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Mrs. Rooted is an erstwhile national champion figure skater, so of course we are quite deep into these 22nd Winter Olympic Games. After watching just about everything NBC felt like broadcasting over the past week, she posed me a very good question: are most of these athletes from just a few countries?

Indeed, if it seems to you as though a handful of countries at the intersections of Rich and Northern have provided most of the competitors at these games, you wouldn’t be wrong. Using data from Wikipedia, I mapped the origins of this year’s Olympians:

cutting costs on the flag assembly line

So if you’re watching the games and wondering why it looks like everyone is from the same few countries over and over again…you’re right!All data from the Oracle; note that due to the limitation of the shapefile I was working with, the three athletes from Tai…er, Chinese Taipei and the one from Hong Kong were combined with China’s 66, and Serbia’s 8 were combined with Montenegro’s 2. As you can see, a relatively small handful of countries are producing vast numbers of Winter Olympians while most countries produce little or none. In fact this map may even understate the lopsidedness; the top five countries by size of team – the United States, Russia, Canada, Switzerland, and Germany, respectively – comprise 35% of the entire Olympic field, and the top ten – adding Norway, Austria, Italy, Japan, and Sweden, respectively – accounts for 56% of the entire field! To put it as nerdily as possible, it’s almost a classic power-law distribution, with 20% of the countries providing 75% of the athletes.

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If there is one metanarrative that can sum up the era we are entering in terms of the impact of technological change on society, it’s extremes – new technologies that are prepared to change society come with both much higher upsides than most technologies have in the past, as well as much lower downsides.

Let’s take three, in order of present, near-future, further-future.

First: vehicles piloted by software or by humans remotely. We are already somewhat here, with drones in the air and self-driving cars creeping closer. The upsides to these technologies are tremendous – an end to traffic congestion and vehicle-related deaths, same-day delivery of anything, cheaper commercial airfare, and boundless other changes unimaginable to us.

It also means robot armies and spies, ie, vast reductions in the marginal cost (economic and political) of slaughter and snooping.

Second: 3D printing. The great leap to the world of instant satisfaction, universal artisanship, the Star Trek economy.

It also means every home is a potential arsenal.

Lastly: nanobots, ultra-tiny ultra-sophisticated drones. It means amazing geological and astronomical exploration, as well as a revolution in medicine – imagine “Body Wars” come to life, tumors and blood clots eliminated in seconds with no pain and minimal costs, strokes and punctured lungs repaired. Average age skyrockets.

It also means invisible untraceable assassins and an end to any presumption of privacy.

This is the future, folks.

doesn't anyone know how to play this game?

So Wal-Mart is threatening to cancel its plans to open three stores in DC if the Council goes forward and passes the “Large Retailer Accountability Act,” which raises the minimum wage from $8.25 to $12.50 only for businesses that occupy more than 75,000 square feet. This showdown has no good potential outcome, is a large embarrassment, was completely predictable, and yet still has a very simple solution.

DC needs work, and it needs groceries and other goods and services easily available to lower-class residents at affordable prices. This is why District officials were wooing Wal-Mart for so long in the first place.

But Wal-Mart is a terribly and notoriously nasty employer and a fiercely spiteful institutional player, one that prizes itself on its willingness to abuse, fire, and sabotage the careers and sanity of its workforce, and its willingness to play chicken and act the bully with political officials. So it’s no surprise that Wal-Mart is reacting to legislation that is all but a bill of attainder with bluster and threats.

So what is a DC Council to do? If they vote for this bill (which they already passed once, 8-5), Wal-Mart may in fact leave, which would be both a short-term setback for living conditions among the District’s worst-off but also a longer-term setback that could prove some of the worst stereotypes about the DC Council true – why would any other non-Wal-Mart business invest in DC if they thought they would wooed until the point of no return, then have the rules changed on them? On the other hand, if the Council fails the bill, it will prove itself powerless in the face of Wal-Mart’s tantrum, leaving itself nakedly toothless for the world to see.

