Razib Khan One-stop-shopping for all of my content

April 16, 2017

In a hopeless world hope is better than resignation

Filed under: Economics,Economy — Razib Khan @ 11:59 pm

There’s really nothing one can say anymore about what Hugo Chavez did to his country, No Food, No Medicine, No Respite: A Starving Boy’s Death in Venezuela. But now in France a left-wing politician is on the rise who praises Chavez, Left-Wing Politician Shakes Up France’s Presidential Race:

That man is Jean-Luc Mélenchon, admirer of Fidel Castro and Hugo Chávez, sworn enemy of NATO and high finance, and candidate of his own “France Unsubjugated” movement, who has been drawing tens of thousands to his rallies, especially the young, as he did here Sunday at Toulouse on the banks of the Garonne River. They came to hear a veteran French politician give them a dousing of old-fashioned Robin Hood-revolutionary rhetoric, with promises to tax the rich hard, give to the poor and start a “citizen revolution.”

There is a serious chance that this will be the next president of the French republic. This man, who has no problems being called a Communist. If there is one political system where the experiment has been done, it is command economy socialism. There may be cases of market failure where the state needs to intervene, but by and large an economy dominated by the state has not done good for the common man.

And yet the reality is what alternatives are the people being given? They are looking Left and looking Right, because they want hope that the future will have some of the promise that the past had. Sober realistic centrists with broadly liberal views only offer them only hard truths.

Truths such as this: Evidence That Robots Are Winning the Race for American Jobs. The far Left anti-capitalist program in economics really doesn’t offer a long run path to prosperity. But capitalism itself only leads to individual and broad-based prosperity as a side effect of market logic. If returns to capital could accrue without labor inputs, then that would be even “better.”

September 8, 2012

The Europes

Filed under: Culture,Economics,Europe,geography — Razib Khan @ 9:48 pm

Planet Money recently did a report on the difficulty of maintaining high economic productivity in southern Italy. I won’t rehash the specifics of the story, but, I think it is important to get a visual sense of just how large the contrast between the south and north of Italy is. Too often we speak of nation-states. Nation-states are real, and they are important, but they are often not comparable. Just like comparing the USA to Sweden is only marginally informative, so comparing a small nation like Ireland to a more substantial one like Italy is deceptive. Here is a 2008 regional GDP map with sub-national breakdowns. Though some of the values are certainly lower now (basically, everything outside of Germany and Sweden), the relationships still hold.

There has been a gap between the north and south of Spain and England, as well as the west and east of Germany, but none of these are of the same magnitude of what you see in Italy (for one, southern Italy is much more populous than eastern Germany).  Sicily and the southern provinces are the poorest regions of western Europe. In contrast, the area ...

August 18, 2012

The economic correction

Filed under: Economics — Razib Khan @ 9:50 pm

Finally the social bubble seems to be bursting. Do remember that in 2000 there was backlash against Amazon as well, and it’s still around. Still, global oil demand level is low. Most people seem to agree that some of the “fixes” to the 2008 financial crisis were only band-aids, and the fundamental structural problems were put off for another day. Is that day now? Pessimism is cheap, but if you feel it, why not share it? I mused about a possible recession in May of 2007, and some of the comments were kind of funny and tragic. I’ll quote, with names removed to protect the guilty:

They’re practically glorified hiccups nowadays. I don’t get what the big deal is.

In a word, no. Unless you’re talking houses here in the Bay Area, but the “recession” is more like a return to a normal, vanilla market. All the economic signs I see look good. Krugman’s cat must be hurting.

The economy has been generally good, unemployment has been relatively low throughout. And so no, I don’t see the looming failure ecomomically.

I doubt it. People often react to one aspect of the economy without looking at the larger picture. Yes, there was an overextension ...

August 16, 2012

The trash index

Filed under: Economics,Economy — Razib Khan @ 11:04 pm

I heard about the chart above on Marketplace. Track enough variables, and you’ll find some which correlate well with GDP…until they don’t. So this is a neat story, but is it true? Well, I do accept the underlying logic here. So I’m hoping this is a statistical artifact of some sort….

