Month: February 2014
Paul Krugman will leave Princeton for CUNY and a Manhattan-based existence
Here is the Bloomberg account, here are Krugman’s own words. I say it’s a good move and if I were in an analogous position I would do something similar. Think of it as another form of disintermediation. Think of it also as being closer to useful airports and media centers.
More generally, the value of living in either New York City or Washington, D.C. — for those who seek influence — is going up. Krugman’s decision reflects that broader reality.
The proliferation of (illegal?) drone flights
Commercial drones such as the one that left her and two friends with bruises are prohibited in the U.S. That hasn’t stopped a proliferation of flights nationwide that’s far beyond the policing ability of the Federal Aviation Administration, which is laboring to write long-awaited rules governing flights of unmanned aircraft. Drones, which are available online and at hobby shops, have been used to film scenes in The Wolf of Wall Street and to deliver flowers. They’ve been sent aloft to inspect oil-field equipment, capture sporting events, map farmland, and snap aerial photographs for real estate ads.
Some operators plead ignorance of the law. Others claim their flights are permitted under exemptions for hobbyists. Flying model aircraft below 400 feet and away from populated areas is generally permitted, provided it’s for recreation only. There’s not much the FAA can do to stop people from flouting the rules.
There is more here, from Bloomberg Businessweek.
Assorted links
What I worry about
For Russia, matters in Ukraine are close to an existential crisis, as Ukraine is intimately tied up with Russia’s sense of itself as presiding over a mini-empire of sorts. Nor could an autocratic Russia tolerate a free and prosperous Ukraine, developing along the lines of Poland. America cares about Ukraine less, and cares more about Syria and Iran, or at least cares about saving face in those latter venues. Therefore there is a Coasean deal to be had between America and Russia, where Russia gets to partition part of Ukraine, create a buffer against Europeanization and democratization, keep the larger Ukraine unit weak, and also keep its Black Sea fleet. In turn Russia would do something less than totally sabotage all American plans for Syria and Iran. (Of course that is Coasean for the leaders, and not necessarily for the citizenries.)
The thing is…China. What kind of signal would such a Coasean deal of partition send to China?
That is what I worry about.
Larry Summers on WhatsApp and sluggish investment
Joe Weisenthal reports:
Ponder for example that the leading technological companies of this age, I think for example of Apple and Google, find themselves swimming in cash and facing the challenge of what to do with a very large cash hoard. Ponder the fact that WhatsApp has a greater market value than Sony with next to no capital investment required to achieve it. Ponder the fact that it used to require tens of millions of dollars to start a significant new venture. Significance new ventures today are seeded with hundreds of thousands of dollars in the information technology era. All of this means reduced demand for investment with consequences for the flow of – with consequences for equilibrium levels of interest rates.
I don’t completely follow that argument (does it show up in the producer price index numbers?), but I pass it along to stimulate your thought. Ashok Rao has excellent commentary:
…software (the blue line) is still only 15 percent of private investment and not significantly higher than points in the past two decades when interest rates were a lot higher. On the other hand, residential investment as a share of private investment, hasn’t changed much in structure since the mid-’60s and is still very sensitive to changes in the interest rate.
The full (short) piece on Summers is here.
Tyler Cowen on the adjustment to growing automation
Despite the grim forecast, Tyler Cowen argues that western societies won’t collapse under the weight of future industrial change, but will eventually adjust to a new phase of ubiquitous automation—the period Brynjolfsson calls the ‘Second Machine Age’. However, he warns that evolution will take considerable time to play out.
‘If you look at the Industrial Revolution that starts in England say around 1780 and for a long time a lot of jobs do go away, wage gains are very slow, there’s a lot of volatility, it’s not really until the 1840s that real wages in England are going up significantly,’ he says. ‘So I think this time around it will actually be a lot like the last time. We will have a transition period of many decades. That will be tough for many people. In the very long run it will be splendid, but along the way it’s not always going to feel splendid. I think that is the historical pattern for a lot of these changes.’
There is more here, from Australian Radio National.
Why was the housing bubble so much worse in Las Vegas?
There is an interesting new Justin Lahart piece, here is one bit from it:
The way Princeton’s Zhenyu Gao sees it, the problem in Las Vegas was that while land was available, constraints were high enough that it took time for homes to get put up — the data on land constraints matches up well with a separate data set on how long it takes to complete the review and approval of residential projects. As a result, it took time for the supply of housing to meet demand.
