crossposted from ello because does anyone read ello anymore?

This is super late, but in looking back at responses to my post on reparations this bit from Tim Worstall caught my eye:

“Thus today’s value of what was stolen from the slaves is that $1.75 trillion. Which is, when you look at it, a formidable sum of money. Except, actually, it isn’t. The net wealth of the entire country is around $80 trillion or so. So it’s a trivial percentage of the national wealth. Or we could look at it another way. There’s 42 million or so African Americans (defined as having some possibly slave and black antebellum ancestry) so the capital sum would be some $40,000 for each of them. Which, while a nice enough sum to receive isn’t the sort of life changing sum some might think might be due in reparations.”

This is wrong, but the fact of its wrongness itself goes to show how much many folks underestimate the dire economic straits of black America.

According to the FRB’s invaluable Survey of Consumer Finances, the net wealth of all of black households is around $1.7 trillion. So even that $1.75 trillion infusion (which is the most minimal estimate of the amount reparations ought to be my calculations produced) would double the net worth of black America as a hold.

Put another way, two-thirds of black households have less than $40,000 in net wealth. So this wouldat least double the net wealth of two thirds of black households.

Put another way, the entirety of black America has just over $921 billion in debt. So that $1.75 trillion could wipe out all debt held by all black Americans (in practice, just over two-thirds of black households have debts totaling less than $40,000, so it would leave some black households with some debts).

So given that $1.75 trillion is ‘a trivial percentage of the national wealth’ maybe we should just give it to black America then? I doubt they’d find it so trivial.

It seems like discussion of Piketty’s Capital has run its course and much of the commentary has moved on (though not necessarily from the broader topic) so now is as good time as any to peer back and reflect on how the debate around the book ended (if such a thing can be summarized). From my own vantage point, the debate about the book (not necessarily the discussion) stalled out around a single question, so I will do my best to restate and clarify that question so as to focus where more evidence and argument is needed, should this be a conversation anyone wishes to resume. None of this is new, exactly, but it’s worth recanting given the importance of the question and the stakes surrounding it.

Around 1800 AD, living standards in some countries began to rise substantially, and over the past 200 years, that rise (as measured in GDP per capita) has been on the order of a factor of 50. This generally seems to correlate with other indicators of increased living standards to a degree that, with some exceptions (such as thinly-populated resource-rich countries) it is generally, though not universally, accepted practice to use GDP per capita as a good-enough shorthand for broad living standards. Whatever the case, exactly how and why this increase transpired is still a matter of debate, in no small measure because most people would find it desirable to replicate the phenomenon in those areas that have not yet experienced it. Indeed, some countries that did not begin experiencing the phenomenon in its initial emergence have experienced it since, leaving, essentially, three groups of countries – those who have experienced it, those who have not, and those in transition.

Piketty’s book, while not exclusively, overwhelmingly is focused on the first kind of country. A compelling portion of his narrative is documenting that transformation, yet the broader focus of the book is on what has transpired since that transformation was consolidated in the era following the Second World War. There are two key factors to be documented. The first is that the countries that have fully experienced this transformation are themselves not ‘complete’ in this regard – average living standards (recent economic troubles excepted) continue to rise and are generally, though not universally, expected to continue to rise in the absence of extreme calamity on the scale of global catastrophic climate change. The second is the change in the distribution of income – since a moment of ‘peak equality’ in roughly 1970, most of the countries Piketty analyzes have seen a sharp increase in inequality, the specific degree of which dependent on method of measurement but whose general contours is not really disputed. This, Piketty and many other believes, poses a problem for these countries that is not alleviable solely by continuing increases in average living standards or aggregate wealth and income growth.

Piketty devotes a lot of space to developing a simple model of how the aggregate quantity and distribution of capital can drive income inequality. This remarkably simple model requires only three input variables – the growth rate of the economy, the average return to capital, and the savings rate (perhaps better phrased as the rate of capital formation relative to national income) – to generate a long term prediction of two key ratios: the ratio of capital to income, and the capital share of national income. From there, wealth inequality can be used directly to compute a floor on income inequality – for example, if 1% of the population owns 50% of the national wealth and the capital share of income is 30%, then that 1% captures, at a minimum, 15% of national income.

And here we arrive at the crux of the debate. Piketty’s model implicitly assumes a certain exogeneity between those three input variables and the two ratios they converge towards, ie, that they are not inherently correlated with each other. This exogeneity poses a fragility in Piketty’s model and a challenge to mainstream economic theory. The fragility is that, if they are strongly correlated (in the direction such correlation is expected), and especially if there is iterative feedback between them over time, then Piketty’s model no longer produces outcomes in which wealth inequality drives income inequality. The key example here is the average return to capital; were it to fall in proportion to the rise of total capital accumulation, then the capital share of national income would be invariant to the quantity of capital, and thus largely undermine the mechanism by which present wealth inequality drives future income inequality. Furthermore, were this anticipatable decline in the in return to capital to drive a decline in savings, the capital/national income ratio would converge at a substantially smaller value than that projected by extrapolating from the initial period. This further depresses the likelihood of ever-increasing wealth-driven income inequality.

