe in a systematic pattern of discrimination, you’d have to believe that we’re discriminatory toward certain people without being discriminatory at all toward an extremely broad range of ethnicities and religions. Because of Pakistanis, we’re seeing a higher-than-ever proportion of Muslim employees in a lot of our companies.
No. 2, our companies are desperate for talent. Desperate. Our companies are dying for talent. They’re like lying on the beach gasping because they can’t get enough talented people in for these jobs. The motivation to go find talent wherever it is is unbelievably high.
He is also spot on about online education.
Hat tip: Newmark’s Door.
Somsook Boonyabancha
She has a new idea:
Somsook is developing the methodology for “land-sharing”, an urban land use innovation built around a mutually beneficial deal between urban squatters and the owner of the land who wishes to develop for commercial purposes. The slum dwellers get new, better, if more dense housing on a back portion of the plot in dispute, and the owner gets the street-front portion freed for immediate development. Everyone wins. The slum dwellers get more than quality housing at agreed affordable cost and they become legal and secure. They also emerge, in Somsook’s way of orchestrating such deals, organized and able not only to negotiate but to go on and deal with other problems.
The owners and developers rescue most of the value of their investment opportunity, which otherwise very probably would remain mired in a limitless quicksand of politicized conflict. Such conflict produces only costs and is painfully un-Thai. Somsook’s win-win land-sharing deals also helps the cities: ending the stalemate which has been immobilizing important properties facilitates more rational, efficient urban development.
That is from this Ashoka site, there is a video here, there is an interview here. For the pointer I thank Janet B.
November 17, 2014
2015 Law and Literature reading list
The New English Bible, Oxford Study Edition
The Law Code of Manu, Penguin edition
Njal’s Saga (on-line version is fine)
Lawyer Poets and that World Which We Call Law, edited by James Elkins
Glaspell’s Trifles, available on-line.
The Metamorphosis, In the Penal Colony, and Other Stories, by Franz Kafka, edited and translated by Joachim Neugroschel.
In the Belly of the Beast, by Jack Henry Abbott.
Conrad Black, A Matter of Principle.
Sherlock Holmes, The Complete Novels and Stories, Sir Arthur Conan Doyle, volume 1.
I, Robot, by Isaac Asimov.
Moby Dick, by Hermann Melville, excerpts, chapters 89 and 90, available on-line.
Year’s Best SF 9, edited by David G. Hartwell and Kathryn Cramer.
Death and the Maiden, Ariel Dorfman.
The Pledge, Friedrich Durrenmatt.
E.M. Forster, A Passage to India.
Haruki Murakami, Underground.
Honore de Balzac, Colonel Chabert.
Toer, Pramoedya Ananta, House of Glass.
M.E. Thomas, Confessions of a Sociopath.
Films: A Separation, Memories of Murder, other.
Podcast: Serial
If you are eligible (economics graduate students have taken it in the past), do take my class, I am very happy to have you there.
The bad economic news out of Japan: what does it mean?
Here is one version of the latest report, here is another. People, don’t be surprised by this bad news. Unemployment in Japan already had fallen to about three and a half percent. So how much of a miracle could Abenomics accomplish in the first place? Not much, not even for committed Keynesians. Commentators have grown to expect so much of the Phillips curve these days, but still a mechanism for the output boost is required and the Phillips curve (at best) holds only in some contexts. Japan simply hasn’t had that many laborers to put back to work. Getting more women in the workforce, as Abe has tried to do, is a positive development, but that is not mainly about macro policy nor is it mainly about the short run.
Some of you might be thinking “well, won’t inflation cause some kind of output rise, if only by stimulating demand?” People, there is still no mechanism specified in that sentence. And you may recall, the 1970s and early 80s saw the rise of a bunch of “monetary misperceptions” theories, often stemming from the work of Bob Lucas, postulating something to that effect. It was the Keynesians who slapped them down on both empirical and theoretical grounds, as intertemporal elasticities of substitution are simply not high enough to support this as a major channel of output determination. There has been no reason since then to think those theories deserve to make a major comeback.
Here is Scott Sumner on Japan, here is Megan McArdle on Japan, and here is Edward Hugh on Japan.
I noticed a comment by Alen Mattich on Twitter:
If a mere 3 percentage point increase in taxes kills Japan’s economy, got to wonder about how that 230% of GDP debt will ever be resolved.
I’m not sure 230% is the best number there, but still that is the question of the day. With the continuing circulation of what I call “the Venceremos mentality,” the limits of economic policy remain underappreciated, and the recent news from Japan should provide a sobering lesson for us all.
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