July 1, 2012

Thinking like a behavioral economist (dentist edition)

Filed under: Behavioral Economics,Economics — Razib Khan @ 10:41 am

This clip with Dan Ariely telling off a dentist who tried to sell him on a more expensive item is classic. Would that we all behaved in such a manner, no? The problem when you interact with a particular set of professionals, in particular in healthcare, the information asymmetry is such that it is very difficult for you to make an informed choice as a consumer. I’ve had an experience very similar to Ariely with dentists.


The problem here though that is that dentists are professionals. In other words, they should be motivated by something other than the profit motive. Ergo, we (the public) confer upon the profession licensing for exclusive services. The problem is that professionals are not immune from incentives. On the conscious level it seems that professionals generally do perform services without the profit motive in mind (e.g., dentists and doctors encourage your toward good health).* The problem is that on the unconscious and implicit level is where subtle biases and preferences come to the fore.

Naturally professionals don’t want to admit that they have biases. I’ve listened to Dr. Thomas P. Stossel dismiss the possibility that gifts and perks by pharmaceutical companies might have an ...

January 3, 2012

Economic forecasters should put their $ where their mouth is

Filed under: Economics,Human Evolution — Razib Khan @ 1:24 pm

Happy Days Are Here Again! Don’t believe the naysayers: An economic recovery is right around the corner.:

Economic forecasting is a mug’s game. There are simply too many unknowable factors that affect “the economy” for anyone to make accurate predictions. The Fukushima earthquake and nuclear disaster, for instance, had a noticeably negative macroeconomic impact around the world, and nobody knows what lurks inside the hearts of central bankers. Plus, if I did possess the secrets to the future, I’d be making a fortune as a speculator, not telling you about it.

There are plenty of financial types who have funds where investment is contingent upon expectation of macroeconomic conditions. You know what they think because you know how they invest, and they’ll tell you what they think as well. What’s the point of journalists and academics even offering predictions if they don’t have “skin the game”? You can basically just say anything to be contrary, perhaps like in a publication such as Slate.


Here’s another anti-pessimism piece from Slate, No Pessimists Allowed! America’s economic recovery will be twice as big as experts predict. Date: January 2nd, 2010. With hindsight this was obviously unwarranted optimism. But how sure was the author, Dan Gross, about his prediction? It would be nice to get a sense if Gross had some put real money down on his predictions and made the values transparent. The amount of money would have given you a sense of the individual’s confidence in their proposition.

Of course, as Matt Yglesias says above why would he even publish his predictions instead of investing them? As Yglesias has said explicitly and implicitly he’s not a blogger for the money, he likes his job a great deal. He likes making predictions and performing rapid analyses. So that’s one reason why a Harvard grad with a degree in philosophy didn’t go to law school or into finance to make more money. But another issue here is that most journalists are probably not big enough individually to move the market. Therefore, their “small bets” would be a good gauge at least of how seriously to take any given prediction for their readers. Though obviously most readers aren’t interested in this stuff for truth. They just want to be entertained….

August 31, 2011

India vs. China

Filed under: Economics,India vs. China — Razib Khan @ 8:56 am

India Measures Itself Against a China That Doesn’t Notice:

“Indians are obsessed with China, but the Chinese are paying too little attention to India,” said Minxin Pei, an economist who was born in China and who writes a monthly column for The Indian Express, a national daily newspaper. (No Indian economists are known to have a regular column in mainland Chinese publications.)

Most Chinese are unconcerned with how India is growing and changing, because they prefer to compare their country with the United States and Europe, said Mr. Pei, a professor at Claremont McKenna College near Los Angeles. He says he has tried to organize conferences about India in China but has struggled to find enough Chinese India experts.

Liu Yi, a clothing store owner in Beijing, echoed the sentiments of a dozen Chinese people interviewed in Beijing and Shanghai, in dismissing the idea that the two countries could be compared. Yes, he said India was a “world leader” in information technology but it also had many “backward, undeveloped places.”

“China’s economy is special,” Mr. Liu said. “If China’s development has a model, you could say it’s the U.S. or England.”

The sentiments are real. But the Indian assumption that the difference is the governance style of China is false. It’s the aggregate difference in human capital.