This is also precisely the challenge to mainstream economic theory. These correlations and feedbacks are precisely what are predicted by fundamental, strongly-held ideas about economics held by economists; most centrally that investment behavior is driven by that most central economic force, supply and demand. Piketty, however, is not simply laying down an alternative model, but an empirical challenge to this challenge. The most crucial assertion made by his model – that the return to capital fails to decline in proportion to the supply of capital – is not simply a theoretical alternative but one derived from the meticulously researched and calculated estimates in his unprecedented data. As I myself pointed out in my write-up of Piketty’s book, the data show that the return to capital is sufficiently resilient to its accumulation to justify Piketty’s model. At least, that is, without controlling for any additional factors.

And here is where debate stalled, with one side asserting that theory demands these variables be tightly correlated, and the other side responding that empirics demonstrates that they are not. The problem, of course, is that macroeconometric panel empirics is extremely sensitive to model specification, to the point of being perhaps the perfect example of how any decent statistically-versed researcher with strong priors can generate the outcomes from the data they which to receive. Certainly it is more than possible to generate a superfluity of complex models demonstrating the theoretically-predicted correlations, and these models will collectively have zero persuasive power because it is trivially easily to create as many or more equally-plausible equally-complex models that demonstrate the obvious.

Why does this all matter, to the degree it’s worth recounting in such detail to the tune of a thousand words? Because it strikes directly at the heart of the most important argument for tolerating high income inequality.

There are basically three arguments in favor of tolerating high income inequality, which I will attempt to summarize as fairly as I can.

  •  The ‘Just Deserts’ Position: incomes reflect the inherently just outcomes of markets. Beyond a certain threshold to prevent the worst form of miseries, it is therefore a violation of justice to take from the deserving and distribute to the undeserving.
  • The ‘Pink Salt’ Position: income inequality is irrelevant except to the irremediably envious, resentful, or spiteful. What matters is preserving and increasing human happiness, which is largely driven by civil liberties, non-market institutions such as family and community, and the secondary impacts of economic progress.
  • The ‘Golden Egg’ Position: income inequality may be ceteris paribus bad but aggregate economic growth is extremely good to a degree that in most plausible scenarios swamps income inequality. Furthermore, income inequality and economic growth may be conjoined outcomes of our economic system and cannot be modified independently. Therefore, we should be extremely cautious about attempting to alleviate income inequality through policies that slow the rate of economic growth, as this may reduce not just aggregate utility but the utility of those benefiting directly from redistribution.

It will shock nobody to hear that I reject outright the first argument in the strongest possible terms, and the second in quite strong terms as well. Indeed, I believe that the majority of Americans, and certainly the majority of voters in developed countries, disagree with those arguments as well. It is that third argument that gives pause to many – including, to a degree, me (though that pause is still far from convincing in my own case). The average person living in a developed country today as compared to a person living in that same country in 1800 is vastly better off, and it is not impossible to imagine that the average person living in a developed country in 2100 will be vastly better off than that average person today. Impeding our shared progress in that regard could simultaneously defer developments that improve the quality of most lives while simultaneously deferring developments (like innovation in renewable energy sources and storage) that could mitigate or reverse the worst consequences of economic growth to date.

This all converges on something of an ironic surprise. In this debate, it has been the left that has been advocating, implicitly or explicitly, on behalf of the resilience of capitalism (broadly defined) and its ability to deliver human prosperity, whereas it has been the right that has claimed, implicitly or explicitly, that capitalism and the prosperity it delivers is fragile, so much so that even increasing post-market redistribution (as opposed to pre-market regulatory redistribution through minimum wages, stronger protections for unions, and abridging the current rights and privileges of lenders and shareholders) could, to use a tired aphorism, kill the goose that lays the golden eggs. This ideological positioning isn’t wholly novel, and whether it is instrumental and ephemeral or representative of something larger remains to be seen; but it is notable, and worth pondering for what it says about the state of both the contemporary mainstream left and right movements in the United States (if not beyond).

Since none of you seem to be on Ello, and since why should BI get all the fun, I’m reposting this here.

The Economy In 1000* Emoji

The Key Facts

Each emoji represents one one-thousandth (0.1%) of GDP. All data from 2013 BEA NIPA tables, with the exception of estimates of federal non-defense and state & local consumption expenditure breakdowns, derived from CBPP, Mercatus, and Tax Policy Center estimates.

*Gross emojis actually total 1,334 because of imports and net foreign travel; net emoji equal 1,003 due to rounding.

Without further ado, here’s your economy:


















LEGEND (similar categories merged):

