Month: May 2023
The changing classic book culture that is German
I visited the best and largest bookstore in Konstanz, a university town and a town with above-average wealth. The bookstore had three floors.
In times past, you might have expected to find hundreds of classic German-language novels in such a store. This visit I found only a single shelf devoted to such novels, and most of them were not German-language heritage at all. (In contrast, the section for English-language books was about three times larger.) I saw Italienische Reise by Goethe and Wilde Phantasien by Tieck, and…? Maybe two or three others? There was plenty of Sherlock Holmes, a fair amount of Dickens and Austen and Melville, and so on. No Kafka, Musil, Mann…you can keep on going and no it wasn’t there. Nowhere to be found in the store. You might do better looking for those works (in English) in an American Barnes and Noble.
Do the classic German book buyers simply use Amazon? Or is the shift in reading habits so dramatic? Is this another international conformity effect, and can I somehow blame the Woke? Maybe immigrants are a modest factor too, or you might not wish to post your reading of such books on social media.
Wednesday assorted links
1. How does winning (or losing) a Grammy change an artist’s subsequent music?
2. Greater job churn in the red states?
3. The costs of banning targeted advertising.
4. “Vitalik Buterin holding Zuzu, the puppy rescued by people of Zuzalu.” (Interview)
5. My thirty-minute podcast with Ryan Chern of U. Washington, was lots of fun.
Wheeling and Dealing: How Auto Dealers Put The Brakes on Direct Sales
Alexander Sammon attends the the annual convention of the National Automobile Dealers Association:
Now car dealers are one of the most important secular forces in American conservatism, having taken a huge swath of the political system hostage. They spent a record $7 million on federal lobbying in 2022, far more than the National Rifle Association, and $25 million in 2020 just on federal elections, mostly to Republicans. The NADA PAC kicked in another $5 million. That’s a small percentage of the operation: Dealers mainline money to state- and local-level GOPs as well. They often play an outsize role in communities, buying up local ad space, sponsoring local sports teams, and strengthening a social network that can be very useful to political campaigns. “There’s a dealer in every district, which is why their power is so diffuse. They’re not concentrated in any one place; they’re spread out everywhere, all over the country,” Crane said. Although dealers are maligned as parasites, their relationship to the GOP is pure symbiosis: Republicans need their money and networks, and dealers need politicians to protect them from repealing the laws that keep the money coming in.
The political power of dealers is why many states still prohibit car manufacturers from selling direct to the public, an absurd restriction that I have been complaining about for years. Some progress has been made but also plenty of pushback:
After years of litigation, Michigan, the birthplace of the dealership, recently agreed to let Tesla sell and service cars in-state. Half of states have loosened dealer protections more (red states, ostensibly “pro-business,” tend to have the most binding restrictions), but dealers are still making record profits. Even Florida Gov. Ron DeSantis, despite launching his presidential bid with Tesla’s Elon Musk, has raised millions from dealers and given no indication he’d veto two restrictive, dealer-sponsored bills passing through the Florida Legislature. (These bills would make it illegal for car manufacturers to set transparent prices and allow buyers to order EVs from legacy manufacturers online.)
Even “pro-business” Texas, which Elon Musk now calls home, and where Tesla and SpaceX are major employers still doesn’t allow Tesla to sell its cars direct to consumers. As a result:
Teslas made in Texas have to be shipped out of the state and then reimported across state lines to any buyers in Texas who purchase them online, one of many ridiculous workarounds born of dealer-protection laws.
Absurd.
Hat tip: Market Power.
The value of informal mentoring
We document a largely unrecognized pathway through which schools promote human capital development – by fostering informal mentoring relationships between students and teachers, counselors, and coaches. Using longitudinal data from a nationally representative sample of adolescents, we explore the nature and consequences of natural mentoring relationships by leveraging within-student variation in the timing of mentorship formation as well as differences in exposure among pairs of twins, best friends, and romantic partners. Results across difference-in-differences and pair fixed-effect specifications show consistent and meaningful positive effects on student attainment, with a conservative estimate of a 9.4 percentage point increase in college attendance. Effects are largest for students of lower socioeconomic status and robust to controls for individual characteristics and bounding exercises for selection on unobservables. Smaller class sizes and a school culture where students have a strong sense of belonging are important school-level predictors of having a K-12 natural mentor.
That is from a new NBER working paper by Matthew A. Kraft, Alexander J. Bolves, and Noelle M. Hurd.
Are We Running Out of Exhaustible Resources?
