EC101: Links for 13th June, 2019

  1. “A September 2018 article from Eater tells us that Miguel Gonzalez delivers directly to 120 New York restaurants. As an avocado supplier, he works with farms in Mexico’s Michoacán state. To maintain consistency and minimize bruising, he monitors truck temperatures and how the boxes are stacked during their 2600 (or so) mile journey.”
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    What happens when you raise the tariff on a commodity? Who do you think will (ultimately) pay? Econ texts give you the answer – this article provides an example.
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  2. “Across the United States, a similar cocktail seems to be keeping inflation at bay: Employers are reluctant to charge more, unsure how consumers will react, and they’ve found an untapped supply of workers. It’s partly great news. More Americans are getting jobs than policymakers once thought possible, and wages and prices aren’t spinning out of control the way history would predict.”
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    Think you know macroeconomics? Short answer: you never really do. The NYT provides an example of a conundrum that is keeping the Federal Reserve up at night: full employment, low inflation. A nice problem to have, right? You’d have thought so…
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  3. “Economists have written about topics that we would now classify under the headings of “microeocnomics” or “macroeconomics” for centuries. But the terms themselves are much more recent, emerging only in the early 1940s. For background, I turn to the entry on “Microeconomics” by Hal R. Varian published in The New Palgrave: A Dictionary of Economics, dating back to the first edition in 1987.”
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    On the etymology of micro and macroeconomics.
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  4. “Belloy’s misfortune stemmed from more than bad luck. He was the victim of unscrupulous traders known simply as operators, who might sell fake elevator receipts, or move prices in their favor by spreading false news. Or they might pull off an especially cunning manipulation known as a corner, in which they would buy future wheat while simultaneously buying all physical wheat.Later, when it came time for the operator to take delivery of his future wheat, the other trader had to first go buy some. But there was none. The operator owned it all. Thus trapped, or cornered, the victim had no choice but to pay whatever price the operator demanded. Cornering was the ruin of many a trader, like our Belloy, to whom the only apparent recourse was to find the nearest saloon and shoot himself in the head.”
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    Rarely are classes in financial economics so very entertaining. A lovely history (maybe apocryphal, who knows) about the early days of the CBOT in Chicago.
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  5. “There is no simple remedy for the curse of knowledge, but let me offer a suggestion. Keep a particular person in mind as you teach. That person should be someone you know well—a parent, a spouse, or a best friend (as long as that person is not an economist). Pretend you are explaining the material to them. Are they getting it, or are they lost? If you know this person well, you may be able to more easily empathize with their learning challenges. You might prevent
    yourself from going overboard.”
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    N. Gregory Mankiw comes up with a short six point guideline about how to teach economics better. It is worth going over this list, irrespective of whether you are learning economics or teaching it. Also, taken a look at Eli5?
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Links for 6th June, 2019