:red_car: New Cars
:blue_car: Used Cars
:nut_and_bolt: Car Parts
:door: Furniture
:tv: Appliances
:fork_and_knife: Foodware
:hammer: Tools
:computer: Information Equipment
:football: Sports Equipment
:golf: Sports and Recreation
:books: Books
:watch: Watches and Jewelry
:wheelchair: Therapeutic Equipment
:book: Educational Books
:briefcase: Luggage
:phone: Phones and Faxes
:corn: Food
:beer: Alcohol
:dress: Women’s Clothing
:necktie: Men’s Clothing
:baby_bottle: Children’s Clothing
:tshirt: Other Clothing
:fuelpump: Gas and Fuel
:pill: Pharmaceuticals and Medical Equipment
:game_die: Recreational Items
:package: Supplies and Inventories
:eyeglasses: Personal Care
:smoking: Tobacco
:newspaper: Newspapers, Magazines, etc
:house: Rental Housing
:house_with_garden: Owner Housing and Housing Construction
:potable_water: Water
:electric_plug: Electricity
:ambulance: Medical Services
:hospital: Hospitals
:taxi: Vehicle Services
:bullettrain_side: Transportation
:airplane: Travel
:cinema: Culture
:spades: Gambling
:roller_coaster: Other Recreation
:wine_glass: Restaurants
:dollar: Financial Services
:loudspeaker: Communications
:school: Education
:heavy_dollar_sign: Professional Services
:mans_shoe: Clothing Services
:church: Religious Activities
:wrench: Home Maintenance
:passport_control: Net Foreign Travel
:angel: Nonprofits
:factory: Industrial Supplies
:rocket: Aircraft
:euro: Other Exports
:iphone: Consumer Goods
:copyright: Intellectual Property
:us: Governance Exports
:yen: Other Imports
:tractor: Durable Goods
:handbag: Nondurable Goods
:jp: Governance Imports
:bomb: Defense
:office: Structures
:satellite: Equipment
:cop: Police
:post_office: Other Federal Services
:heavy_minus_sign: subtraction from the total

PEG has something to say about science. I’m going to let Adam Ozimek say what needs saying about certain more easily refuted parts of the piece; but I’m going to actually focus on where I, well, kind of agree. Well, maybe agree is the wrong, word. Let’s try empathize.

This Mother Jones piece crowed about the fact that ‘science-denying’ creationists were attacking portrayals of the Big Bang in Cosmos just as “[a] major new scientific discovery,…has now provided ‘smoking gun’ evidence for ‘inflation,’ a crucial component of our understanding of the stunning happenings just after the Big Bang.” What was this ‘smoking gun’ evidence?

Using a special telescope to examine the cosmic microwave background radiation (which has been dubbed the “afterglow” of the Big Bang), researchers at the South Pole detected “direct evidence” of the previously theoretical gravitational waves that are believed to have originated in the Big Bang and caused an incredibly sudden and dramatic inflation of the universe.

So, people who believe the universe is seven orders of magnitude younger than it actually is in spite of all already-existing scientific evidence because it conflicts with their theology are supposed to be pwned because a mysterious and complex gizmo they haven’t seen, located on the most remote part of the planet, was looking at something they don’t understand and found evidence they don’t understand of a phenomenon they don’t understand linked to a theory of the consequences of that thing they don’t believe happened. Yep. That’ll do it.

Think about it – have you seen that telescope? Do you know what it does? How it works? How can you be sure it’s working properly? What is its actual output – some sort of numbers on a computer? What do those numbers mean? How do you know that? Can you interpret them? How do they fit into the theoretical construct that leads you to believe this particular stream of telescope output corroborates the Big Bang? Do you really understand this?

I don’t think you do. And that’s fine. Most of us don’t understand most things. I probably understand fewer things than most. But one thing I definitely understand is that human beings are alive, if we’re lucky, for just over 700,000 hours, more like 525,000 as an adult, more like 350,000 as an awake adult, of which you’ll spend at least a fifth working and then you have kids and illnesses and hobbies and suddenly you’re out of time to understand complex matters of cosmological theory and telescope construction.

The point is that at some point to believe just about anything in which you are not a seasoned effort you have to trust other humans. And how you decide which other humans to trust isn’t something you can determine by corroborating everything they say, because that’s circular. It’s decided by a whole host of factors, but the point is that it is extremely rational to decide to trust or distrust certain sources as a matter of course.

Yet we resist that, for reasons that are both rational and thoughtful as well as those that are reflexive to elite culture. Watch Joe Weisenthal struggle with it in this convo:

I’ve thought a lot about that short exchange since it happened nearly a year ago, because it so neatly captures the tension between our valuing ideas and open-mindedness and the relentless logic of using sources as filters. Many people who think that hyperinflation is JUST AROUND THE BEND and who have repeatedly warned of hyperinflation over the last decade have many useful and valuable insights; but their vocal and insistent warnings about imminent hyperinflation have also been extremely wrong in a very discrediting way. In the opposite vein, if you did trust the hyperinflationistas, why would you trust a debunking of them from, of all people, Paul Krugman?

In the end, we are all bound not by the objective veracity of the information and the merit of the ideas we hope to adjudicate, but  by who we trust to convey and explain ideas and information to us. We trust science, fundamentally, because we trust people who trust science. And once that trust is broken, it can be very, very hard to restore.

And remember that discovery of gravitational waves and the Big Bang? Well, it was wrong. Probably.

Depends who you trust.

First, read David Dayen on Darden, Starboard, and how many private equity and hedge funds are basically, well, if looters is a strong term, let’s call it strident, not inaccurate.

The short version is that a standard maneuver in the outside financier playbook is to find a company that is, basically, two companies – one providing goods or services, the other a large landowner. They then split the company in two and profit as landlords regardless of who they lease their space to.

This plays into an old hobby horse of mine, which is the nature and purpose of the firm. In the theoretical world of neoclassical economics, with low transaction costs and information approximating perfect, it doesn’t really make sense for these two companies to be one company – or at least, not any more sense than it does for them to be two.