But investors didn’t appreciate the fact that more supply was eventually going to arrive, and rushed in. Indeed, Mr. Gao shows that areas of the country like Las Vegas fell into a sweet spot, with more investment home purchases than both more land-constrained and less land-constrained areas. Of course, by pushing prices higher the investors invited even more development, and an eventual oversupply of homes that made the bust all the more painful.
I would put it this way: space to build plenty more, and enough slowness in the building process to get over-committed before seeing the supply-side decisions of other investors. The original research is here (pdf).
Assorted links
Corporate economists are hot again
Bob Tita reports:
With more data available than ever before and markets increasingly unpredictable, U.S. companies—from manufacturers to banks and pharmaceutical companies—are expanding their corporate economist staffs. The number of private-sector economists surged 57% to 8,680 in 2012 from 5,510 in 2009, according to the Bureau of Labor Statistics. In 2012, Wells Fargo & Co. had one economist in its corporate economics department. Now, it has six.
There is more here.
Bringing extinct species back to life
It will happen, in fact it has already happened and more than ten years ago:
Novak is tall, solemn, polite and stiff in conversation, until the conversation turns to passenger pigeons, which it always does. One of the few times I saw him laugh was when I asked whether de-extinction might turn out to be impossible. He reminded me that it has already happened. More than 10 years ago, a team that included Alberto Fernández-Arias (now a Revive & Restore adviser) resurrected a bucardo, a subspecies of mountain goat also known as the Pyrenean ibex, that went extinct in 2000. The last surviving bucardo was a 13-year-old female named Celia. Before she died — her skull was crushed by a falling tree — Fernández-Arias extracted skin scrapings from one of her ears and froze them in liquid nitrogen. Using the same cloning technology that created Dolly the sheep, the first cloned mammal, the team used Celia’s DNA to create embryos that were implanted in the wombs of 57 goats. One of the does successfully brought her egg to term on July 30, 2003. “To our knowledge,” wrote the scientists, “this is the first animal born from an extinct subspecies.” But it didn’t live long. After struggling to breathe for several minutes, the kid choked to death.
There is more here, interesting throughout. One risk is that these newly recreated animals may turn out to be efficient carriers of modern diseases. And the economic benefits of recreating extinct species are…? And here is a legal perspective:
In “How to Permit Your Mammoth,” published in The Stanford Environmental Law Journal, Norman F. Carlin asks whether revived species should be protected by the Endangered Species Act or regulated as a genetically modified organism. He concludes that revived species, “as products of human ingenuity,” should be eligible for patenting.
And are they really the same animals after all, given the imperfections in the process of cloning and recreation? The philosopher might say this:
“I would like to have an elephant that likes the cold weather,” he told me. “Whether you call it a ‘mammoth’ or not, I don’t care.”
I say we would be wise to exercise option value on this one, but of course the incentives of scientists are to do something first.
Should we give Bill Clinton a tenured professorship?
Hans Noel flunks this test and says no:
I don’t think Clinton should be given a “tenured professorship.”+ Not because of his lack of a Ph.D. per se, but because, smart as he is, Clinton is not a scholar. He doesn’t do research. He is not in the business of contributing to the store of human knowledge. If Clinton is given a job as a tenured professor, what would he do? A “tenured professorship” is not a plum given to reward success. It’s an actual job.
The job of a professor is not the same as “being smart.” Academics write those pesky obscure papers that Kristof finds impenetrable and irrelevant because that’s how we learn things. The demands for publication may have perversities, but it is what drives people to do research.
I would offer a tenured professorship to any ex-President who is willing to spend real time with students and academic programs. That would be in a public policy school, a public administration department, a university-wide appointment, or even a political science department. A class actually taught by Clinton, even half of the time with another professor doing most of the actual work, would be fascinating. And if you don’t like Clinton, or don’t think he is smart (not my view at all), consider this a student’s chance to see the (ex) emperor with no clothes, which is itself a learning experience.
I know people who have had Obama as professor — before he was President of course — and loved him, and not for partisan reasons.
Have I mentioned that universities tenure plenty of people who don’t do research? Check out your music department, for a start, or Fine Arts. Or (very likely but not always) your business school.
I recently read Noel’s book on political polarization and enjoyed it, especially his discussion of how intellectual elites have led the process of polarization. Still, I would trade in having read that book for a five minute chat with Bill Clinton.
