Tyler Cowen
Coase and Wang on capitalism in China
by Tyler Cowen on November 14, 2012 at 2:54 pm in Books, Current Affairs, Economics, Uncategorized | Permalink
Nick Schulz does the interview. After they discuss the topic, here is one bit toward the end:
We are now working with the University of Chicago Press to launch a new journal, Man and the Economy. We chose our title carefully to signal the mission of the new journal, which is to restore economics to a study of man as he is and of the economy as it actually exists. We hope this new journal will provide a platform to encourage scholars all over the world to study how the economy works in their countries. We believe this is the only way to make progress in economics.
For the pointer I thank David Levey.
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Assorted links
by Tyler Cowen on November 14, 2012 at 1:52 pm in Uncategorized | Permalink
1. The gorilla is not the only thing you miss.
2. Small steps toward a much better world.
3. The new Cass Sunstein book on the way: “Simpler: The Future of Government.”
4. There is no great stagnation (photo only), this one is worth more.
5. Thomas Schelling and the computer.
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What does equilibrium look like for the book business?
by Tyler Cowen on November 14, 2012 at 10:22 am in Books, Economics, Uncategorized | Permalink
Adam Davidson offers some interesting remarks. My take is a little more radical. I expect two or three major publishers, with stacked names (“Penguin Random House”), and they will be owned by Google, Apple, Amazon, and possibly Facebook, or their successors, which perhaps would make it “Apple Penguin Random House.” Those companies have lots of cash, amazing marketing penetration, potential synergies with marketing content they own, and very strong desires to remain focal in the eyes of their customer base. They could buy up a major publisher without running solvency risk. For instance Amazon revenues are about twelve times those of a merged Penguin Random House and arguably that gap will grow.
There is no hurry, as the tech companies are waiting to buy the content companies, including the booksellers, on the cheap. Furthermore, the acquirers don’t see it as their mission to make the previous business models of those content companies work. They will wait.
Did I mention that the tech companies will own some on-line education too? EduTexts embedded in iPads will be a bigger deal than it is today, and other forms of on-line or App-based content will be given away for free, or cheaply, to sell texts and learning materials through electronic delivery.
Much of the book market will be a loss leader to support the focality of massively profitable web portals and EduTexts and related offerings.
There is this funny thing called antitrust law, but I think these companies are popular enough, and associated closely enough with cool products — and sometimes cheap products — to get away with this.
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The wisdom of Alex Tabarrok
by Tyler Cowen on November 14, 2012 at 7:25 am in Economics, Education | Permalink
Alex did not reproduce this passage from his essay on on-line education, so I will did (and Reihan Salaam did):
Productivity in education has lagged productivity in other sectors of the economy because teaching is so labor intensive. Where exactly in the typical classroom is there room for investment, let alone productivity improvement? More chalk? Prior to online education, the bottleneck though which productivity improvements had to pass was the teacher, and we know that improving teacher productivity is very difficult, which is why teaching methods haven’t changed in millennia. Online education vastly increases the potential for productivity increases because it greatly increases the size of the potential market. Bigger markets increase the incentive to research and develop new products (coincidentally the very topic of my TED talk.) A tool used to improve online education–an interface, an algorithm, a new teaching method–can be applied very widely, potentially world-wide, thus greatly increasing the incentive to invest in the education sector, perhaps the most important sector of the 21st century economy.
Here are some budges forward on the accreditation of MOOCs.
Addendum: Here are interesting comments from Joshua Gans.
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Undercounting very discouraged workers
by Tyler Cowen on November 14, 2012 at 7:19 am in Economics | Permalink
Here is a guest post from Stephen Bronars. Excerpt:
I estimate that there are over four million fewer labor force participants than what would have occurred if age-adjusted participation rates maintained their pre-recession trend. In this recovery, the official BLS count of “marginally attached” workers underestimates, by 40%, the number of people who left the labor force because they stopped looking for work. Although BLS figures suggest that marginally attached workers are a minority of the 5.6 million adults who left the labor force, a more plausible estimate is that 72% of these non-participants stopped searching for work in the past few years.
If official underutilization measures included jobless workers who gave up searching for work within the past 36 months the labor force underutilization rates reported by the BLS would be higher by about 0.9%. For example, the underutilization measure that includes unemployed and marginally attached workers would have been 10.2% (rather than 9.3%) last month.
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What are the best new products that people don’t know about?
by Tyler Cowen on November 13, 2012 at 9:55 pm in Uncategorized | Permalink
Here is a Quora discussion of that question. I like “Traffic Signal with Hour Glass Timer” and “Cooking Solved.” “No more blind spots” is the one I would pay for.
For the pointer I thank Rob.
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Assorted links
by Tyler Cowen on November 13, 2012 at 1:21 pm in Uncategorized | Permalink
1. “Andrew Solomon is a lumper.”
2. Just apply the usual stacked blog post title to this one, and more here.
3. Interview with Malcolm Gladwell.
4. Horse nationalism is defeated — for now.
5. Some of the academics behind the Obama campaign.
6. You would think the anti-virus software was enough for one lifetime.
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On the “fiscal cliff”
by Tyler Cowen on November 13, 2012 at 7:28 am in Economics, Political Science, Uncategorized | Permalink
First, I don’t like calling it the fiscal cliff; it is not a cliff and in any case, as with “austerity,” why not disaggregate the issues? James Hamilton provides some useful numbers on the components.