But there is substantial value in them being unified. In cyclical economies defined by uncertainty and high transaction costs, many companies face cyclical fluctuations in revenue but not expenses, leaving them vulnerable to fixed cost shocks that may not be ameliorable by spending down savings or accessing credit, especially since credit tends to be scarcest just as these shocks are fiercest. That means a restaurant chain, for example, could be put out of business simply by failing to pay its rent during lean years even if it was flush during expansions. This is a deep myopia of the highly financialized capitalist system we current have. Investors both fail to recognize fusing land ownership with other industries to be, essentially, a form of saving and/or cost smoothing and wouldn’t care anyway because why not just juice the stock or pay out a massive dividend and bail.

Capitalism in many ways truly does thrive on creative destruction – and if anyone seems ripe to be creatively destroyed, it appears to be Olive Garden. Yet by making creative destruction such a shibboleth we’ve lost sight that there is also value in its opposite – institutional preservation. Institutions are repositories of knowledge. Destroying them can destroy the knowledge they hold collectively. Putting their existing stock of resources can involve tremendous transaction costs. Making more institutions more vulnerable to cyclical fluctuations means more institutions will implode when economies cycle, which exacerbates those cycles and destroys value unnecessarily.

A great example of this was the auto bailouts. These were high-fixed-cost manufacturers exceptionally vulnerable to a deep cyclical shock. There was no private finance ready to see them through uncertainty to profitability. So the state invested in forestalling the needless implosion of these institutions because the alternative was imposing not just needless private costs but also bearing large socialized costs from the wrenching transition to whatever followed the liquidation of the American auto industry. Without picking apart every controversial aspect of the program, it makes perfect sense in principle but only if you acknowledge the limitations of private markets to mitigate against widespread disasters with socialized costs.

This tweet from Joe Weisenthal:

Reminds me of a thought I had the other day.

I had this thought when driving from DC to northern Florida, which Mrs. Rooted and I do in a single day when we visit the in-laws, partially because it means we can bring this guy:

i'm sunning

But also because it’s cheaper. And when you’re chugging along 95’s least-compelling stretch for hours on end you think a lot, especially about cars, and especially about how much longer we have to wait until our promised jetpacks arrive. A good amount of attention has been focused on the long-term consequences of self-driving cars for intra-metropolitan transportation, but less has been focused on inter-metropolitan travel. But this is at least equally fertile ground for a major shake-up.

Speed limits are fairly high along southern 95, mostly 65 or 70 mph. It gets even higher out west where things are flat and straight, and there’s a patch of Texas where you can legally go 85 mph. But that’s still pretty slow – less than a fifth the speed of an airplane. But self-driving cars will likely be able to (barring congestion or poor conditions) go much, much, faster. And that can make a huge difference.

When we drive to my in-laws, we drive 774 miles, mostly along I-95, which at an average speed of 70 mph plus just an hour for various breaks is still a 12-hour door-to-door journey. When we fly, the flight is only 2.5 hours to the nearest large airports (Orlando or Jacksonville – they’re much closer to Daytona but flights to that airport are fewer and often more expensive in our experience). But the trip, as Joe points out, is actually a lot longer. If we want to get to the airport with at least 45 minutes to spare before takeoff, we have to leave at least that long before the flight, and that’s if we’re leaving from the closest airport to our home (DCA). Once we land, it takes roughly half-an-hour before we’re in the car heading to our destination, and then it’s at least another hour before we arrive. Adding it all together, the trip is more like six hours, not two-and-a-half. And that’s assuming the plane leaves on time.

To go 774 miles in six hours you’d have to go 130 mph. That’s really fast. But in a world where cars are doing the driving along highways especially designed for that purpose, it’s totally plausible. And what that means is that once self-driving cars are universal they will demolish short-haul flights. So long as road capacity accommodates, flights under two hours in length will likely vanish, and flights under four hours will decline markedly. Shoot, at 200 mph, if no driver needed to be conscious you could leave DC at 8PM Eastern and sleep most of the way across the continent, arriving in San Francisco at 7AM Pacific. Even at 15 mpg and $5/gallon, that’s a < $1,000 trip, which if you’ve got more than two people in the car, is quite competitive; if you imagine that self-driving cars will be much more efficient than that, it’s a almost a no-brainer for personal travel.

This gets us back to the promise in the title of the post. If self-driving cars really do displace short- and even medium-haul domestic flights, a once-scarce resource becomes suddenly plentiful – airport capacity. Assuming energy scarcity is not a crippling obstacle (and if it is we have bigger problems), this should mean a much greater volume of international flights, especially flights across the ocean. If our cars can drive us from New York to New Orleans, then we have more planes, pilots, runways, and fuel to take us to New Delhi.

If you haven’t already, Ben Wallace’s profile of Kara Swisher is very good reading. To me, this was the most interesting passage:

Just how hostile should the technology press be? This question, which Swisher has circled for most of her career, came into sharp focus at SXSW, where she was on a panel addressing the responsibilities of tech media in the surveillance era and titled “Why Didn’t a Tech Journalist Break PRISM?” A co-panelist from the Guardian and the moderator both wore tiny plastic life-logging cameras around their necks that snap 120 images per hour. So, the moderator asked, why didn’t you? “We’re terrible,” Swisher said, to laughter, though “we did tell you about the Lyft funding today.”

