When I first joined Twitter I was taken aback by how easy it was to get swept up by the frenzied conversations that everyone else was having. After it happened once or twice I realised that I wasn't forming my own judgements & was just parroting the available consensus.
— Claire Lehmann (@clairlemon) March 24, 2019
What’s going to be very important in 5 years’ time that we’re not thinking enough about now?
— Tommy Collison (@tommycollison) March 26, 2019
Back in 1896 men didn’t call women sluts.
They called them “bicycle face”.
Why? Because bicycles <gasp!> helped women 💪 make their own dating choices.
IOW bikes were the first dating app. That scared men.
Let’s talk about it.
Hold on to your bodices people, THIS IS A THREAD
— Article Group (@ArticleGroup) March 24, 2019
— Pranay Kotasthane 康平 (@pranaykotas) March 26, 2019
- “”Because it’s so difficult for people with edge-to-edge bites to produce sounds like f and v, the study’s authors figured they would be unlikely to say them by accident, or to incorporate them into their languages. They checked to see whether they could find this pattern playing out in the real world by comparing the sound systems of languages across the world with the subsistence style of the people who speak those languages. About half of the world’s languages use labiodental sounds, but on average, languages spoken by hunter-gatherer societies turned out to use fewer than one-third the number of labiodental sounds as their agricultural counterparts.”
An area I know nothing about, but I found this fascinating. How agriculture might have influenced speech, and how therefore we got around to using “F” and “V” sounds in language. It begs the question: how might current society be impacting the evolution of language?
- “Something interesting emerges from those figures. As the atmosphere is full of small eddies, so humanity experiences many small deadly quarrels, which result in a few fatalities. But now and again come huge storms, which kill millions. These are just the sort of outbreaks, like the world war Richardson had seen for himself, that people think of as surprising. Yet when Richardson plotted the frequency of wars against the number of deaths caused by each one, he found a constant and predictable relationship. On his graphs, the violence obeyed a “power law”—a constant relationship between the size and frequency of measurements. In his turbulence work, Richardson had found that such a power law governed the relationship between the rate of diffusion of objects in a turbulent stream and their distance from one another. Now he had found evidence of an underlying law in the supposedly unpredictable realm of politics.”
Well worth the price of admission – the article begins somewhat slowly, but picks up pace and complexity, taking us on a journey through war, weather forecasting, religious background, and much else besides. People who don’t like math, especially, should really read this post.
- “Foreign investors believe they can navigate around India’s governance fault lines. Still, South Korea’s chaebol discount could also become a millstone for India if the grip of a handful of private interests on state institutions and economic opportunities tightens. The new boxwallahs will be much harder to shake off than the old cronies.”
The always excellent Andy Mukherjee on the urgently needed corporate reforms in India. Well worth a read for its own sake, of course, but more importantly, a great read to help you understand what you should read more of when it comes to India’s business history.
- “There are undergraduate courses, and then there are great undergraduate courses. Today we have the 49 item course bibliography for Thomas C. Schelling’s “Conflict, Coalition and Strategy” along with its ten-page final examination”
This is, I’m still gobsmacked to think about it, an undergraduate course. We at the Gokhale Institute are starting an undergraduate course this year – it’ll be interesting to see if any of these references could be included in that course. I found this fascinating, especially because of the wide variety of subjects from which the list has been drawn up. A lot of bookmarks to be added via this link!
- “For, in both Ricardo and Marx, a conflict of interest is visible between social classes. In order to promote the ‘idea’ of a just and harmonius system, the theories (especially the labour theory of value) of Ricardo and Marx were criticised as being limited, and an alternative was proposed. This new theory completely did away with social classes. Individuals were chosen as the primary unit of analysis. Social classes, actually was modified into ‘factors of production’. A very interesting and important methodological shift, with powerful political implications! All the factors of production were assigned equal importance, and it was also shown how both labour and capital recieved incomes according to their contribution to the production process. That is, a capitalist system, with free mobility of labour and capital and with clear property rights (contracts), is essentially a just and stable system.”