Today I wish to raise two questions:
1. If we don’t take “tough fiscal action” this time around, how much more will those special fiscal privileges (I’m not sure there is a single appropriate neutral term for the whole of them) become entrenched and difficult to dislodge, even when later macroeconomic conditions call for such?
2. What is the underlying rate of growth in the U.S. economy today, and how much higher (lower?) is that rate likely to rise (fall) over the next ten or so years? In other words, how much better (worse) an environment will we have for fiscal consolidation in the medium-term future? And at higher rates of growth, if we get them, how much harder is it to dislodge special fiscal privileges?
I submit that no one has very good or very certain answers to these questions, given the current states of public choice theory and the macroeconomics of growth. And if analysts do not have very good answers to these questions, dogmatic positions about the “fiscal cliff” are to be avoided.
If you read analyses which do not raise and consider these questions, fear that snake oil is being served up.
I don’t expect I’ll be doing any day-by-day tracking of this new Washington drama, but it would not hurt to remind yourself of this post every few days or so.
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Paul Krugman does believe that an attack of the bond vigilantes would be expansionary
by Tyler Cowen on November 13, 2012 at 7:23 am in Uncategorized | Permalink
You can read him here. Keep in mind we are talking about a sudden leap upward in interest rates, a sharp rise in the risk premium, and a sudden fall in bond prices. In response, I suggest a multi-step program:
1. Read Gary Gorton on how much the decline in the value of mortgage securities — if only as collateral — damaged the global economy during 2008 by causing a credit collapse, including in but not limited to the shadow banking system.
2. Estimate size of said effect for a serious price decline for U.S. Treasury securities, a much larger and more central and otherwise more secure market. Do not leave out margin call effects or negative effects on the eurozone.
3. Compare said effect to short-run benefits from exchange rate depreciation, taking into account lags and J-curve effects and the relatively closed nature of the American economy and the slowdowns in other countries around the globe.
4. Run a Chicago Booth questionnaire study to see how much of the profession will agree with you.
5. Flee in panic.
6. Start praising the Republican Party for their macroeconomic acumen in damaging the credit reputation of the U.S. government.
7. Declare yourself an “elasticity optimist” when it comes to relative price shifts and lower tax rates. Team up with the U.S. Chamber of Commerce to write a study calling for the immediate slashing of corporate tax rates, or at least corporate tax rates as applied to exports. The theory of exchange rate incidence is the theory of tax rate incidence, and furthermore, by happy coincidence, lower tax rates do not involve all of the costs of a financial crisis.
8. Ponder technical questions such as “if I think bad news is more than offset by gains from exchange rate depreciation, do I also think that good news is more than offset by losses from exchange rate appreciation?”
9. Read Thucydides, or perhaps Broadwell, about how a crisis is not always manageable once underway.
Krugman’s is a reckless position, and simply noting that America borrows in its own currency doesn’t come close to defending it.
Addendum: Here are comments from Nick Rowe. And from Scott Sumner. And David Beckworth. And Evan Soltas. And here is my earlier post on exchange rates and the like.
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The world we live in
by Tyler Cowen on November 12, 2012 at 7:16 pm in Current Affairs | Permalink
Both of these articles are from this evening’s New York Times:
U.S. to Be World’s Top Oil Producer in 5 Years, Report Says
and:
Text Messaging Declines in U.S. for First Time, Report Says
Furthermore the reports seem pretty plausible. If you foresaw both of these trends five years ago, bravo to you. If you didn’t (or even if you did), the case for epistemic humility remains worthy of your attention.
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Assorted links
by Tyler Cowen on November 12, 2012 at 12:30 pm in Uncategorized | Permalink
1. Interview with Daniel Tammet.
2. Blueberry Cheesecake Kit Kat Oyatsu Break! The full blog, one Canadian man studying Japanese snack food, is here.
3. How not to give a gift to the President of the United States, Homeland edition.
4. Danish molecular gastronomy set to revolutionize Bolivia? And The Day of the Skulls in Bolivia (good photos).
5. The anatomy of the fiscal cliff.
6. Brazilian dog markets in everything.
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A simple model of lifetime happiness
by Tyler Cowen on November 12, 2012 at 7:17 am in Education, Games | Permalink
From Jeff:
Suppose that what makes a person happy is when their fortunes exceed expectations by a discrete amount (and that falling short of expectations is what makes you unhappy.) Then simply because of convergence of expectations:
- People will have few really happy phases in their lives.
- Indeed even if you lived forever you would have only finitely many spells of happiness.
- Most of the happy moments will come when you are young.
- Happiness will be short-lived.
- The biggest cross-sectional variance in happiness will be among the young.
- When expectations adjust to the rate at which your fortunes improve, chasing further happiness requires improving your fortunes at an accelerating rate.
- If life expectancy is increasing and we simply extrapolate expectations into later stages of life we are likely to be increasingly depressed when we are old.
- There could easily be an inverse relationship between intelligence and happiness.