Self-flagellation was a recurring theme, even though it would be silly to expect the national-security story of the decade to break in a California business publication. Swisher and fellow panelist Alexia Tsotsis, the co-editor of TechCrunch, spoke of the non-investigative nature of the bulk of their coverage—fundings, job changes, new product features. Tsotsis was especially abject, suggesting that even if she’d received the Edward Snowden documents, she probably “would have succumbed to the pressure of the Obama administration now”; TechCrunch “is just a cheerleader,” she said, and “a lot of tech media is sort of in the pockets of the people we cover … We’re inviting them to our parties. We might be dating some of them. We are right in the middle, in the thick, of the tech industry.” (Tsotsis dates a partner at General Catalyst, a venture-capital firm.) She noted that TechCrunch was entrepreneur-friendly from its inception and said she stays up nights worrying about sources getting fired: “There’s a part of me that’s like: No, don’t leak this to us!

“I never say that,” Swisher said.

“That’s why you’re better than us,” Tsotsis said sweetly.

Spencer Ackerman, a writer with the Guardian, stood up and said: “It sounds like you’ve just gotten used to not having an oppositional journalistic culture.”

“I don’t think we’re completely non-oppositional,” Swisher said. “I don’t think you can look at my history and say they love me to death in Silicon Valley.”

“A smart young person in the Valley thinks being a reporter is basically being a PR person,” says one tech journalist. “Like, We have news to share, we’d like to come and tell you about it.” Reporters who write favorably about companies receive invitations to things; critics don’t. “They’re very thin-skinned,” says another reporter. “On Wall Street, if you call them a douchebag, they’ve already heard 17 worse things in the last hour. Here, if you criticize a company, you’re criticizing the spirit of innovation.”

I quoted at length because I think it really digs to the heart of what’s wrong with with “tech” journalism – which is to say, it’s pro-tech. That matters because “tech” is something much more specific than the “A” in the Cobb-Douglas function. Tech is a network of very specific institutions, values, cultures, geographies, and peoples, that construct a relatively narrow and very linear narrative of the world. It is a narrative where progress, also called innovation, is defined almost axiomatically by markets and is inherently and inviolably good, and those persons, places, and institutions that perpetuate that progress are on The Side of Good, and all else is on The Side of Bad. If something new is popular or profitable, it must be a Good Thing, and the people and companies responsible for it are Innovators. Those who are skeptical of or, for whatever reason, impede the Innovation – often some blend of regulators, entrenched interests, and luddites – are anti-Innovation and must be disrupted.

The thing about Tech Journalism is that, in general, it is not just credulous of or invested in this narrative but unaware that other narratives can even exist. It views itself as an invaluable participant in that narrative, doing journalisty things as part of the collective effort to further innovation. That’s where the miscommunication between Ackerman and Swisher comes in. A true ‘oppositional journalistic culture’ isn’t just one where CEOs and VCs are snippy towards the top gossip; its one where journalism is and can be fundamentally skeptical of their subject’s mission, values, and methods. Snowden would never have gone to tech journalists for the same reason that he went to highly-reputed but notably skeptical and independent investigative journalists – tech journalism wouldn’t know what to even do about Snowden, and to a great extent they still don’t. The idea that Google, Facebook, Apple, and all these other firms could be bad, just don’t compute.

This is not to say how much of the Tech narrative I buy into or dispute – I’m on the record as an Airbnb booster, among other things, and in general I think technological progress has redounded to the net benefit of humanity – but that there’s room for complexity and ambiguity in every story, triumph and tragic, and that even progress has costs. When tech journalism can internalize that, then it’ll be, you know, journalism.

Tyler Cowen muses about algorithmic curation in Twitter, and he’s wrong, but he’s wrong for an interesting reason. Even more interestingly, while I was musing on it, that interesting reason was recently stated curiously but quite nicely by James Pethokoukisregarding a totally different topic – climate change:
“…humans have a poor record of understanding risk in complex systems, full of interdependencies, feedback loops, and nonlinear responses. Perhaps humility and caution and consideration are warranted.”
What’s curious about Pethokoukis’ take is that he frames it in the headline of his post as “[]a] conservative way to think about climate change.” And depending on your definition of conservatism, this may be so. But it is decidedly not an economist‘s way of thinking about anything.
The economic way of thinking is deeply rooted in margins. This is, in many instances, very useful, and has a lot of explanatory power in dealing with a diverse set of market outcomes. Tyler Cowen is very much an economist rooted in this way of thinking (I mean, look at the title of his blog), and thus applies this general way of thinking to Twitter. How does this change impact behavior at the margins? How does that partial equilibrium translate to general equilibirum?
The problem, however, that this mode of thinking runs into is that it’s very poor at understanding ecosystems, and therefore poor at detecting the boundaries between changes that do and don’t disturb that ecosystem. Ecosystems, as Pethokoukis writes about, you know, The Ecosystem, is characterized by ‘complexity, interdependency, feedback loops, and nonlinear functional forms.’ But ecosystemic characteristics apply in a lot of intra-human activity as well.
Twitter is a good example of this. As it stands right now, there are many marginal changes one could make in Twitter’s operation – a few more promoted tweets here, a change to profile structure there. But some changes risk affecting the Twitter ecosystem, which risks destabilizing what makes Twitter work on a more fundamental level. Involuntarily excising tweets from feeds, even on a very small scale, risks destroying broad trust in some of the core principles and benefits – sponteneity, discovery, democracy, meritocracy, platform autonomy – that have made Twitter so useful and appealing to so many. A seemingly marginal change could actually collapse the ecoystem.
The lesson here is generalizeable – where economists and that mode of understanding and problem solving tend to go wrong are those places where ecosystemic factors and risks go undetected by a mindset not trained to see them. The result is one where marginal changes – or, more insidiously, a collection of marginal changes – causes an ecosystem to malfunction. That doesn’t mean chaos; a new ecosystem fills the vaccum. But that ecosystem may be substantially different than the previous one, and not always, or even often, for the better.