Why should one study economics? Most, if not all, colleges today leave students with the answer to this question being completely backward. We learn, and teach, theories of economics and then ask students to apply them to the world outside. Arguably, even the latter doesn’t happen nearly often enough. But this post helps you understand where theories come from in the first place! They came up in response to the world that was around those theorists – at that time, and at that place. This time, and this place is different – and we, as students of economics, would do well to remember that. Excellent article, and about an economist who isn’t studied enough.
- “While nightlife and entertainment are certainly drivers of the night-time economy, they need not be the only ones. According to a report released by the London mayor’s office, 1.6 million people in London—constituting more than a third of the workforce—worked at night in 2017. Of these, 191,000 worked in health and 178,000 in professional services, with nightlife coming in third at 168,000. These were closely followed by transport, automotive, IT and education.In other words, the city’s nighttime economy is not merely bars and restaurants, but an extension of its day-time economic activities as well. It is estimated that the night component comprises 6-8% of the city’s economy and contributes £18-23 billion in gross value added to the British economy. The figures are approximations but significant enough for Mayor Sadiq Khan to champion the night-time economy and appoint a “Night Czar” to manage it.”
In which Nitin Pai makes the argument for having more shops, establishments and services operate at night as well, in India. A useful read for students of urbanization, microeconomics and life in India.
- “I think that our economic system reflects our understanding of humankind, and that understanding has been developing, with especial rapidity lately. You have to understand people first before you can understand how to devise an economic system for them. And I think our understanding of people has been accelerating over the last century, or even half-century.”
Robert Shiller chooses five books to help us understand capitalism better. I haven’t read all of them, and read one a very long time ago (Theory of Moral Sentiments) – but this has tempted me to go and read at least A.O. Hirschman’s book, if not all of them!
- “The problem with cricket in most cricket-playing countries, certainly in India, is that the cricket market is what economists call a monopsony. A monopsony is a market in which there is only one buyer for a particular class of goods and services. Until now, a young Indian cricketer who wanted to play at the highest level could only sell his services to the BCCI. If it treated him badly and did not give him his due rewards, he had no other options open to him.”
I am happy to admit that I got the IPL gloriously wrong – I approached the IPL while wearing my cricketing purist hat, but I really should have approached it wearing my economist’s hat. Which is exactly what Amit Varma did, ten years ago. Monopsony, the power of markets, incentive mechanisms, it’s all here.
- “The 737 assembly line in Renton, Wash. is a marvel of lean manufacturing. The line inches forward little-by-little as assembly proceeds. Born from Toyota’s production methods, the process is one of continual improvement. It’s what made the 737 the lifeblood of Boeing in the first place and why this crisis, taken to its most extreme, could threaten the company’s very existence. But the assembly line also comes with a tool called an Andon cord. The cord empowers all employees to pull it and stop the line if something is amiss or requires investigation and needs fixing. The rest of the world has already pulled it.”
A mostly understandable explanation of the possible reasons behind the crash – but when I say possible reasons, I do not mean the technical ones. Why compromises had to be made, and the impact of those compromises.
- “I’m happy for the descriptive part of economics to stay as it is. The prescriptive part, when we tell people what to do – that one should be much more broad. In fact, we should stop using just economics and take all kinds of ideas from psychology, sociology, anthropology, philosophy and economics, and test which ones work, which ones don’t work and under what conditions. There is no question that behaviour is the ultimate goal – to try to understand behaviour, and how to change or modify it. I hope we can create a discipline that is much more empirically based and data driven. Maybe we can call it “applied social sciences”. It will draw from all the social sciences equivalently as we approach problems in the real world, and try to find solutions for them.”
Dan Ariely on five books that he’d recommend when it comes to understanding behavioral economics better. If you are interested in this topic, as I am, the interview is great reading – and the books too! I have not read Mindless Eating, and will begin it soon.
- “As a program adapts and serves more people and more functions, it naturally requires tighter regulation. Software systems govern how we interact as groups, and that makes them unavoidably bureaucratic in nature. There will always be those who want to maintain the system and those who want to push the system’s boundaries. Conservatives and liberals emerge.”
Here’s a useful thumb-rule. Read anything written by Atul Gawande. In this article, he speaks, nominally, about the difficulty of adapting to a new computer system that is being foisted upon the medical community. But there’s much more to unpack here! Adapting to systems, mutations within systems, the difficulty of scaling, substitutes and complements, opportunity costs – and much, much more.