The Indian elites have presided over a situation where their nation is the world capital of cretinism.

July 26, 2011

Ingenuity’s flight toward rents

Filed under: Culture,Economics,Intellectual property,Myhrvold,progress,science — Razib Khan @ 10:53 am

Andrew Oh-Willeke, Esq., observes:

One example of cyclicality that continues to today is the practice of law. The basic principles of Roman private law and the complaints that people made about lawyers and litigation were remarkably similar in the 300s to what they are today.

In the 6th century Justinian the Great sponsored a compilation of the body of law which was being widely practiced in the Roman Empire at the time, what is now known as the Corpus Juris Civilis. This is not an abstract or obscure point in the history of modern law:

The present name of Justinian’s codification was only adopted in the 16th century, when it was printed in 1583 by Dionysius Gothofredus under the title “Corpus Juris Civilis”. The legal thinking behind the Corpus Juris Civilis served as the backbone of the single largest law reform of the modern age, the Napoleonic Code, which marked the abolition of feudalism.

Imagine that the astronomical models of Ptolemy served as a basis for modern astrophysics! There’s only a vague family resemblance in this case. The difference is that law is fundamentally a regulation of human interaction, and the broad outlines of human nature remain the same as they ...

July 14, 2011

Geography is dead, long live geography!

Filed under: Economics — Razib Khan @ 9:24 am

Silicon Valley: Not Enough Of A Good Thing:

The right questions to be asking aren’t “why does Silicon Valley create so few jobs;” it’s “why doesn’t everyone move to the Bay Area” (the rent is too damn high) or “how come there’s only one high-tech cluster.” After all, if industrial age capitalism had just created the prosperity of the Detroit area in its heyday, we’d look on it as a huge bust. But we had lots of industrial production clusters, of which the Detroit automobile industry was just the most famous.

I think there’s a standard geographical reason why capital intensive production of material goods exhibits polycentrism: the cost of transport matters. Many of the early industrial nuclei were located relatively close to the inputs for manufacturing. Additionally, once the goods were produced they had to be distributed as cheaply as possible, so location was another essential fixed parameter. Big eastern industrial centers loom large in the public imagination, but the same logic applies in other regions of the nation. Cheap electricity and abundant clean water is why many tech-oriented manufacturers are based out of the Pacific Northwest. It isn’t as if you could just relocate the Columbia river.


July 6, 2011

The 2,500 year experiment with solid currency

Filed under: Cash,Currency,Economics,Finance — Razib Khan @ 8:30 am

This article in The New York Times focuses on cash in terms of paper currency, but the lessons are generalizable to coinage as well, which pre-dates paper currency by 1,500 years. Some fascinating numbers:

…In 1970, at the dawn of plastic payment, the value of United States currency in domestic circulation equaled about 5 percent of the nation’s economic activity. Last year, the value of currency in domestic circulation equaled about 2.5 percent of economic activity.

…Indeed, cash remains so pervasive, and the pace of change so slow, that Ron Shevlin, an analyst with the Boston research firm Aite Group, recently calculated that Americans would still be using paper currency in 200 years….

… Thanks to technological advances, the average dollar bill now circulates for 40 months, up from 18 months two decades ago, according to Federal Reserve estimates….

…. In 1989, the Fed replaced 46 percent of returned dollar bills. Last year it replaced 21 percent….


We don’t know if the United States of America will be around 200 years from now, so the question about the persistence of cash is rather moot in my opinion. But in any case, the marginalization of (relatively) untraceable cash for abstract monetary units of value ...

June 10, 2011

The future as India?

Filed under: Economics — Razib Khan @ 7:13 pm

I had the same reaction as Kevin Drum to this story, In India, Dynamism Wrestles With Dysfunction. Drum says:

Basically, Gurgaon has turned into something from a dystopian science fiction novel: an archipelago of self-contained corporate mini-cities that provide their own power, water, sewage, transit, postal service, schools, medical care, and security force. Meanwhile, everything in between is no man’s land. And growth has been spectacular.