My new job is in a building with a revolving door, and spinning that thing around a few times a day will get you thinking. We already know that revolving doors have the potential to save a not-insignificant amount of energy through climate control efficiency. But I wanted to know the answer to a more ambitious question – if we made every door in the United States a revolving door, and attached a turbine to them, how much energy could we generate?

I’m not such a science whiz, but fortunately I had a little bit of help – the inestimable Randall Munroe had already tacked a similar question, and his calculations were a good guide to the information I needed to know.

Fortunately, the MIT study cited in both the above links had already done a decent chunk of work, calculating that an average revolving door requires, in foot-pounds, fourteen times the length of the door, which is also the radius of the circle which incloses it. Browsing this brochure, a decent estimate for the average diameter of a revolving door is 2700mm, and from there we can do a little simple math and deduce that on average it takes 0.023 watt hours to open a revolving door (and let’s assume the turbine can perfectly convert work to electricity for now).

Next, I had to guesstimate how many times Americans would enter or egress through revolving doors, assuming revolving doors were the only ways in and out of all buildings except single-family houses. Using some data from the BLS time use survey (augmented by NMHC data) I came up with a few coefficients using the venerable technique of “meh that seems rightish” and came up with a daily aggregate average of 5,221,919,613.23. This works out to about 21 spins per person per day, which seems more than close enough to estimate. Then you just need to do some multiplication and then attach a price to electricity (Randall used $0.15, but I’m going to go with a dime based on this EIA data). Once you’ve done that, you get a grand total of….$4,451,115.65.

If this sounds underwhelming, it is. Revolving doors start at $2,500, and therefore the Fermiest of estimates suggests that retrofitting every building in America with one might be a $20 billion job, meaning your ROI here is, generously, two-and-a-half basis points.

The reasons for this, fundamentally, is that it just doesn’t take very much work to push a revolving door relative to the energy needed to power modern society. A kilowatt hour is enough energy that, if you hit a golf ball with that much force at St. Andrews, you could sink a hole-in-one at Pebble Beach. Going through a revolving door only generates one fifty-thousandth or so of that much energy; but your average American house uses thirty times that much energy every day.

What does this all add up to? Our whole social, economic, and political order is built, on a very fundamental level, on massive production and consumption of energy beyond that humans and animals could supply directly with their body. Finding sources for that energy is hard, and even if you could capture all the adult humans in the United States exert, you’d probably only be generating at most $20 billion a year, which is still not even 10% of the energy residences alone consume annually. This, semi-coincidentally, is also why The Matrix was pretty dumb.

Anyway, to really meet our energy needs as we wonder whether fossil fuels will run out before or after we’ve trashed the planet beyond the point of no return, we need to turn to much vaster sources of energy. You know, like the sun.

Oh, and:


Cross-posted with Medium.

On Monday, Ray Rice was fired. After an initial decision to suspend the Baltimore Ravens’ running back for two games earlier in the summer, the National Football League revised its decision to indefinite suspension after TMZ published a video leaked to them showing, not merely its aftermath, but the actual moments of horrible violence Rice committed against his now-wife Janay. Today, the Associated Press disclosed that, contrary to their claims, the NFL had this video in their possession since April. The NFL, for the moment, denies this is so.

Maybe it’s true. But either way this video clearly existed, and if the NFL didn’t have it, it was not out of an inability to procure it but an affirmative desire not to possess it, to see what it contained, to be forced to expel an exceptional talent from a team that won the Super Bowl just the year before last. This incident is horrifying, despicable, and dispiriting for a tangled myriad of reasons; but one thing it clarifies is that there is a rot in the heart of American professional sports, and it is a rot with only one solution – full and complete public ownership.

The reasons such a nationalization (for lack of a better term) of American sports – centrally, the big four sports leagues, the NFL, NBA, NHL, and MLB, as well as all their teams and other properties – is not just desirable but necessary are manifold and interweaving. They are economic, political, social, and even spiritual. I will attempt to tackle them in as organized a fashion as possible, but especially since I already do not believe in clear or obvious delineations between these various spheres of human life, I will move in an order that may be primarily guided by emotional sense.

