Canada fact of the day

by on August 23, 2017 at 2:13 pm in Education | Permalink

That means the top 10 universities in the United States – a country of over 315 million people – at any given time are educating a grand total of only 62,150 students.

By contrast, here are the rough numbers of undergraduates at the top 3 Canadian universities:

McGill: 30,000

UBC: 47,500

UofT: 67,000

That is from Joseph Heath, via Alessandro S.  Now, you might wish to argue that the United States is optimally anti-egalitarian in having relatively small classes for its best elite universities.  But then I wonder how much more widely that logic might generalize.  I, for one, still favor Harvard and other top schools trying to do 3x or 5x with respect to their admissions.

Wednesday assorted links

by on August 23, 2017 at 12:13 pm in Uncategorized | Permalink

1. NYT reports on Shenyang.

2. On political anger (pdf).  And methods to limit violence at demonstrationsAnd “Do black Americans have the courage and conviction to look the hateful monsters in the eye and offer a love so radical that it reminds them their hatred does not define them?”

3. “Users would be able to earn “Karma Coins” by meditating and teaching Buddhism. The coins could be spent within a special Buddhist community called the “Lotos Network.”” Link here.

4. Millennials don’t care about classic movies.

5. Gelato sushi > sushi gelato, or so it is claimed.  And the Neptune forecast is for diamond rain.

6. Receiving welfare does not seem to dis-incentivize future achievement.

7. Kevin Drum offers a rebuttal on market power, but he cedes the entire ground on mark-ups.  Concentration is up somewhat, but that is not the debate at hand.  Bookstores are an excellent example of where concentration has gone up, and real choice has gone up too.  Nor do I see a big problem with pricing (Amazon used anyone?), though of course the marginal cost of producing an extra book copy is pretty low and thus the measured mark-up should be high.  Pharma?  A given drug has falling mark-ups over time, for new drugs the price falls from infinity.  For phone service, these days prices are tumbling.  Airfares falling too.  Search engines?  p = 0.  An unusual “fail” from Kevin.

Gab is an app similar to twitter but it has a more permissive speech policy. According to company spokesman Utsav Sanduja, “Whatever is permissible under the First Amendment is what Gab allows onto its site.” Gab has attracted some users from the alt-right and seemingly for this reason Gab has been banned by both Google and Apple. I wouldn’t go so far as Aaron Renn who argues that “Google and Apple have used their duopoly status to revoke the First Amendment on mobile phones” but I do find these actions troubling.

I have no problem with Twitter or Facebook policing their sites for content they find objectionable, such as pornography or hate speech, even though these are permitted under the First Amendment. A free market in news doesn’t mean that every newspaper must cover every story. A free market in news means free entry. But free entry is exactly what is now at stake. Gab was created, in part, to combat what was seen as Facebook’s bias against conservative news and views. If Gab or services like cannot be accessed via the big platforms that is a significant barrier to entry.

When Facebook and Twitter regulate what can be said on their platforms and Google and Apple regulate who can provide a platform, we have a big problem. It’s as if the NYTimes and the Washington Post were the only major newspapers and the government regulated who could own a printing press.

In a pure libertarian world, I’d be inclined to say that Google and Apple can also police whom they allow on their platforms. But we live in a world in which Google and Apple are bound up with and in some ways beholden to the government. I worry when a lot of news travels through a handful of choke points.

I also fear that Google and Apple haven’t thought very far down the game tree. One of the arguments for leaving the meta-platforms alone is that they are facially neutral with respect to content. But if Google and Apple are explicitly exercising their power over speech on moral and political grounds then they open themselves up to regulation. If code is law then don’t be surprised when the legislators demand to write the code.

These problems are arising in many fields not just news. As Politico noted, OKCupid has banned users accused of being white supremacists and asked members to report “people involved in hate groups.” AirBnb took it even one step further and “jettisoned the accounts of users it suspected of renting rooms to attendees of the “Unite the Right” event.” So it wasn’t even white supremacists who were banned but people who rented to them. What is next? Will white supremacists be banned from lunch counters? Sure, that prospect might generate a frisson of excitement but is that the kind of society we want to live in? And are we so sure that the tables will never turn again?

Addendum: By the way, LBRY, the censorship-free “blockchain meets youtube” startup (I am an adviser), is up and running in beta. Check it out!