But it’s not quiiiite a no-win situation – the Council does have a winning play, the same play they should have played all along – raise the minimum wage for everybody. Frankly, there is no policy or moral justification for why Wal-Mart and other large retailers should have to pay higher wages than any other business, and the obviousness of this attempt to target Wal-Mart is doubly embarrassing for all the years the District spent wooing the Bully of Bentonville in the first place. Raise the minimum wage for everyone, and the playing field is even, and Wal-Mart suddenly loses either way – if they pull out, they’ve proved their problem is with paying living wages and not with being singled out, and it also shows that all the businesses small and large that will continue to thrive (and they will) prove that Wal-Mart’s protestations of inability to pay living wages are spurious; if they stay, then they’re creating lots of jobs that pay $12.50/hr! And even better, every other minimum wage employee in DC gets a raise.

I was listening to The Economist’s podcast summarizing their special report on Germany and and when I got to the equivalent of this line:

It is the largest creditor country in the euro zone, and as chief paymaster it has the biggest clout in determining the single currency’s future.

And I guffawed. And it’s worth explaining why.

When a creditor loans money to a debtor, there is the potential for everyone to be better off – the debtor can make an investment they could otherwise not afford, and the creditor receives some interest in return. However, there is a large potential opportunity for the debtor to rip off the creditor and never pay back their money, thus getting free money. Therefore, creditors have traditionally tried to employ both the power of the state and extra-legal threats to ensure compliance. There is a long history of violence and threats of violence in this regard, from Mafia kneebreaking on the black-market side to the Venezuelan blockade on the macro-side. The reason the Iron Bank of Braavos* gets paid back is because they have proven their willingness in the past to depose and assassinate kings to collect.

But modern norms have changed that. Sure, you can still be imprisoned for debt in certain parts of the United States, but remember that the entire state of Georgia was originally envisioned as a debtor’s colony. And on an international scale, while you will suffer for sovereign default, you won’t be invaded and expropriated, and note that countries like Argentina have done surprisingly OK after even a spectacular sovereign default. Not that being shut out of most financial markets, both as an individual and a nation, is without consequences, but it’s a lot better than being behind bars or under the gun.

What’s the point? The key is the huge power of social and cultural norms, and how many can persist even as related ones change. For example, our increased unwillingness to use violence and imprisonment to punish debtors would seem to encourage double-dealing by borrowers and recalcitrance by lenders; yet our powerful social norm in favor of paying back debts and in viewing creditors as virtuous (“savers” “investors”) and debtors, especially debtors who fail or struggle to repay, as sinners (“deadbeats” “spendthrift” “profligate”) then debtors will largely continue to pay and creditors will largely continue to lend even though debtors, not creditors, are gaining in leverage and material power. They have your money! Germany isn’t invading Greece or Italy or Spain or Portugal or Ireland! But debtors don’t have anyone’s respect and that matters tremendouslyAnd economic models (and economic commentators) fail to account for it.

*You seriously thought I was going to go all day on this blog without a reference to “A Song of Ice and Fire?” Ha! Ha, I say, ha!

Daniel Kuehn writes elegantly about the inability of libertarianism to hide behind public choice economics. I personally think that the net value added of public choice to our understanding of political economy is sort of scattershot at best but nonetheless I want to bounce off Kuehn’s post to sort of summarize and extend his challenge to libertarianism this way:

“Assuming the following statements are true – 1) public choice economics is, generally speaking, on the money; and 2) that’s why we can’t have nice things, defined here as libertarian…if not utopia, then whatever is a notch or two down from utopia (goodtopia?) – then what is the actual political project of libertarianism?”

This, I think, is a question most libertarians can’t answer or won’t answer, and with good reason. A lot of people, using some sort of parallel but functionally-equivalent axiom in place of the first statement above, use that question to essentially reason themselves to progressivism/liberalism/social democracy. This is what can be really frustrating about engaging with libertarians, because they tend to presume that progressives have some sort of axiomatic or intrinsic preference for state action as a form of problem-solving. There is a more complex discussion to have about this, of course, but the short version is that that if you genuinely convince most progressive people that, in the actual real world, you adopted more libertarian-ish solutions to public policy problems then outcomes would improve then you would find progressives adopt those libertarian-ish solutions. And in fact you see that all the time, everywhere.