I will begin, though, with cold hard economics. Sports leagues are natural monopolies. Barriers to entry are extremely high, and like other natural monopolies such as utilities, increased competition often means doubling or tripling investment to chase roughly the same quantity of revenue. The XFL cost at least $50 million ($67 million adjusted for inflation) to start up and likely much more, and its failure was instructive. Fundamentally, it was competing against a well-resourced, deeply-entrenched incumbent, and could not offer top-tier talent. That so few competitors of any substance have broached taking on the major leagues in the decades they have been dominant economic, social, and political institutions is in-and-of-itself evidence that competing against these leagues is inherently all-but-doomed. Admissions to spectator sports in the United States alone totalled $22.3 billion in 2013, which doesn’t include the additional billions from television rights and merchandise. Even excepting the MLB’s exemption from certain antitrust laws, one has to imagine that, were it possible for a competitor to profitably challenge the dominant leagues for a slice of that fortune, they would. But alternative leagues would offer poorer players, poorer officiating, and a lack of the earned history that builds the kind of devotion that keeps fans returning year after year – not to mention a concerted effort by the existing leagues to destroy them wholesale.

In other realms of life, natural monopolies are regulated, or at the very least the topic is up for discussion. In sports, however, not only are leagues not regulated, they are bathed with public subsidy of all kinds. The most obvious and widely condemned are the vast giveaways to support ever larger and grander stadia, not merely at staggering opportunity costs but at the cost of the neighborhoods which house the facilities themselves, which in all but the rarest and most careful cases tend to laughably contradict the eager promises of economic development by politicians and team flakes, instead leaving hollow neighborhoods in their wake. But these modern monuments are just the tip of a much larger iceberg of public funds vacuumed by the oligarchs atop the rapidly-narrowing hierarchy of professional sports. Municipal resources and cooperation devoted to propping up teams add up rapidly, everything from crooked land deals to arrange for stadia to police officers managing traffic in and out of games or inevitably dealing with rowdy fans. Broadcasting is another – the various waves and tubes that bring sports into the homes of millions are either public property or implicitly or explicitly supported by regulation (or lack thereof). Taxation is another – the NFL and NBA are, hideously, non-profit trade associations and thus exempt from taxes; the MLB was until 2007, when it decided it preferred opacity to filing an increasingly-embarrassing 990.

In each of these cases sports leagues are able to use the unique nature of their monopoly power, just as real yet much more flexible than laying miles of underground pipes, to create a network of dependencies, each one reliant for funds and support of leagues and teams to justify their positions – networks, mayors, and secondary and tertiary business owners increasingly need the continued patronage of national leagues or local teams to stay afloat, and each is helpless before threats to vacate existing obligations should a new stadium not be built, or a more favorable broadcast contract be signed. In each case that public or semi-public moneys and resources flows into these leagues, there is a corresponding relationship of peonage on which the pyramid of professional sports relies. Watch local officials, egged on by local media and local businesses, flail in panic every time a team threatens to vacate for more lucrative waters – if you can stand to.

By far the largest and most corrosive of these dependencies is our university system. Almost always exempt from taxation when not themselves public entities, our nation’s colleges and universities function in all but name as subordinate leagues to the professionals atop the pyramid. These leagues are in many ways even grander exploitations of public trust, and of socioeconomically vulnerable populations, than the professional leagues themselves, but they are also fiercely codependent with those same leagues. Public resources in monumental quantity are shoveled into the zero-sum activity of talent discovery, for which the schools and their administrators and faculty are handsomely compensated and increasingly dependent, but for which the laborers themselves are paid with nothing but an education in-kind – an education that is more often than not a perfunctory justification for their presence on campus, providing no skills or knowledge to equip athletes in the overwhelming probability that their collegiate athletic career will fail to lead them to a career in the big leagues.

Athletics are an unusual case in our society because they are one of the few fields in which almost all observers would agree that success truly is overwhelmingly driven by merit; and further that a necessary-if-not-sufficient condition of that merit is natural talent, for which no amount of training or socialization can substitute. Nevertheless, the cost of identifying and training this talent to perform at a level competitive with other professional athletes is enormous and entials, frankly, an enormous amount of waste – the opportunity costs of the time and resources spent discovering which few dozen of the tens or hundreds of thousands of youth who this year have put on their first helmet or glove, skates or high-tops, are staggering, and despite frequent protestations to the contrary, the skills, knowledge, and socialization gained through extended participation in sport in school, from elementary to university, are often useless in modern society, or at the very least somewhere between equally and vastly less useful than the skills, knowledge, and socialization gained through other extracurricular activities, activities with essentially no meaningful financial or institutional support compared to sports. The athletic experience, especially as one gets older and moved into more competitive spheres, may even be counterproductive. Locker rooms, especially but not only male locker rooms, are potent incubators of some of the worst in society and humanity – homophobia, xenophobia, racism, exclusivity, aggression, militarism, unthinking hierarchicalism, and of course, misogyny. For every athlete who comes away from a locker room with positive memories of camaraderie and cooperation, many more likely come away bullied and scarred, damaged and ready to inflict damage on others.

The NFL is an extreme but clarifying case. Approximately 60,000 students at any given time are playing NCAA football. These individuals, disproportionately drawn from the most disadvantaged corners of our society, are immersed in the toxic environment of the university-athletic complex – a hierarchy of corruption and blind fealty that is precisely the type prone to the sort of scandal witnessed at Penn State – and sent out to collide their bodies against others, day after day, perhaps for years. They will receive not a dollar in fungible wealth to their name for doing so, and fewer than one in fifty will play a single day in the NFL – yet how many will find themselves with lifelong damage to mind, body, or soul from the experience?