- “Pig facial recognition works the same way as human facial recognition, the companies say. Scanners and software take in the bristles, the snout, the eyes and ears. The features are mapped. Pigs don’t all look alike when you know what to look for, they said.”
The intersection of technology, pork and the culture that is China today. Some might call this dystopian, others might fret at how slow progress is – but the article is fascinating.
- “The level of u* is not fixed. It changes over time, driven by changes in labor laws, the minimum wage, government benefit programs, demographics and technology. For instance, u* might decline if workers, on average, are older; older workers are less likely to be unemployed. The level of u* might rise if unemployment benefits become more generous and this leads unemployed workers to be more picky about taking jobs.”
NAIRU – or the Non-Accelerating Inflation Rate of Unemployment, was one of the more nerdy acronyms I learnt when I was a student. This article does a good job of explaining exactly what this is, and why it matters. And most importantly, it does so in a way that isn’t confusing for the layperson.
- “These calculations make clear why economists so often argue against light rail and subway construction projects. They are so expensive that ridership can only begin to cover construction and maintenance costs if the systems operate at close to their physical capacity most of the time; that is, if there are enough riders to fill up the cars when they run on two- to three-minute headways for many hours per day. Since most proposed projects do not meet this standard, economists generally argue against them. Buses can usually move the projected numbers of riders at a fraction of the cost.”
I am, and probably always will be, a huge fan of buses over other forms of public transport. And I will always be a big fan of public transport over private transport. This article explains why not just I, but other economists will also tend to favor buses over other forms of public transport.
- “The principle that you are presumed to be innocent unless and until you are convicted, after a fair trial, turns out, in practice, to be a different principle altogether: for the purposes of compensation, once you are convicted your conviction is deemed to be correct. You are presumed guilty for the rest of your life, irrespective of whether your trial was fair or unfair. It makes no difference that your conviction has been quashed. It makes no difference that new evidence – which ought to have been obtained by the police before your trial – shows that you are probably innocent. Those acting on behalf of the state may have bungled the investigation, and possibly even bent the rules to get you convicted. None of that is of any consequence. All that matters is whether you can prove that you suffered a “miscarriage of justice:” ”
I teach statistics, and would happily spend an entire semester explaining how to frame the null, and more importantly, hot to not frame the null. This article does an excellent job of providing an all too important example of the latter.
- “The rising cost of textbooks, then, is a sign of one of the greatest paradoxes of higher education: As everything from tuition to housing to books gets more expensive, the people who are tasked with making sure students receive a good education are being forced to do more work for less money. The result is a world where students and professors alike struggle to get by.”
Full of interesting snippets, this article helps you understand how expensive education can be abroad. Not just the cost of tuition though, which is large enough as it is – but the cost of textbooks. Just buying your textbooks for the academic year can set you back by around INR 40,000/-.
- “What is the traditional lecture? It is a model of learning in which a teacher possesses the knowledge on a given topic and disseminates it to students. This model dates to the beginning of education, when it was the only way of sharing information. In fact, you occasionally still see the person presenting the lecture called a reader, because way back before the internet and even the printing press, a teacher would literally read from a book so students could copy it all down.”
Classroom lectures are unbelievably boring. There exist a million alternatives that can do a better job, and this article lays out some of them. But at the end of the second decade of the twenty-first century, the idea that we can teach the same way we did throughout the twentieth is just wrong.
- “Whichever way one looks at it, the very public unravelling of the enterprise is reminiscent of the past, the saga of Air India and Kingfisher Airlines. There is no denying poor governance –particularly in a business with high cash flows. Equally, the sequels illustrate how vegetating policy and misplaced notions of what constitutes strategic interest left the sector episodically chasing its tail. Consider this: Passenger traffic rose from 68.4 million in 2009-09 to 103.7 million in 2013-14, and to 183.9 million in 2017-18. Clearly there is no dearth of demand and of growth in traffic. Yet three airlines have crashed into the red in the period.Can India afford three Mayday calls in less than a decade in a critical sector?”
A breezy read about an extremely serious topic. The excerpt above is a sobering read: passenger traffic in India has about tripled over the last ten years. The last ten years have also seen three airlines go under. Something, somewhere, is really and truly wrong.
