Links for 11th April, 2019

  1. “Who has the upper hand in bargaining for wages and employment benefits? Who dominates markets and who must submit to market forces? Who can move across borders and who is stuck at home? Who can evade taxation and who cannot? Who gets to set the agenda of trade negotiations and who is excluded? Who can vote and who is effectively disenfranchised? We argue that addressing such asymmetries makes sense not only from a distributional standpoint, but also for improving overall economic performance. Economists have a powerful theoretical apparatus that allows them to think about such matters.”
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    Dani Rodrik makes the case for rewriting economics, rather than tinkering with it at the margins, in order to really tackle the problems that the world faces today. An article worth reading – I’d linked to their manifesto earlier.
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  2. “In San Lucar, selfish behavior is unacceptable. But in New York, a city with 8 million people, selfish behavior is the norm. It’s a dog-eat-dog mentality. Policemen are everywhere and sirens are the sound of the city. During rush hour on 5th Avenue, pedestrians fight like soldiers on a battlefield. They step over homeless people, weave through strangers, and J-Walk through red lights.Why are people so cooperative in San Lucar, but so selfish in New York?”
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    If you are a student of game theory, you already know that the answer is game theory. But the article is worth reading because it should prompt you to wonder if there is a deeper answer than the one provided – and Adam Smith might be a good place to begin.
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  3. “First, declining growth is a key, albeit low-frequency, cause of today’s social and economic distress. Second, the unfortunate consequences of the ICT revolution are not inherent properties of technological change. Rather, as Rajan notes, they reflect a “failure of the state and markets to modulate markets.” Though Rajan does not emphasize it, this second point gives us cause for hope. It means that ICT need not doom us to a jobless future; enlightened policymaking still has a role to play.”
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    Angus Deaton reviews Raghuram Rajan’s latest book, and leaves us with a sense of appreciation for the book (and in my case, a desire to read it), but also with a deep sense of foreboding about where we may end up as a society.
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  4. “That leads to a broader point: “tech” is not simply another category, like railroads or telecom. Tech is a means, not an end, but Senator Warren’s approach presumes the latter. That is why she proposes the same set of rules for the sale of toasters and the sale of apps, and everything in between. The truth is that Amazon is a retailer; Apple a combination of hardware maker and platform makers. Google is a search and advertising company, and Facebook a publishing and advertising company. They all have different value chains and different ways of impacting competition, both fairly and unfairly, and to fail to appreciate just how different they are is a great way to make bad laws that not only fail to fix problems but also create entirely new ones.”
    Ben Thompson on how to think about tech (and in a very long article, this excerpt really matters): tech is the means to an end, and therein lies all the difference in the world.
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  5. “You may never have heard of Islamestan, in Chinese Turkestan, or its one-time “king”, Bertram Sheldrake. Islamestan is long gone, swallowed up in the historical shifts of a turbu­lent region, but for a brief and unlikely moment, an English pickle-factory heir ruled, with his wife, Sybil, over the newly independent Muslim country, to the far west of China.”
    Stories don’t get much better than this, and that’s putting it mildly.
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Links for 6th March, 2019

  1. “A new transatlantic alliance will require both a U.S. president who recognizes its value and Europeans who are able to overcome their own internal divisions and commit to an equal partnership. The next alliance cannot be only about channeling U.S. contributions to European security; it must also be a global partnership to which each side contributes in order to protect their mutual security and economic interests. That sort of alliance remains possible. It is worth fighting for.”
    Not for the optimistic note that it strikes at the end of the article, but rather for the good summary of the history of the alliance between America and Europe, and how it hasn’t always been rocky – but never before as at risk as it is today.
  2. “I long held the belief that my grandfather felt regret at Pakistan’s creation because of the bloody years of the War on Terror, but now I know that he saw far worse. I wonder whether the regret came to him early, or if it was the last straw, his final impression of the history of a country he was able to witness from birth until his own death. ”
    Via The Browser, an article from a Pakistani about Pakistan – ranging from his grandfather and the start of that country, to the sad mess that is has become since.
  3. “In other words, what matters is not “technological innovation”; what matters is value chains and the point of integration on which a company’s sustainable differentiation is built; stray too far and even the most fearsome companies become also-rans.”
    I am teaching a part of the course on Industrial Organization at Gokhale Institute, and every so often, I feel like outsourcing it to Stratechery. This article is one reason why – it helps you not just understand what value chains are, but provides multiple examples of how to think about them, and through them. As almost always with Stratechery, a great read.
  4. “I think that a lot of people, on some level what they think they’re doing when they sponsor young co-workers is spotting talent—they called it “talent-mapping” in the accounting firm we studied. But a lot of people we talked to were also able to reflect and say, “Part of why I was excited about that person, probably, is because they reminded me of a younger version of myself.” The word we use in sociology is homophily—people like people who are like themselves.”
    File this under a variety of things: hiring practices, labor productivity, people compatibility – but more than anything, I’d file it under behavioral economics, and the word homophily.
  5. “It’s more important than ever to manage your passwords online, and also harder to keep up with them. That’s a bad combination. So the FIDO Alliance—a consortium that develops open source authentication standards—has pushed to expand its secure login protocols to make seamless logins a reality. Now Android’s on board, which means 1 billion devices can say goodbye to passwords in more digital services than seen before”
    It didn’t take long to go from unlocking your phone with your fingerprint to unlocking everything online with a fingerprint. How long before the next innovation in security and identity comes along, and will it mean that the phone will become irrelevant? A question worth pondering.