The doubly-frustrating thing about this is that, if more libertarians genuinely asked themselves that question you’d have vastly more room for compromise (at least in an cross-ideological sense as opposed to actual political solutions which don’t necessarily follow) that everyone would probably agree would increase utility. The principle of the second-best suggests that libertarians who think that libertarianism for whatever reason, public choice-y or otherwise, is ideal but unstable/unsustainable should be willing to make pretty substantial trade-offs in some areas of public policy to state intervention in order to secure more libertarianism in others. For example, libertarians could genuinely support universal health insurance as the price to be paid for more libertarian labor markets, and I’m sure there are a lot of progressives just waiting to sign that deal. This is the impetus that led to Denmark’s “flexicurity” which hasn’t been perfect – what is? – but which works pretty darn well as a compromise in which stronger tax-and-transfer programs, from a libertarian perspective, are traded for much less regulated labor markets then you tend to see in other European countries.

As a concluding note, it’s worth observing that almost every country with developed-world levels of GDP/capita tends to have political and economic systems that are pretty similar to each other and remarkably so given the diversity of systems of political and economic organization humans have devised over time and still persist to this day. There are some chicken/egg issues but largely it’s probably some of both and people who propose radical changes to the political and economic order should probably spend more time considering why it is the way it is right now.

if you're not drowning, then justice is done

Don Boudreaux (does reading Cafe Hayek make me a masochist, BTW?) thinks he has something here, but he doesn’t:

If (by whatever criteria) the process is fair, then the outcomes are fair.  If the process is not fair, then at least some outcomes are lamentable.  If those lamentable outcomes involve too little income for Smith and too much for Jones, then this income difference is evidence of the unfair or skewed or crony-fied process.  But the object of my concern in such situations isn’t the income difference as such; rather, it’s the unfair or skewed or crony-fied process that gave rise to it.

Forget about how much work is being done here by the parenthetical; this is mostly specious and otherwise useless. Let’s use some real life examples:

Let’s say black people are enslaved and forced to labor for centuries. I bet Prof. Boudreax and I would certainly agree that process is unfair.

Now let’s say that all slavery is abolished, and the entire socioeconomic system (somehow) peacefully replaced with a system that Prof. Boudreaux considers completely fair on a forward-looking basis. Are outcomes now fair? I would argue, no, because the inputs are biased then even an ideal process can’t produce ideal outcomes. But let’s say that the process iteratively produces improved outcomes. At what point does it produce ideal inputs that then lead to truly ideal outputs via the ideal process? One iteration? Two? Ten? Never? What if the theory of the second-best kicks in – where, once any condition of optimality is changed, you cannot presume that you can maximize your target goal by maintaining all the conditions that would have produced the ideal outcome under the original optimal set?

What if a process that is ideal at some time t produces outcomes that alter the process at some time t+x? Take Robert Nozick’s infamous example of Wilt Chamberlain, whereby ideal inputs and an ideal process can produce outcomes many would consider unfair (though, obviously, not Nozick or Boudreaux [or probably Wilt the Stilt]). What if Wilt decides that, now that he is vastly richer than everyone else in society, he is going to bribe a politician to sell him state assets at below-market prices. What if inequality, even inequality produced via ideal processes with ideal inputs, inexorably produce outcomes that lead to non-ideal processes?

What about luck? What if what distinguished Prof. Boudreaux’s Jones and Smith was some completely unpredictable and random event – an asteroid incinerates Jones’ barn, a once-in-a-thousand-year storm destroys Smith’s ship? What determines whether Facebook becomes a world-beater and not Friendster or MySpace? Can even an ideal process mitigate for those inequalities? What if luck, or chance, or events beyond human control and understanding, drive most of the gaps between life outcomes?

I agree with Prof. Boudreaux more than he probably would suspect. I believe that a system that allows for private property, broad freedom to transact, and inevitable dispersion in the distribution of wealth is likely ideal, both from a utilitarian and non-utilitarian perspective. Yet Prof. Boudreaux accuses those who worry about these inequalities of smallness, of envy, of corroded character. I would argue that it is he who has exploited a certain myopia and smallness to leverage a handful of economic insights into a worldview that justifies a corrosive lack of empathy and a smallness of the soul.