I my pessimistic moments I wonder if the world will transform into what India seems to be becoming. Yes, developed societies have created relatively homogeneous pockets of middle class baselines, but we’re in the age of migration today. It seems possible that at some point cosmopolitan elites will simply force free labor movements as the new norm, resulting in massive spikes in inequality as the world reequilibrates, with labor moving where there’s demand.

It’ll be nice if my pessimism is totally unfounded. I think it might be. But if the cyberpunk future comes into being hopefully I’ll be well connected enough that my offspring can find a place in a safe private community.

May 28, 2011

The housing bubble vs. the financial crisis

Filed under: Economics,Google Trends — Razib Khan @ 8:26 pm

In the mid-2000s many regular folks knew that something was weird in housing. Of course everyone was aware that there was a short term windfall to be made if you could flip. But there were normal discussions about the bubble, and when it would burst, or if the weird arguments by some economists and the real estate industry that there wasn’t a bubble were true. In contrast regular people weren’t aware of the possibility of a financial crisis. I recall saying stupid things about the “Great Moderation,” parroting what I’d heard smarter people who I assumed knew better say, in the summer of 2008. Or take a look at some of the comments when I mooted the possibility of a recession in mid-2007: “They’re practically glorified hiccups nowadays. I don’t get what the big deal is.”

With that in mind I looked at Google Trends for two queries, “housing bubble” and “financial crisis.” The top panel is search query, and the bottom panel is news query. The financial crisis query is what you’d expect:

The housing bubble query is more interesting:

People ...

May 26, 2011

“Gross national happiness” in numbers

Filed under: Bhutan,data,Data Analysis,Economics — Razib Khan @ 11:34 pm

Bhutan famously espouses “gross national happiness”:

The term “gross national happiness” was coined in 1972 by Bhutan’s former King Jigme Singye Wangchuck, who has opened Bhutan to the age of modernization, soon after the demise of his father, King Jigme Dorji Wangchuk. He used the phrase to signal his commitment to building an economy that would serve Bhutan’s unique culture based on Buddhist spiritual values….

Apparently the nation has recent switched from absolute to constitutional monarchy:

Bhutan’s political system has developed from an absolute monarchy into a constitutional monarchy. In 1999, the fourth king of Bhutan created a body called the Lhengye Zhungtshog (Council of Ministers). The Druk Gyalpo (King of Druk Yul) is head of state. Executive power is exercised by the Lhengye Zhungtshog, the council of ministers. Legislative power was vested in both the government and the former Grand National Assembly.

On the 17th of December 2005, the 4th King, Jigme Singye Wangchuck, announced to a stunned nation that the first general elections would be held in 2008, and that he would abdicate the throne in favor of his eldest son, the crown prince….

From what I can tell the royal house of Bhutan seems genuinely sincere. More plainly paternalist ...

May 25, 2011

Against the “Thinking Machines”

Filed under: Economics,Finance — Razib Khan @ 12:08 am

Steve Hsu points me to this essay which discusses ‘high-frequency trading’, How to Make Money in Microseconds. This might elicit a takfir from my friends at the Singularity Institute, but that piece makes me less ill-disposed to a Butlerian Jihad. A lot of this stuff on the margins and frontiers of finance reminds me of intragenomic conflict or cancer; entities and phenomena which are generally proposed to serve as means toward particular ends develop their own internal logic and ends through a co-evolutionary “arms race” in their own domains.

Against the “Thinking Machines”

Filed under: Economics,Finance — Razib Khan @ 12:08 am

Steve Hsu points me to this essay which discusses ‘high-frequency trading’, How to Make Money in Microseconds. This might elicit a takfir from my friends at the Singularity Institute, but that piece makes me less ill-disposed to a Butlerian Jihad. A lot of this stuff on the margins and frontiers of finance reminds me of intragenomic conflict or cancer; entities and phenomena which are generally proposed to serve as means toward particular ends develop their own internal logic and ends through a co-evolutionary “arms race” in their own domains.

May 3, 2011

India, for the long haul

Filed under: Culture,Economics — Razib Khan @ 11:24 am

India Raises Interest Rates to Battle Inflation:

In a bid to rein in persistently high inflation, India’s central bank raised interest rates Tuesday more than analysts had expected and signaled that it would be willing to raise borrowing costs even further.