Tim reaffirms his status as one of the great (greatest?) contemporary popular writers on economics, this time turning his attention to technology.  From a Smithsonian interview:

So what made you decide to write a book looking at the modern economy through specific inventions? 

I think it was a slight sense of frustration. I’m an economist, and economics often feels abstract and very impersonal, even though I don’t think it’s abstract or impersonal. As an economics writer, I’m also looking for a way to tell a good story and get some ideas across. I realized if I produced a kind of technological history with lots of ideas and examples I could teach some economics lessons through these very specific stories.

What’s your favorite invention in the book?

It varies, but right now it’s paper. I just loved the realization that there was an alternative to talking about the Gutenberg press. Obviously I have nothing but admiration for the Gutenberg press – it’s a tremendously important innovation. But everybody told me, ‘oh, you’ve doing fifty inventions that shaped the world, you must do the Gutenberg press.’ And I thought, ‘yeah, but it’s so obvious.’ Then I was looking at the Gutenberg Bible in the New York Public Library, and thinking, ‘this bible is printed on something. It’s not printed on nothing. It’s printed on a surface.’ It turns out that the Gutenberg press works perfectly well with parchment, technologically speaking, but economically speaking it doesn’t make any sense without paper. Parchment is just too expensive to produce a long print run. So as long as all you’re doing is handwriting bibles and making them look beautiful, there’s no need to use paper at all. But with paper you’ve got a mass-produced writing surface. It’s often the very cheap inventions that get overlooked, but nevertheless change the world.

Here is an adaptation from the book on the history of barbed wire.  Here is another BBC adaptation on why electricity did not change manufacturing more quickly.  You can pre-order the book here.

The Rise of Market Power?

by on August 23, 2017 at 12:17 am in Economics, Uncategorized | Permalink

I am referring to the new Jan De Loecker and Eeckhout paper that is starting to get some buzz (ungated versions here).  Their major result, quite simply, is:

In 1980, average markups start to rise from 18% above marginal cost to 67% now.

That sounds like big news, and probably it is.  But I don’t think the authors are doing enough to interpret their results.  There are two ways these mark-ups go could up: first there may be more outright monopoly, second there may be more monopolistic competition, with high mark-ups but also high fixed costs, and firms earning close to zero profits.  The two scenarios have very different distributional implications, and different policy implications as well.

Consider my local Chinese restaurant.  Maybe the fixed cost of a restaurant has gone up, due to rising rents and the need to invest in information technology.  That can mean higher fixed costs, but still a positive mark-up at the margin.  The marginal meal ordered there probably is taken from food inventory, representing almost pure profit.  They are happy when I walk in the door!  Yet they are not getting super-rich, rather they are earning the going risk-adjusted rate of return.

Now, if the economy is moving more toward monopolistic competition, higher mark-ups don’t explain other distributional changes in the macro data, such as the decline of labor’s share, as cited by the authors.

The authors consider whether fixed costs have risen in section 3.5.  They note that measured corporate profits have increased significantly, but do not consider these revisions to the data.  Profits haven’t risen by nearly as much as the unmodified TED series might suggest.  I do see super-high profits in firms such as Google and Facebook, however.  Those companies for the most part have lowered margins compared to the status quo ex ante when the relevant service cost infinity.  “Mark-ups over time” measurements become very tricky when new products are being introduced.

The authors argue that the rising value of the stock market (plus dividends) is further evidence for rising profits.  Maybe, but keep in mind that the public market is less and less representative of corporate America.  It also has significant survivorship bias, based on size, as superfirms are rising and the number of small and mid-sized companies listing has plummeted since the 1980s.  I suspect what has really happened is that large firms are way more profitable, partly because of globalization, not because they are doing such a major rip-off of American consumers.  In most areas we have more choice, maybe much more choice, than before.  I would be very surprised if it turned out that most good ol’ normal mid-sized service sectors firms saw a nearly fourfold increase of the profit rate relative to gdp since 1980, as the authors are suggesting might be true for the American economy as a whole.  Health care, maybe, I grant that.