Noah Smith has called out Dean Baker for being anti-immigration, and Dean Baker has thoughtfully responded. Before I address the substance of the two claims here, I want to make a broader point.

Noah: Dean Baker is not anti-immigration. This guy is anti-immigration:

And, really, I’m not being pedantic here. While Noah Smith and Dean Baker certainly have disagreements about the practical effects and thus the desireability of different kinds and amounts of immigration, neither of them are anti-immigration. If the anti-immigration position in the United States were characterized by Dean Baker, who says this:

First of all, there is the immediate issue of what we do with the undocumented workers who are already here. I don’t see much ambiguity on this one; they should be allowed to normalize their status and become citizens. These people are here as a matter of government policy even if they are working in violation of the law.

And this:

The question is really how we structure immigration policy going forward. Noah argues the merits for having an open door for high-skilled immigrants. I am 100 percent for this policy, although I may draw the line in a somewhat different place than Noah. I absolutely want to see more foreign doctors, dentists, lawyers and other professionals in the United States.

We would be the most pro-immigration country in the world. This is especially weird because Smith ends his post by advocating for unity by embracing lots of high-skilled immigration, Baker agrees with Smith, and then Smith says he’s disappointed. Weird.

As for the substantive differences between them, though, I first want to respond to this from Dean:

Btw, we can structure this so the foreign countries benefit as well. It would be a relatively simple matter to impose a modest tax (e.g. 10 percent) on the earnings of foreign professionals for the first ten years or so they work in the U.S. This money could be repatriated to their home countries so that they could educate 2-3 doctors for every 1 that came to the United States. You don’t trust this to work? Well, the foreign countries get zero now for the doctors who are leaving, so we have a pretty low bar to beat.

This is probably unnecessary to the point of counterproductive. Voluntary remittance outflows from the United States are already anywhere from $51-$110 billion, and remittances are perhaps the best way to get money from the United States to home countries since they are precisely targeted by people with local knowledge in amounts and for purposes designed to maximally benefit the intended individuals. Presumably, allowing in many foreign "doctors, dentists, lawyers," etc, would lead to far greater voluntary outflows without instituting any new tax that would have to be administered and foreign aid that could prove difficult to target well.

As for Social Security, I think Baker is right, and as for urban agglomaration and productivity arguments, I think Smith is right, but I think Smith doesn’t realize that if he is right about urbanization then he’s wrong about Social Security, because if you can create more productive cities with the labor force you already have you don’t need to import workers to "fix" Social Security since the increased productivity will get you the same actuarial gains as a higher worker:retiree ratio.

I am surprised, though, that neither post uses the word "moral." I know they are both economists and therefore specializing in their comparative advantage in the arena of public debate, but the economic arguments (and economic language) is uniquely suited to explain the moral benefits of immigration, especially low-skilled immigration. If we allow millions of low-to-medium-skilled workers emigrate to the United States, their expected lifetime earnings will skyrocket and more than offset any expected wage losses from incumbent American workers – a massive potential Pareto improvement. Additionally, I think a major value shift we will see in coming decades is one where the long-standing assumption that the accident of your place of birth ought to be determinant of where you are allowed to live and work is increasingly questioned, and for good reason. If I wanted to live and work in Brussels or London, I don’t see why it’s completely obvious why the default position should be that I am prohibted from doing so and should have to work extremely hard to apply for permission, yet when I want to move from DC to San Francisco or Anchorage or Honolulu or Santa Fe or Austin or Miami or Minneapolis that I am free to do so. Obviously there are questions of practicality and sociopolitical sustainability (I think there should be a cap on net annual immigration to the United States – just a large one), but that would still mitigate in favor of a very different world than the one we inhabit.

In conclusion, I strongly suggest everyone go watch Like Crazy.

Went back to listen to old "The Incidental Economist" podcasts this morning, and listening to this one about raising the Medicare eligibility age, (not a transcript but points summarized here and here) I realized just how ingenious the ACA was.

During the debate on ACA, many progressives tried to bolster the case for the public option by pointing to massive budgetary savings. Didn’t work. C’est le vie. There’s no law or rule saying Congress has to pass good ideas.