The action, which caused the country’s stock market to close 2.4 percent lower, will make it harder for India to achieve the 9 percent growth target set by the government for the current financial year, which ends in March 2012.

Growth is good, but sustainable growth is better. We know that well in the USA, where growth driven by property bubble and an ballooning financial sector has left us with a terrible hangover.

May 2, 2011

Giving to India

Filed under: Economics,GiveWell,Giving,NGO — Razib Khan @ 5:57 pm

The team at GiveWell took a trip to India. Here are their reflections:

- Natalie

- Elie

- Holden

(disclosure: Holden is a friend)

April 26, 2011

Building a harmonious society through genomics

Filed under: Beijing Genomics Institute,Economics,Genomics — Razib Khan @ 12:27 pm

Dan Vorhaus points me to this Newsweek feature on BGI. My friend Steve Hsu gets some face time in the piece:

…Last year, pharmaceutical giant Merck announced plans for a research collaboration with BGI, as the Chinese company’s revenue hit $150 million—revenue projected to triple this year. “I admire their passion and the willingness to take risks,” says Steven Hsu, a physicist at the University of Oregon, adding that “it permeates the organization.”

Satellite research centers have been set up or are underway in the U.S., Europe, Hong Kong, and four other locations in China, and the number of researchers at the main headquarters in Shenzhen has more than doubled during the past year and a half. The institute now employs almost 4,000 scientists and technicians—and is still expanding.

“I’ve seen it happen but sometimes even I can’t believe how fast we are moving,” says Luo Ruibang, a bioinformaticist, who at 23, fits perfectly within the company’s core demographic. The average age of the research staff is 26.

Li Yingrui, 24, directs the bioinformatics department and its 1,500 computer scientists. Having dropped out of college because it didn’t present enough of an intellectual challenge, he firmly believes in motivating young employees ...

March 22, 2011

Can biologists admit they are wrong?

Filed under: Biologists,Dawkins,Economics,Evolution,Genetics,Genomics,Gould — Razib Khan @ 8:59 am

Jason Collins, an economist strongly grounded in biological principles, has a post up in response to Mike the Mad Biologist’s critique of economic misunderstandings of biology. Jason asks:

On the flip side, did Dawkins or Gould (or their respective supporters) ever concede to the other side that they were wrong and substantially change their world view?


WRONG!

I have some opinions on this. My own attitude is that both Richard Dawkins and Stephen Jay Gould retreated from maximalist positions when it came to the gradualism vs. punctuated equilibrium arguments of the 1970s substantively. But rhetorically they often seemed to downplay their modifications, and assert more that their own positions were a change of degree, while their antagonist in the argument would have to make a change of kind to align with the evidence. This sort of semantic gamesmanship is disappointing, though alas rather conventional. But since i’m not a thorough master of the oeuvre of both men I’d be curious what readers think.

Also, it is to be noted that Dawkins has reversed himself on ‘the handicap principle’. He spent some time rejecting it in The Selfish ...

March 2, 2011

In praise of the House of Habsburg!

Filed under: Economics,Hapsburgs — Razib Khan @ 1:27 am

One of the most annoying aspects of the post-Westphalian era is the conceit that all national administrative units are equivalent in some deep fundamental sense. So, for example, you get comparisons of per capita income for nations, and Luxembourg and Lichtenstein inevitably show up at the top of the rankings. Everyone knows that this is a farce, but a nation is a nation, and one must honor the ideal, even when it leads us to bizarre assessments like this. Luxembourg has a population of 500,000, and is a little dot of a nation. It’s really ludicrous to compare it to Italy, which spans the gamut from Milan’s value-added wealth to Puglia’s spare poverty.

But with modern statistical tools and GIS software we can disaggregate the mishmash of administrative units which coalesce together to constitute large amorphous nations, and actually compare like to like. In this way those of us who haven’t traveled all around the world, and actually lived “on the ground,” can get a sense for fine-scale variation which all the locals have as part of their background information. This is what the Eurostat Yearbook ...

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