Links for 19th February, 2019

  1. “…granted, most supply has moved to Facebook and other social networks; it is no longer possible to build a viable web business with display ads. At the same time, the web is still as open as can be, which means there is room for new business models like subscriptions, a model that has only gotten started and is already producing far better content than the old mass market media model every (sic) did”
    The always excellent Stratechery blog on Spotify moving into the podcasting business. Read this to understand how pricing works in the world of the internet, and how an ad-based business is going to be difficult to sustain.
  2. “Goodhart’s law states that once a social or economic measure is turned into a target for policy, it will lose any information content that had qualified it to play such a role in the first place.”
    A current favorite of mine as an example: students must attend at least 75% of all classes in a semester assumes that a student will auto-magically learn once in class – for that is the reason behind the 75% attendance requirement. Do read, though. I’m sure you can think of a million different applications.
  3. “The constitution ensured that the Senate could protect the people against themselves, and simultaneously ensured that the Framers armored the Senate against the people. Should America be too Democratic, and grant too much power to the House, Madison worried that government would have a propensity “to yield to the impulse of sudden and violent passions, and to be seduced by factitious leaders into intemperate and pernicious resolutions.””
    As an Indian, I enjoyed reading this as a reminder of the thinking behind the Rajya Sabha and the Lok Sabha. And which is why I’d recommend you read it too!
  4. “What these results suggest is the headline inflation – expected to be in the 3% handle in the near future – will eventually start converging, over a 12-month period, towards core inflation which is currently running above 5%. If this were to come to pass, space for any monetary policy easing cycle – notwithstanding a one-off cute in February or April this year – would virtually evaporate.”
    Expect there to be an intense discussion about the differences between headline (overall) and core (overall minus fuel and food) inflation. This article is a decent analysis of the link between the two in the past, and today.
  5. “Consider Ms. Nishimasa’s daily routine. The preschool her two youngest children attend requires the family to keep daily journals recording their temperatures and what they eat twice a day, along with descriptions of their moods, sleeping hours and playtime. On top of that, her 8-year-old son’s elementary school and after-school tutoring class require that a parent personally signs off on every homework assignment.”
    A fascinating read from the NYT, to help us better understand the culture that is Japan.

Links for 4th February, 2019

  1. “The classic example in language is that a doctor is male and a nurse is female. If these biases exist in a language then a translation model will learn it and amplify it. If an occupation is [referred to as male] 60 to 70 percent of the time, for example, then a translation system might learn that and then present it as 100 percent male. We need to combat that.”The Verge interviews Macduff Hughes, the head of Google Translate. Worth reading for understanding applications of AI, the amount of bias that exists in our culture (along various dimensions), and the garbage in, garbage out problem.
  2. “This was a great year for iPhone customers, but perhaps not for Apple itself… Technology is outpacing customer need and phone lifespans are ever-longer, which we saw hurt Apple’s bottom line.”Keeping a tab on Apple makes sense, and this is a good place to start. Apple has had a difficult year for many reasons, but the most important reason has been a multi-year phenomenon – Apple has gotten too good for its own good.
  3. Ben Thompson tells it like it is:
    “While I know a lot of journalists disagree, I don’t think Facebook or Google did anything untoward: what happened to publishers was that the Internet made their business models — both print advertising and digital advertising — fundamentally unviable. That Facebook and Google picked up the resultant revenue was effect, not cause. To that end, to the extent there is concern about how dominant these companies are, even the most extreme remedies (like breakups) would not change the fact that publishers face infinite competition and have uncompetitive advertising offerings.”
    Worth reading for an excellent discussion of the law of conservation of profits, the Buzzfeed firings that took place recently, and the future of media.
  4. As Tyler Cowen never tires of saying, “solve for the equilibrium“:
    “The content industry spent years trying to battle piracy via all manner of heavy handed-tactics and lawsuits, only to realize that offering users inexpensive, quality, legitimate services was the best solution. Many users flocked to these services because they provided a less-expensive, more flexible alternative to traditional cable.Now, if the industry isn’t careful, it could lose a sizeable chunk of this newfound audience back to piracy by making it overly expensive and cumbersome to access the content subscribers are looking for.”
    Worth reading for why piracy may yet re-emerge, a good understanding of market entry and exit, and competition and its implications.
  5. “The market valuation of Baidu, Alibaba, and Tencent (BAT) is more than a quarter of India’s GDP.”
    What a stunning statistic. The rest of the blog post is a good way to acquaint yourself with how China has seen it’s internet ecosystem grow, and where India could improve.