  1. “That night, after singing in the Rose Garden, Nelson went to sleep with his wife, Connie, in the Lincoln Bedroom. Then one of the president’s sons knocked on his door.“Chip Carter took me down into the bottom of the White House, where the bowling alley is,” Nelson says. Then they went up to the roof and smoked a joint. Nelson remembers Carter explaining the surrounding view — the Washington Monument, the string of lights on Pennsylvania Avenue. “It’s really pretty nice up there,” Nelson says.”
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    I found it hard to extract an excerpt from this article, because it is (all of it) entirely readable, multiple times. There’s information about music, weed, economics, sustainability, mortality, longevity and so much more!
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  2. “Graham Fagg, the British miner who punched through to the French side and became the face of continental connection, on Friday told French news agency AFP that he was now a Brexit supporter. “I worked on the Channel Tunnel and did the breakthrough, but I actually voted for Brexit,” the 70-year-old said. “I don’t see that as incompatible.”Fagg said he supported joining the European Economic Community — the forerunner to the EU — in a 1975 referendum, but did not realize it would become a political union.”We voted for a trade deal,” he explained. “I can’t remember anybody ever saying to me, ‘we’re going to turn it into a federal Europe. We’re going to set all the rules and you’ve got to obey them’.””
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    A short, but very readable article about the Chunnel – I didn’t know the history was as long as all that. I also found the Thomas The Train picture quite poignant.
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  3. “The consistent critic of anarchism must, however, attack with equal force all of those who suppose that large groups will whenever the need arises voluntarily organize a pressure group to deal with the state, or a labor union to deal with an employer. Bentley, Truman, Commons, Latham, and many of the pluralist and corporatist thinkers are fully as guilty of the “anarchistic fallacy” as the anarchists themselves. The anarchists supposed that the need or incentive for organized or coordinated cooperation after the state was overthrown would ensure that the necessary organization and group action would be forthcoming. Is the view that workers will voluntarily support a trade union, and that any large group will organize a pressure-group lobby to ensure that its interests are protected by the government, any more plausible?”
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    Aadisht Khanna reviews “A Theory of Collective Action”. This, I should confess, is a book I started but have (at least for now) given up on. It is not an easy read. But reading Aadisht’s review, this excerpt caught my eye – it is the strongest argument I have seen to make me want to vote.
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  4. “And so Thibaw wasted away in Ratnagiri, “a very unpleasant place to live in”, he wrote, full of “snakes and scorpions”. His expenses—much of it religious—led to endless debt, even as he petitioned the British for the return of valuables he had entrusted to them when surrendering his former capital (including a celebrated ruby, never seen since). His wife was initially resolute: She smelt conspiracy everywhere, Shah notes, and taught her daughters to cook, certain that they would be poisoned otherwise. But, by 1900, bogged down by their fall, she was in the grip of depression. Denied regular social contact, and policed and watched, their daughters too grew up lonely—the princess who in 1944 gave mangoes to her visitor began an affair with their Maharashtrian gatekeeper, her love child later marrying the family’s dog-walker. This granddaughter of the last king of Burma would one day transform herself from TuTu to Baisubai, selling paper decorations in the local market.”
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    Do you follow Manu Pillai on Twitter? Do you read his columns in Livemint? Have you read his books? Get started right away!
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  5. “The results of this survey have not been officially released. However, the leaked reports of an historically high unemployment rate and the subsequent resignation of two members of the National Statistical Commission (NSC), who were involved with the PLFS, created a furore and heightened the politicisation of unemployment. The Opposition used this as an opportunity to malign the government, while the government representatives at NITI Aayog resorted to the view that the survey results have not been reviewed by experts, and therefore the report was not deemed reliable enough to be released. The truth of the matter, however, is that there is neither credible evidence of a job crisis in India, nor credible evidence of the absence of it.”
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    There is a problem pertaining to data measurement in India, and it is a big one. This article doesn’t necessarily tell you how to solve that problem (no article can, in the length that articles usually comprise of), but it does help you be aware of what the problem is.

Links for 25th April, 2019

  1. “Singapore appreciates the relative strengths and limits of the public and private sectors in health. Often in the United States, we think that one or the other can do it all. That’s not necessarily the case.”
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    It is always a good idea to learn about Singapore’s healthcare system, and this Upshot column from the NYT helps in that regard. Each of the links are also worth reading. If you spend time reading through the article and all the links therein, you might be a while, but it is, I would say, worth it.
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  2. “With Nobel laureate Daniel Kahneman, he collected evidence on happiness that remains my benchmark for social scientists’ ability to shed light on wellbeing. Prof Kahneman once warned me that expert advice can go only so far. Much happiness and sadness is genetically determined: “We shouldn’t expect a depressive person to suddenly become extroverted and leaping with joy.” Those words are much on my mind this week.”
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    Tim Harford remembers Alan Kreuger, and helps us understand a lot about the man, his work, happiness and much else in the process. Entirely worth reading.
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  3. “The Captain Swing riots are thus one more example, an especially vivid one, that new technologies which cause a lot of people to lose a way of earning income can be highly disruptive. The authors write: “The results suggest that in one of the most dramatic cases of labor unrest in recent history, labor-saving technology played a key role. While the past may not be an accurate guide to future upheavals, evidence from the days of Captain Swing serve as a reminder of how disruptive new, labor-saving technologies can be in economic, social and political terms.”
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    One, because reading something you hadn’t read before is always interesting. Two, because unemployment because of automation isn’t new. Three, makes for very relevant reading today (in multiple ways: automation itself, but also untangling causality.)
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  4. “He says he was inspired by the depth of the nun’s commitment to India’s least fortunate—but he was unwilling to emulate her approach, and not simply because of its material sacrifices. Although Shetty often performed free surgeries for the poorest of the poor, he reasoned that the only way to sustainably serve large numbers of people in need was to make it a business. “What Mother Teresa did was not scalable,” he says—perhaps the first time venture capital jargon has been applied to the work of the Angel of Calcutta.”
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    Interested in healthcare, or economics, or both? A lovely read, in that case. Also a good explainer of the challenges in front of Modicare.
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  5. “The argument in favour of having Tribunals is that they offer a specialised and dedicated forum for settling specific categories of disputes which are otherwise likely to get stuck in the regular judicial channels. But this assumption holds only if the regular judiciary exercises restraint and does not insert itself into the proceedings pending before Tribunals. ”
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    The problem with laws in India isn’t their framing – it is their implementation. Read this to find out more.