No, or so says a new paper by Felix Pretis, Cameron Hepburn, Alex Pfeiffer, and Alexander Teytelboym:
Mineral and material commodities are essential inputs to economic production, but there have been periodical concerns about mineral scarcity. However, there has been no systematic recent study that has determined whether mineral commodities have become scarcer over the longer run. Here we provide systematic evidence that worldwide, near-term exhaustion of economically valuable commodities is unlikely. We construct and analyse a new database of 48 economically-relevant commodities from 1957–2015, including estimates of worldwide production, reserves and reserve bases, prices, and production, using publicly-available data and further data requested from the United States Geological Survey. We explore trends in prices, reserves-to-production ratios, and production itself, on a commodity-by-commodity basis, using econometric techniques allowing for structural changes, and further estimate overall trends robust to outlying observations. For almost all commodities, we cannot reject the null hypothesis of no trend in prices and exhaustion, while production has increased. Price signals appear to have guided consumption and provided incentives for innovation and substitution. Concerns about mineral depletion therefore appear to be less important than concerns about externalities, such as pollution and conflict, and ecosystem services (e.g. climate stability) where price signals are often absent.
Julian Simon lives…
Via Jason Crawford.
The changing nudity culture that is German
Some while back, sunbathers in Germany, say on the river banks of a city, would be about 2/3 fully nude. Circa 2023, they are 100% wearing bathing suits or more.
I believe the causes here are threefold: a) a Woke/prudery effect, b) an international conformity effect, and c) a fear of being posted on social media or circulating as a jpeg effect. The increased number of migrants to Germany is possibly a fourth factor, especially when people go in groups.
Tuesday assorted links
1. Digging through the Extropian archives. By Max T.
2. David French on the Right and masculinity, also relevant for understanding the MR comments section (NYT).
3. One million new galaxies discovered, ho hum.
4. The economics of augmented and virtual reality.
5. Vending machine eggs. Canadian.
Orwell’s Falsified Prediction on Empire
In The Road to Wigan Pier, George Orwell argued:
…the high standard of life we enjoy in England depends upon our keeping a tight hold on the Empire, particularly the tropical portions of it such as India and Africa. Under the capitalist system, in order that England may live in comparative comfort, a hundred million Indians must live on the verge of starvation–an evil state of affairs, but you acquiesce in it every time you step into a taxi or eat a plate of strawberries and cream. The alternative is to throw the Empire overboard and reduce England to a cold and unimportant little island where we should all have to work very hard and live mainly on herrings and potatoes.
Wigan Pier was published in 1937 and a scant ten years later, India gained its independence. Thus, we have a clear prediction. Was England reduced to living mainly on herrings and potatoes after Indian Independence? No. In fact, not only did the UK continue to get rich after the end of empire, the growth rate of GDP increased.
Orwell’s failed prediction stemmed from two reasons. First, he was imbued with zero-sum thinking. It should have been obvious that India was not necessary to the high standard of living enjoyed in England because most of that high standard of living came from increases in the productivity of labor brought about capitalism and the industrial revolution and most of that was independent of empire (Most. Maybe all. Maybe more more than all. Maybe not all. One can debate the finer details on financing but of that debate I have little interest.) The second, related reason was that Orwell had a deep suspicion and distaste for technology, a theme I will take up in a later post.
Orwell, who was born in India and learned something about despotism as a police officer in Burma, opposed empire. Thus, his argument that we had to be poor to be just was a tragic dilemma, one of many that made him pessimistic about the future of humanity.
Armin Rosen on the Saudi reforms
An excellent piece, to be read through in its entirety, here is one excerpt:
MBS is gambling that the fruits of openness and modernity can be reaped on Saudi terms, and that prosperity, stability, and a recharged, secularized sense of national purpose won’t shatter existing norms or generate dangerous civic appetites. The reforms have created a rising class of ambitious executives, entrepreneurs, and artists, and for now almost everyone seems to accept the idea of a national horizon defined by the wisdom and vision of a single family, and perhaps even a single man. His program has created an atmosphere muggy with floating potential, as the palace carries out an uncertain experiment on tens of millions of people. MBS’s subjects could be the engine and the beneficiaries of the only successful 21st-century governance project in any populous Middle Eastern state—or they could mark the disastrous limits of utopia declared from on high.
Recommended.
What I’ve been reading
Bjorn Lomborg’s Best Things First delivers the expected dose of correct common sense.