- “Incuriosity is not merely ignorance. Ignorance is a universal trait, people just differ in what they are ignorant about. But Americans are unique in not caring to learn from other countries even when those countries do things better. American liberals spent the second Bush administration talking about how health care worked better in most other developed countries, but displayed no interest in how they could implement universal health care so that the US could have what everyone else had, even when some of these countries, namely France and Israel, had only enacted reforms recently and had a population of mostly privately-insured workers. In contrast, they reinvented the wheel domestically, coming up with the basic details of Obamacare relying on the work on domestic thinktanks alone. The same indifference to global best practices occurs in education, housing policy, and other matters even among wonks who believe the US to be behind.”
Word for the day: incuriosity. A state of the world in not only do you not know, but do not wish to know. But that apart, the entire post – although a little long – is worth reading to learn more about the specifics of what ails subway construction in the USA.
- “Structurally, it is impossible because Kim Jong-un has a very detailed network of surveilling the leaders around him. If you are of high rank, then all the high-ranking officials have to live in the same apartment. They can’t choose where to live. They have to live collectively. You are not allowed to have private time with your friends around you, so the control system of North Korean society is really unimaginable.”
An interview with a North Korean defector who now lives in South Korea about Kim Jong Un. It is difficult for any of us to understand the extraordinary life of ordinary South Koreans
- “The researchers discovered that commonly visited places, like coffee shops, can be within a few feet of each other but they can each primarily have visitors from completely different income brackets. This indicates that economic inequality isn’t just present at the neighborhood level, but it can also show up among the places people visit as part of their daily routines. It suggests that income inequality might impact not just where people live, but also where they go. ”
A great article to help you think through the following: inequality, how to measure it, how to measure it using modern methods, what is the difference between class inequality and income inequality, sampling, the limitations of sampling, the Data For Good initiative, 100 Resilient Cities and the SmartCitiesDive program.
- “An experiment that the researchers arranged hinted at a possible explanation of the correlation they found. They asked participants to picture and describe what it would be like to have a certain amount of daily free time, and then report how they’d feel about that allotment. “What we find is that having too little time makes people feel stressed, and maybe that’s obvious,” says Holmes. “But interestingly, that effect goes away—the role of stress goes away—once you approach the optimal point.” After that point, Holmes says, the subjects started to say they felt less productive overall, which could explain why having a lot of free time can feel like having too much free time.”
One of my favorite Calvin and Hobbes strips has the quote “there never is enough time to do all the nothing you want to”, or words to that effect. This article tells you that having more than 2.5 hours of “nothing” time may well be too much.
- “While India has 70-odd companies that are rated highest quality, only two companies in the US enjoy this distinction. No company in Germany and UK enjoys AAA rating. Among emerging countries, China has only 14 AAA-rated entities. This implies a gulf between credit standards in India and elsewhere. The exacting standards observed in other countries are missing among domestic agencies.”
Via Gulzar Natarajan, this article points out a disturbing statistic – Indian firms might well be given ratings that don’t really indicate their reliability. Rating agencies the world over took a hit to their reputation post the 2008 crisis, but this story seems to be unique to India. The article does have some caveats, but I’d say the news is, even so, worrying.
- “We employ Comin et al.’s (2010) data on ancient and early modern levels of technology adoption in a spatial econometric analysis. Historical levels of technology adoption in a (present-day) country are related to its lagged level as well as those of its neighbors. We allow the spatial effects to differ depending on whether they diffuse East-West or North-South. Consistent with the continental orientation hypothesis, East-West spatial effects are generally positive and stronger than those running North-South.”
Are you familiar with vertical vs horizontal business models? Apple is vertical (controls everything, end-to-end) and Netflix is horizontal (needs to be available across multiple verticals to succeed). I was strongly reminded of that when I read this.
- “He is maddening in ways they never anticipated, along vectors they’ve never seen; he is a tireless innovator in the craft of mass irritation. He can cause fans to go absolutely nuts whether he wins or loses. McEnroe himself has spent a good chunk of the past five years complaining about Kyrgios, and McEnroe is probably the greatest tennis player of all time at driving people wild. Being found intensely annoying by John McEnroe is a high honor for any exasperating person. It’s like Beethoven humming your melody.”