Links for 9th April, 2019

  1. “What is not useful is the sense that measuring GDP is the problem, and measuring gross national happiness is the solution. Few societies have ever really focused on either. We should all be happy about that.”
    Tim Harford reminds us that the truth lies somewhere in the middle. In this case, the article is worth reading for understanding how GDP can’t really be measured, and how that may not be a bad thing. In addition, please read the article to understand that Bhutan probably isn’t all that “happy” a country in the first place!
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  2. “Given the pressure on all unions to negotiate higher-than-average wage increases, using monetary policy to reduce inflation would inevitably aggregate spending to fall short of the level needed to secure full employment, but without substantially moderating the rate of increase in wages and prices. As long as the unions were driven to negotiate increasing rates of wage increase for their members, increasing rates of wage inflation could be accommodated only by ever-increasing growth rates in the economy or by progressive declines in the profit share of business. But without accelerating real economic growth or a declining profit share, union demands for accelerating wage increases could be accommodated only by accelerating inflation and corresponding increases in total spending.”
    Monetary nerds only, it should go without saying! David Glasner runs a blog called Uneasy Money, which is well worth reading, but only if you want to find yourself steeped in all things monetary. This post takes a slightly critical view of Arthur Burns tenure as Fed Chairman.
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  3. “Amazon’s economists game out real estate decisions, set the lowest prices that will deliver a profit, precisely determine what customers care about and whether advertisements are working — all using machine-learning algorithms that automate decision making on a massive scale. It’s the kind of asset that smaller companies can’t always pay for, allowing Amazon to pull further and further away from the competition.”
    Amazon has, in case you didn’t know, probably the world’s largest collection of PhD’s in economics. This article helps you understand what it is that they do once they’re in Amazon. A helpful read if you are considering building a career in economics.
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  4. “The White House explains why it’s predicting such big growth: the TCJA will cause a surge in business investment by “substantially raising the target capital stock and attracting increased net capital inflows.” And this rise in the capital stock will cause a surge in productivity. Except that there’s no sign of a surge in business investment: the report cherry-picks a few numbers, but overall orders for capital goods, probably the best real-time indicator, are showing nothing much (that 2015-6 slump, by the way, was about fracking, which fell off for a while when world oil prices plunged)”
    Paul Krugman is less than impressed with the 2019 Economic Report of the President, and provides data to show why he is less than impressed. The chart that follows the excerpt is worth looking at too.
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  5. “There’s one biosignature that Seager, Guyon, and just about everyone else agree would be as near a slam dunk for life as scientific caution allows. We already have a planet to prove it. On Earth, plants and certain bacteria produce oxygen as a by-product of photosynthesis. Oxygen is a flagrantly promiscuous molecule—it’ll react and bond with just about everything on a planet’s surface. So if we can find evidence of it accumulating in an atmosphere, it will raise some eyebrows. Even more telling would be a biosignature composed of oxygen and other compounds related to life on Earth. Most convincing of all would be to find oxygen along with methane, because those two gases from living organisms destroy each other. Finding them both would mean there must be constant replenishment.”
    That’s just one of many, many excerpt-able pieces from a very long, but also very rewarding article about the search for ET. Take your time with this one – about an hour or so, and pay particular attention to the infographics.

Links for 27th March, 2019

  1. “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.
  2. “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.
  3. “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.
  4. “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.
  5. “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.