Addendum: I also would offer a tenured professorship to any ex-President who is not willing to spend real time with students and academic programs. The job offer would more than pay for itself, given the money it would bring into the university, directly and indirectly. Most universities support athletics programs, and pay the successful coaches millions more than any other state employee earns — can they not find room for a former Commander in Chief or two?
Public Choice Outreach 2014!
I write to ask your help recruiting promising undergraduate or graduate students for our annual Public Choice Outreach Conference. The 2014 Conference will be held on June 6 – 8, 2014 at the Hyatt Arlington conveniently located close to the National Mall and Georgetown areas of Washington DC. Applications are now available and are due on Friday, April 11, 2014.
The Public Choice Outreach Conference is designed as a “crash course” in Public Choice for students planning careers in academia, journalism, law, or public policy. Graduate students and advanced undergraduates are eligible to apply. Many graduates of the Outreach seminar have gone on to notable careers in academia, law and business. Students majoring in economics, history, international studies, law, philosophy, political science, psychology, public administration, religious studies, and sociology have attended past conferences as have a few mayors and other politicians! Applicants unfamiliar with Public Choice and students from outside of George Mason University are especially encouraged.
A small stipend is available and meals and rooms will be provided by the conference (for non-locals). Space, however, is very limited.
More information here.
P.S. Tyler and myself will both be speaking along with an all-star cast of scholars!
Catholics were much less likely to vote for the Nazis
A new paper was presented at the AEA meetings this January, “Religion, Economics, and the Rise of the Nazis,” by Philipp Tillman and Jörg Spenkuch, and the abstract for one version of the paper is this:
We investigate the role of religion in the electoral success of the Nazi Party in Weimar Germany. Among historians, it is a well known fact that Protestants were much more likely than Catholics to vote for Adolf Hitler. However, in spite of the historical importance of the Nazis’ rise to power, the question of whether this correlation reflects a causal effect of religion has so far remained unanswered. We use an instrumental variable approach by relying on geographic variation in religious beliefs dating back to a peace treaty in the sixteenth century. According to the principle “cuius regio, eius religio.” the Peace of Augsburg granted local rulers the right to determine the religion of their serfs. Using rulers’ choices in the aftermath of the peace as an instrumental variable for the religion of Germans living in the respective areas more than three hundred years later, we are able to document an economically large effect of Protestantism on Nazi vote shares— even after controlling for a wide range of region fixed effects and socioeconomic characteristics. Taken at face value, our estimates suggest that Catholics were about 50% less likely to vote for the Nazi Party than their Protestant counterparts. We are currently testing multiple hypotheses to explain this effect and are in the process of collecting additional data.
That is not a new claim but it is new to have serious econometrics to back it up and show the vote tallies were not caused by associated demographic factors. You will find a related copy of the paper at the first link here. Tillman’s home page is here. Spenkuch is here. Here is Spenkuch’s paper on immigration and crime. Immigration is connected to higher rates of theft crime, although by small amounts, and not positively related to violent crime.
Addendum: Here is the most current version of the paper (pdf), with notable additions.
Does immigration undermine public support for social policy?
Mostly not. Again, Kevin Lewis points us to a fascinating paper:
Does Immigration Undermine Public Support for Social Policy?
David Brady & Ryan Finnigan
American Sociological Review, February 2014, Pages 17-42Abstract:
There has been great interest in the relationship between immigration and the welfare state in recent years, and particularly since Alesina and Glaeser’s (2004) influential work. Following literatures on solidarity and fractionalization, race in the U.S. welfare state, and anti-immigrant sentiments, many contend that immigration undermines public support for social policy. This study analyzes three measures of immigration and six welfare attitudes using 1996 and 2006 International Social Survey Program (ISSP) data for 17 affluent democracies. Based on multi-level and two-way fixed-effects models, our results mostly fail to support the generic hypothesis that immigration undermines public support for social policy. The percent foreign born, net migration, and the 10-year change in the percent foreign born all fail to have robust significant negative effects on welfare attitudes. There is evidence that the percent foreign born significantly undermines the welfare attitude that government “should provide a job for everyone who wants one.” However, there is more robust evidence that net migration and change in percent foreign born have positive effects on welfare attitudes. We conclude that the compensation and chauvinism hypotheses provide greater potential for future research, and we critically consider other ways immigration could undermine the welfare state. Ultimately, this study demonstrates that factors other than immigration are far more important for public support of social policy.
There is an ungated version here.