In the greatest irony, the very rarity and irreproducibility of athletic talent makes players zero-sum resources that, as they emerge from the vast many as one of the elite few, causes them to be lavishly pampered and zealously protected, living lives without reproach or accountability. Your average NFL player is more likely to be penalized for harmless antics on the field than actual violence off the field. This lasts as long as a player is productive, after which they are effectively discarded. A few end up on television, the rest are trotted out occasionally for interviews, signings, local events – presuming they can still walk and speak.

The sum effect of all of this is to create a vast and complex network of corruption, venal dependency, and exploitation, in which the labor of hundreds of thousands of athletes and the funds of millions of fans, and beyond that every American citizen, is sucked away as efficiently as possible to be divvied up among a handful of oligarchs – the purest of rentiers who simply collect tremendous rents and produce no new innovation or value – whose pyramid of wealth resembles nothing more than Bronze Age temple economies, in which public power, private industry, and religious authority were fused into monumental institutions which touched, if not dominated, almost all of society. Our systems of public finance, public justice, and public management of public or quasi-public resources are all compromised by these leagues and their enmeshing into the fabric of American life.

This all works because sports play a vital social function. Beyond the genuine value they do provide to participants, at least before those participants become nearer to the toxic core of the industrial sports complex, they play a key role in modern social cohesion that should not be underestimated or dismissed by intellectuals who puzzle over why Americans can memorize batting averages yet know so little about geopolitics. Sports are our common denominator, the thing so many of us might have in common with so many others with whom we might share so little. In almost every conversation I’ve witnessed or participated in between American males from vastly different socioeconomic backgrounds, sports inevitably arises as a topic into which all can join, a lingua franca in which all knowledge and opinion is equally privileged and in which all have an equal emotional and spiritual stake. The rise of city-branded teams alongside the increasing urbanization of America is not a coincidence – as we found ourselves in strange new metropoli surrounded by strangers with different histories, religions, and even languages, we all latched on to what we could share. No matter what else, if you and I are from the same city, we likely root for the same team (or share a passionate but collegial rivalry between neighboring teams). As traditional social bonds dissolved or decayed, sports were there; as American cities evolve, often towards homogeneity, teams are repositories of distinct identities, not just in their names but often in their mascots, merchandise, and arena traditions and concessions. As Americans go to college, move from one city to another, and increasingly meet people from different backgrounds, sports is something that can break ice, forge bonds, and power not just pairings but repeated larger groupings of people essential to human societies. This is the element that makes professional sports teams so anticompetitive above-and-beyond those found in an economics textbook. You could find any forty good baseball players and bring them to Boston and call them Boston’s team, but only the Red Sox are the Red Sox and only Fenway is Fenway. If you don’t have that, you have nothing; if you have that, you have everything.

Yet it is this precise confusion between public identity and private gain that makes our social and spiritual reliance on sports so dangerous. There is an irreconcilable contradiction between our love of, and need for, sports, and the fact that the overwhelming share of the material wealth poured dollar-by-dollar by fans of every class and creed finds its way into the pockets of fewer men – and they are almost always men, rich, white, and old – then could fill even the bleachers at your average Little League game. It is the central and perhaps even vital role that sports plays in our social fabric that allows for the popular defense of these leagues and teams even as they inevitably corrode everything that comes too close – the neighborhoods bulldozed, the public channels of information corrupted, the education system rendered helplessly dependent, and the minds and bodies of players – and, most tragically, often those closest to them as well.

Fortunately, the solution to all this is obvious; unfortunately, it is unlikely to transpire, at least not without both major blows to the leagues specifically and a broader transformation in American values and attitudes more generally. The irony of this is that there is, of course, living proof that nationalization of professional sports can not only work but flourish; it sits in Green Bay, Wisconsin, a city of scarcely a hundred thousand, yet home to one of professional sports’ most successful franchises. The Green Bay Packers are profitable; they win (two of the 28 Super Bowls in my lifetime); and they are ‘owned’ by 360,584 fans who receive no pecuniary consideration, nor the possibility of such consideration, from their shares – only the right to hold the team accountable and have direct input into its fate.

Municipal or cross-municipal corporations exist across America and, though not without their problems, they generally work, certainly well enough to dispel any reason to think they are inherently doomed to failure. Whether structured as a metropolitan authority or placed directly in the hands of citizen shareholders, for professional sports teams to be essentially public property easily passes any potential test of feasibility one could imagine. It is also the only way to permanently bring sports teams and leagues – which are today essentially public institutions being operated purely for private benefit – into alignment with the interests of the public who fund them, support them, and should have every right to hold them accountable directly. Until then, expect the endless litany of scandals to continue unabated – doping, abuse of players, abuse by players, abuse by coaches and other officials, racism, exploitation of public funds, the cover-up and the protection and the facilitation of criminal and vile behaviors of all kind, and any more you care to imagine. The only way to fix sports is to make sports work for the fans and for the people – and the only way to do that is to make them truly ours.


PS: I am well aware that the NHL, NBA, and MLB have teams in Canada. This is a purely logistical obstacle, and one that, in the event broad ‘nationalization’ occurred, would be easily rectified. There’s no reason Toronto can’t own its teams, too.


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