In which Brian Philips makes the case for the upside to Kyrgios being, well, Kyrgios. The interesting question is where else might such a contrarian philosophy work, and why?
How to Get Rich (without getting lucky):
— Naval (@naval) May 31, 2018
1/ One reason we can't have nice investment strategies–a thread.
The brightest people I have met share a superpower that would serve investors well—the ability to make inherently complex things simple and understandable. And yet, most humans naturally equate complexity
— Jim O'Shaughnessy (@jposhaughnessy) March 15, 2019
What are the big successes for the “marketplace of ideas” model?
ie, cases in which public consensus changed mainly due to *good arguments* rather than other causes (like older generations dying out, propaganda, economics)
– Gay rights
– Legal marijuana
— Julia Galef (@juliagalef) March 14, 2019
1/ Last week, I taught my undergrads about logit models.
Though logits are fundamental to many modern statistical techniques, where did it come from? We discussed that yesterday.
Turns out, like the 0.05 p-value, it's pretty arbitrary.
👇is a summary
— Paul Poast (@ProfPaulPoast) March 12, 2019
Thread: It's probably silly to do a CRAZY LONG tweet storm about being named a non-resident fellow @CGDev. But I feel really touched. CGD has been a special place for me for a good part of my professional life. 1/ https://t.co/dqwoB5lAO2
— Dan Honig (@rambletastic) March 21, 2019
You might have been hearing/reading about MMT recently. Today’s set of links is really one place to read a lot of back and forth between two economists about what MMT means in practice – plus an additional bonus link, and a Twitter thread.
You absolutely should read each of these links if you are a student of macro. You probably should read these links if you are interested in the economy – but in this case, feel free to skip some of them. I leave it to your judgment.
- “OK, Lerner: His argument was that countries that (a) rely on fiat money they control and (b) don’t borrow in someone else’s currency don’t face any debt constraints, because they can always print money to service their debt. What they face, instead, is an inflation constraint: too much fiscal stimulus will cause an overheating economy. So their budget policies should be entirely focused on getting the level of aggregate demand right: the budget deficit should be big enough to produce full employment, but no so big as to produce inflationary overheating.”
Paul Krugman gets the ball rolling by explaining what Abba Lerner’s work was all about, why it made sense then, and perhaps doesn’t now.
- “Outside of the so-called liquidity trap, Krugman adopts the standard line that budget deficits crowd out private investment because deficits compete with private borrowing for a limited supply of savings.The MMT framework rejects this, since government deficits are shown to be a source (not a use!) of private savings. Some careful studies show that crowding-out can occur, but that it tends to happen in countries where the government is not a currency issuer with its own central bank.”
Stephanie Kelton responds by pointing out what she sees as the flaws in Krugman’s argument. I have had difficulty in understanding this part myself, which is why I have highlighted it.
- “So let’s be clear here: Are MMTers claiming, as Kelton seems to, that there is only one deficit level consistent with full employment, that there is no ability to substitute monetary for fiscal policy? Are they claiming that expansionary fiscal policy actually reduces interest rates? Yes or no answers, please, with explanations of how you got these answers and why the straightforward framework I laid out above is wrong. No more Calvinball.”
Of the questions that Krugman raises by way of response, it is the second one that strikes me as being at the heart of the issue. Expansionary fiscal policy reducing interest rates boggles the mind – well, my mind, at any rate.
- “#3: Does expansionary fiscal policy reduce interest rates? Answer: Yes. Pumping money into the economy increases bank reserves and reduces banks’ bids for federal funds. Any banker will tell you this.”
I have read Stephanie Kelton’s response, and re-read it, and I find myself confused even then. Expansionary fiscal policy, she says, does reduce the federal funds rate. I found this confusing…
- Until I read this twitter thread by Paul Krugman…
So one thing I learned from the past few days of discussion is that MMTers believe that budget deficits necessarily increase the money supply. That's an interesting view, where by "interesting" I mean "completely wrong" 1/
— Paul Krugman (@paulkrugman) March 2, 2019
As it turns out, the route taken by the government to conduct expansionary fiscal policy matters. You learn a little more macro every time you read about it.