However, there is a law prohibiting Congress from impletementing deficit-exploding ideas. Which means that if you, say, wanted to raise the Medicare eligibility age, well, that used to just push the costs of the government’s books. A net loss to society but a win for deficit hawks who think most people’s social value is limited to being beads in their abaci.

But with ACA in place, those people get scooped up by the exchanges, which means the government is still spending money on them. And since they are old, they will drive up premiums for everybody. Which means that shrinking Medicare doesn’t reduce the deficit anymore.

I think a "bwa ha ha" is in order.

This is insane:

D.C. United’s leadership is “very hopeful” of striking a deal to build a soccer stadium in Washington and end the MLS club’s decade-long search for a new home in the area, Jason Levien, the team’s managing partner, told the Insider…
United has targeted Buzzard Point — a largely undeveloped area near Nationals Park in Southwest — for a complex that would accommodate between 20,000 and 24,000 spectators and replace 52-year-old RFK Stadium as the team’s home venue.

United would finance the project but require help from the city to cover infrastructure and land acquisition costs. Pepco, a local power company, and Akridge, a developer, control the majority of the land.

This is a double boondoggle; firstly, because public investment in sports facility is generally a terrible idea, and secondly, because, oh, hey, what’s this thing over here?

Inline image 1

Why, it’s a massive stadium just outside Washington, DC! Maybe DC United should, you know, play there?

Karl Smith, who is very smart, is still stunningly dense on climate change:

One of the core ideas behind climate change is that if humans continue to burn fossil fuels then the earth will become warmer.

As it stands there are some places on earth that are so hot that no one wants to live there. There are also some places that are so cold that no one wants to live.

A baseline guesstimate might be that if the earth got warmer then the number of places that were too hot would expand and the number of places that were too cold would contract.

A possible strategy then would be for humans to move from the places that are newly too hot to the places that were formerly too cold.

Now this may very well be a horrible idea. In which case I would expect someone to say: I hear were you are coming from Karl but . . . . and that’s why that plan won’t work.

I’ve received a lot of email and tweets on this issue. I have tried to go through them all. So far I haven’t seen one that comes at it like that. Lots of folks mocked me. Some were kind enough to send along information on exactly how hot the too hot places might get and what the consequences of excess heat might be.

Yet, so far, nothing addressing why moving to cooler places won’t work.

Again, even if we are certain this won’t work its probably worth stepping through exactly why it won’t work. At least so everyone can be on the same page.

This is remarkably foolish. Just taking this at face value, you are just sacrificing an enormous amount of non-tradable capital by abandoning cities that would be in the too-hot category. People like Miami and Eilat and Quito and Nairobi and Jakarta and La Paz and Mexico City and all kinds of other places that could become overheated. We would lose a lot of built infrastructure, history, culture, and unique clusters of human interactions that way. Plus, if millions or billions of people are forced to evacuate their homes due to something that was preventable and not of their doing, that’s not very nice.

But this also radically understates what global warming really is. If all it did was “raise the temperature of every place on earth by X degrees” then I would just move to Boston or Montreal and call it a day. But it also, for example, melts the polar ice caps. Which could leave some of those formerly-cold-and-now-warm cities underwater since a lot of them are coastal. It could massively impact food supplies, leading to shortages which lead to starvation. It could cause hurricanes, tornadoes, and other dangerous weather systems to become more common and more extreme. It could make wet places dry and dry places wet, leading to flooding or fires. It could cause mass extinctions of species.

And most importantly, once you get into these kinds of scenarios, the simulations start to get haywire. Kind of like the scene from Sunshine (which tragically seems not be on YouTube) when Capa shows how projections of the bomb’s impact scramble the simulator past a certain point. This is what Matt Yglesias tried to say to Smith in a nice way about “tail risk” – is that it’s very possible that global warming could cause chain reactions of awfulness whose outcomes we cannot possibly predict. It’s the kind of thing economists have trouble pricing, sure, but it’s easier to price it when you acknowledge it. We’re not talking about just relocating vacation homes here.

I mean, seriously, dude, before you piss off the whole internets, at least read this first.

 

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