Charles Horsnby, Kenya, A History since Independence is a very good long treatment of everything up to about 2010, conceptual too.
David Schleicher, In a Bad State: Responding to State and Local Budget Crises. An important, unfortunately timely, and very intelligent book on how the federal government has responded to state and local insolvency in the past. My main complaint is that at 171 pp. of text it is far too short.
Norman Lebrecht, Why Beethoven: A Phenomenon in One Hundred Pieces. A good introduction to Ludwig van, even if some parts do rush by too quickly. Also a good introduction for how to think about different recorded versions of the same piece.
There is Markus K. Brunnermeier and Ricardo Reis, A Crash Course on Crises: Macroeconomic Concepts for Run-ups, Collapses, and Recoveries.
And also Angus Deaton, Economics in America: An Immigrant Economist Explores the Land of Inequality.
Kelly Smith offers his account of Prenda micro-schools in his A Fire to Be Kindled: How a Generation of Empowered Learners Can Lead Meaningful Lives and Move Humanity Forward.
Patrick Mackie, Mozart in Motion: His Work and his World in Pieces is a good introduction to what the title promises.
*The Corporation and the Twentieth Century*
The author is Richard N. Langlois, and the subtitle is The History of American Business Enterprise. 551 pp. of text. I’ve taught Ph.D Industrial Organization for a good while now, and have always wanted a text that provides an overview and introduction to U.S. business history, with sophistication and good economics, and without being out of date. This is that book, so I am happy indeed.
Monday assorted links
1. Claims about semaglutide. Not to be taken as endorsement of the claims, one way or the other, but worth further investigation.
3. Claims that lab-grown meat are worse for the environment.
Two Podcasts
Two podcasts I have enjoyed recently, First, The Social Radars, headed by Jessica Livingston and Carolynn Levy, co-founder and managing director of Y Combinator respectively. Jessica and Carolynn bring a lot of experience and trust with them so the entrepreneurs they interview open up about the realities of startups. Here is a great interview with David Lieb, creator of Google Photos and before that the highly successful failure, Bump.
I’ve also enjoyed the physician brothers Daniel and Mitch Belkin at The External Medicine Podcast. Here’s a superb primer on drug development from the great Derek Lowe.
Pristina, Kosovo bleg
Violence permitting, I will be there soon. So what should I see and what should I do? I thank you all in advance for your wise counsel.
The strange recession that is Czechia (from my email)
From the very perceptive Kamil Kovar, these are his words I will not double indent:
“Seeing your recent brief post on recession I was wondering whether you are thinking about writing a longer post on the topic of recessions in general? I find the recent macroeconomic developments very intriguing, as they challenge my previous notions of what is a recession and what pushes us into recession, and would be very interested in hearing what you think.
To be more specific, let me use European developments, which I think are even more thought-provoking from this perspective than US developments. Take an extreme example of Czechia, which combines following facts:
- GDP has contracted for two quarters in a row, each time around 0.3% non-annualized. It is still below its pre-pandemic peak.
- Consumption has contracted for 5 quarters in a row, cumulatively 7.6%.
- Fixed investment has decreased in last quarter as well, albeit after strong recovery throughout the previous year and a half.
- The reason why GDP did not drop more is because net exports surged from their extremely low values reached during the pandemic period. In last quarter government consumption also helped a lot.
- Despite all the weakness, labor market is tight, with unemployment rate close to its pre-pandemic historical lows (in case you don’t know, it is ridiculously-sounding low at 2.1%), and employment continuing to grow.
(This as of March; more recent data continued in these trends, albeit GDP overall increased a tad bit. Also, Germany is going through something similar, albeit at much smaller scale).
It feels like this combination just does not fit in together in terms of standard macroeconomics – if you would tell me only about consumption (2) I would say the country has to be in recession, but investment (3) and labor market (5) are clearly saying no recession. If it would be just labor market, then I could accept that it is case of labor hoarding distorting the picture, but investment also remaining robust is just hard to reconcile with recession.
So I was wondering in what way, if any, did the last update your beliefs about “what is a recession and what pushes us into recession” in the light of the puzzling macroeconomic data of last year or so…
P.S.: In case you want to read more on the case of Czechia, or my take on what it all means, I had a blog post few months back:
https://kamilkovar.substack.com/p/it-or-isnt-it-recession-on-regular
My way of reconciling the data with my mental models is that got real shocks pushing us into RBC-style recession, but for whatever reason we did not get the typical demand shocks that lead to a more standard recession.”
TC again: Worth a ponder!