Or consider old-style manufacturing.  The authors report that “Markups have gone up in all industries…”  This is in an environment where numerous other highly credible empirical pieces, backed also by good anecdotal observation, cite rising competition from Chinese and other global suppliers.  How does that all square?  I side with David Autor on that one, yet it is reported that those mark-ups, in the sectors where American business now competes with the Chinese, are rising as measured.  I am worried the paper does not at all try to square this tension.  Surely it means the measures are significantly wrong in some way.

Similarly, the time series for manufacturing output is a pretty straight upward series, especially once you take out the cyclical component.  If there is some massive increase in monopoly power, where does the resulting output restriction show up in that data?  Once you ask that simple question, the whole story just doesn’t add up.

Or ask yourself a simple question — in how many sectors of the American economy do I, as a consumer, feel that concentration has gone up and real choice has gone down?  Hospitals, yes.  Cable TV?  Sort of, but keep in mind that program quality and choice wasn’t available at all not too long ago.  What else?  There are Dollar Stores, Wal-Mart, Amazon, eBay, and used goods on the internet.  Government schools.  Hospitals.  Government.  Did I mention government?

I do think concentration in the American economy is up modestly, as I argue in The Complacent Class, and probably profits are up too, including relative to gdp.  Hospitals are the most significant practical problem in this regard, and again that squares with the anecdotal evidence.  As it stands, I don’t yet see that this paper has established its central claim that measured rising mark-ups indicate truly higher profits in a significant way.

Addendum: The section on macroeconomic implications I think is premature (they cite the declining labor share, declining capital share, decline of low skill wages, declining LFP, declining labor market flows, declining migration rates, and slower productivity growth).  They should try to calibrate this, to see if the postulated effects possibly might work out as suggested, and by the way RBC research really is useful.  And timing matters too!  Given the mechanisms the authors cite, what kind of timing lags are possible?  It would seem for instance that when mark-ups rise, real wages fall right then and there, due to the higher prices.  Is that what the data show?  Do the productivity growth effects, and their weird timing with 1973 and 1995-2004 breaks, fit into the same framework?  And so on.  I would be very surprised if the pieces fit together in even a crude sense.

And here are remarks by Rohan Shah.  I thank Alex and Robin for useful comments and discussion, of course without implicating them.

I have a odd idea to improve diversity in the short run within the current system. Economists should create a convention (not rule) by setting the example that at least one of the reference letter writers should be female. I think this one small move could nudge people towards a big change. Young grad students will be more likely to work with women in a position of authority. Schools will try to find more senior level female economists for the department. And the young male colleagues might just behave a little better, if only to get a better working relationship and a reference from the female economist.

Tuesday assorted links

by on August 22, 2017 at 12:46 pm in Uncategorized | Permalink

Certificate of purchase and receipt for grave space to be sold with miniature bible belonging to woman whose name was immortalised by McCartney

They are expected to sell for between £2,000 and £4,000.

They will go under the hammer alongside the original handwritten score for the song, which is expected to fetch £20,000.

The jar by the door, however, is not up for sale.  Via Ted Gioia.

Yes the Chinese are ahead of us in many ways, here is one bit from an excellent article by Connie Chan:

#11 QR code as call box and information kiosk

Remember those emergency call boxes on the side of freeways? In Nanjing, China, smart street signs with QR codes provide the names and contact info for the local police. They also provide sightseeing guidance with directions, and information on how to handle a residence permit.

And:

Since people in China believe that QR codes are here to stay, even tombstones are engraved with QR codes that memorialize the life-story — through biographies, photographs, and videos — of the deceased. From the leadership of the China Funeral Association: “In modern times, people should commemorate their deceased loved ones in modern ways”.

There is much more at the link.

That is the topic of my latest Bloomberg column, the set-up is that the tenure clock and child-bearing plans do not exactly mesh well.  Here is my primary recommendation:

Imagine a greater variety of academic jobs, in areas that are not always valued highly by peer review. They might include jobs devoted to producing policy work, to teaching, to producing materials for online education, and to bringing the lessons of academia to broader audiences, such as through blogs and opinion columns. Furthermore, “up or out” provisions could be weakened, so if an individual didn’t succeed on a research track, but excelled in other areas, employment could be continued with different achievement criteria…Schools could keep some tenured jobs while elevating the quality of these other options.

Here is an interlude:

For all the jawboning about limiting discrimination, without adding good jobs on a significant scale, academia won’t get very far in addressing its imbalances.

Here is the clincher:

I have been struck by the course of debate in the economics profession over the last week, as much (deserved) Twitter ire has been directed at one particular online economics forum with anonymous and frequently misogynistic postings. Such forums probably discourage and demoralize women in the economics profession. But the general consensus among the forum’s critics is that those anonymous posters are the “losers” of the profession, not the deans, departmental chairs and Nobel laureates.

In other words, leading economists have spent a whole week “punching down” at those who are not in charge. I’ve hardly seen any critical self-examination about how the leaders, and the incentives they have created and supported, might also be at fault.

Recommended.

*The Dawn of Eurasia*

by on August 21, 2017 at 5:34 pm in Books, History, Political Science | Permalink

By Bruno Maçães, due out in January.  I was asked to blurb it, I’m going to go “off the reservation” and call it so far the best and most important book I’ve read so far this year.  From Amazon:

In this original and timely book, Bruno Maçães argues that the best word for the emerging global order is ‘Eurasian’, and shows why we need to begin thinking on a super-continental scale. While China and Russia have been quicker to recognise the increasing strategic significance of Eurasia, even Europeans are realizing that their political project is intimately linked to the rest of the supercontinent – and as Maçães shows, they will be stronger for it.

The Kindle edition at least you can pre-order.

Russia fact of the day

by on August 21, 2017 at 3:13 pm in Data Source, Economics, History, Law | Permalink

…the wealth held offshore by rich Russians is about three times larger than official net foreign reserves, and is comparable in magnitude to total household financial assets held in Russia.

That is from Novokmet, Piketty, and Zucman.

Monday assorted links

by on August 21, 2017 at 12:42 pm in Uncategorized | Permalink

In a recent study by researchers at Stanford University, Indonesia, the world’s fourth-most-populous nation, came in last among 46 countries and territories for the number of walking steps its citizens take, averaging only 3,513 a day.

By comparison, Hong Kong was first with 6,880, and China second with 6,189. Ukraine, Japan and Russia rounded out the top five. The study tracked 717,000 people in 111 countries, who voluntarily monitored 68 million days of activity using an app on their smartphones and watch devices that was designed by Stanford researchers — the largest such tracking study ever, the researchers said. Each place needed to have at least 1,000 participants to be ranked in the report.

Jakarta, an urban sprawl of approximately 10 million people, with a metropolitan region of about 30 million, is the poster child of the nation’s walking woes.

Only 7 percent of the capital’s 4,500 miles of road have sidewalks, according to local government data.

That is from Joe Cochrane at the NYT.  Those results are consistent with my intuitions, noting that I sometimes find India difficult to walk in. By the way, the two countries with the highest “Activity Inequality” are the United States and Saudi Arabia.

Here are data on the walkability of various American cities.  The estimable Chug refers me to this short piece on the walkability of the Jersey shore.

Those new service sector jobs

by on August 21, 2017 at 12:50 am in Film, Television | Permalink

Plastic surgeons who give you Vulcan and elfin-like ears:

Of course, looking naturally elflike is not everyone’s goal. Luis Padron, 25, who owns a cosplay business in Argentina, said he has spent over $35,000 in surgeries and procedures including skin lightening, nose surgery and hair removal for his sylvan shape-shifting. His look has been influenced by Katherine Cardona, a contemporary illustrator specializing in fairies, and Sakimichan, a gender-bending fantasy digital artist.

Padron plans to change his eye color to violet using an intraocular implant procedure in New Delhi (not approved by the Food and Drug Administration) because “it is the color of magic, fantasy, dreams and imagination,” he said. The idea is on point, elfishly speaking, when you consider that Bloom, who wore blue contact lenses in the Tolkien film, once described elves as “incredible angelic spirits who create and appreciate great beauty.”

To complete his elflike transformation, Padron is planning a heart-shaped hairline implant and PRP scalp injections in Beverly Hills, California, because “elves have long hair,” he said. He is also planning more plastic surgery in South Korea, including Adam’s apple reduction, jaw reshaping and limb lengthening, and plans to finish his look with ear pointing surgery, which he calls “the cherry on top.”

Waiting time for ear pointing, however, is over a year, and over 40 percent of elf-ear wishers don’t have the right cartilage to perform the modification, Von Cyborg said. Black was one of the lucky ones.

Here is the full story.  Should this be subsidized or taxed?