October 15, 2018

Free Trade Benefits Harley-Riding Econometricians (and All Other Consumers Too)

Roughly 40 years ago, I completed a very useful econometrics course at the University of Chicago taught by the author of the commentary quoted below. Life is hard to predict, with or without econometrics. Who could have predicted that Eddie Lazear would end up on a Harley?

(p. A15) When I served in the George W. Bush administration, a group of Harley-Davidson -riding cabinet members and White House principals led the 2008 Memorial Day Rolling Thunder motorcycle parade. I own a 100th Anniversary Year Road King Classic. I am disappointed to see President Trump singling out the iconic American motorcycle company for harassment--a precedent that could inflict long-run damage on the U.S. economy.

. . .

Mr. Trump may genuinely believe his trade tactics will pressure other countries to reduce their tariffs, resulting in freer trade overall. This is unlikely. In the meantime his policies impose steep costs on American firms, like Harley-Davidson, and the people who want to buy from them. The best way to get others to buy American is to produce high-quality goods inexpensively. Those American products that do well abroad, Harley-Davidson motorcycles among them, succeed because consumers value them, not because tariffs and trade-war threats force them to buy American.

For the full commentary, see:

Edward Lazear. "Keep Your Tariffs off My Harley." The Wall Street Journal (Tuesday, Aug. 28, 2018): A15.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date Aug. 27, 2018.)

October 14, 2018

"I'm Alive and That's an Extremely Good Thing"

(p. A4) HONG KONG -- When Bill Jaynes realized water was rushing into the plane, he started to panic.

Mr. Jaynes, a Micronesian journalist, was aboard a plane set to land on Weno, the tiny Pacific island that is part of the Federated States of Micronesia.

"I thought we landed hard until I looked over and saw a hole in the side of the plane and water was coming in," he said in a Facebook video, describing the landing of a Boeing 737-800 flown by Air Niugini at Chuuk International Airport on Friday morning [September 28, 2018]. "And I thought, well, this is not, like, the way it's supposed to happen."

But then help suddenly arrived -- from a flotilla of local boats that rushed to the plane, which landed short of the runway in the Chuuk lagoon, and all 47 passengers aboard the aircraft were evacuated, according to early statement from the airline.

"It's just surreal," said Mr. Jaynes, managing editor of The Kaselehlie Press, a newspaper on Pohnpei, another Micronesian island.

Matthew Colson, a Baptist missionary who lives on Weno, recorded the rescue effort and posted his interview with Mr. Jaynes on Facebook. He said the locals who rushed their boats to the scene were fisherman and construction workers, all locals.

. . .

Mr. Jaynes, reflecting on the experience, said, "I'm alive and that's an extremely good thing."

For the full story, see:

Austin Ramzy. "When a Plane Crashed in the Pacific, Fishing Boats Came to the Rescue." The New York Times (Saturday, Sept. 28, 2018): A4.

(Note: ellipsis, and bracketed date, added.)

(Note: the online version of the story has the date Sept. 27, 2018, and has the title "'Their Plane Was Set to Land. The Water Rushed In. Then, the Boats Came.")

The passages quoted above, provide one more example of one of the main messages of:

Ripley, Amanda. The Unthinkable: Who Survives When Disaster Strikes - and Why. New York: Crown Publishers, 2008.

October 13, 2018

Higher Minimum Wages Increase Automation of Routine Tasks

(p. A11) Over the past few years, San Francisco in particular, and California in general, has increased the cost to hire and train employees at risk of being automated. The minimum wage will rise to $15 an hour in San Francisco in 2018. The rest of California will get there four years later. On top of San Francisco's hourly wage mandate are requirements for health care, paid leave and employee scheduling.

These added costs give employers with already slim profit margins a strong incentive to automate or embrace self-service. In an interview with Forbes, the founder of a delivery robot company linked his product's value proposition to a rising minimum wage: "At something like $10 per delivery, the majority of citizens will not use [human delivery]. It's too expensive."

The empirical evidence supports the anecdotes: An August [2017] study published by the National Bureau of Economic Research linked a rising minimum wage to an increase in unemployment for workers in jobs that require a large number of routine tasks. The authors reported that it wasn't just service-industry jobs at risk. A rising minimum wage also had a negative effect on job opportunities for older, less-skilled employees in manufacturing.

For the full commentary, see:

Michael Saltsman. "CROSS COUNTRY; San Francisco's Problem Isn't Robots; It's the $15 Wage Floor; The city fears automation will replace workers--but its own policies make low-value jobs illegal." The Wall Street Journal (Saturday, Nov. 25, 2017): A11.

(Note: bracketed year added.)

(Note: the online version of the commentary has the date Nov. 24, 2017.)

The later published version of the National Bureau of Economic Research study mentioned above, is:

Lordan, Grace, and David Neumark. "People Versus Machines: The Impact of Minimum Wages on Automatable Jobs." Labour Economics 52 (June 2018): 40-53.

October 12, 2018

Closed Malls Repurposed as Distribution Centers

(p. B6) The pressure for speedy online package delivery is prompting companies to look for distribution facilities closer to residential areas or highways.

Some of the best locations, it turns out, are dead malls.

Warehouse landlords say they like former malls because the shopping centers occupy swaths of space relatively close to where consumers live or near main highways.

But it isn't easy to convert a mall into logistics space quickly. Developers say it takes a community ready to accept that the mall has failed as well as understanding that there are viable job opportunities in logistics real estate.

For the full story, see:

Esther Fung. "The Best Location for New Warehouse Is Often an Old Mall." The Wall Street Journal (Wednesday, Aug. 9, 2017): B6.

(Note: the online version of the article has the date Aug. 8, 2017, and the title "The Best Place for a New Warehouse? An Old Mall.")

October 11, 2018

Communism Is "the Greatest Catastrophe in Human History"

(p. A17) Armed Bolsheviks seized the Winter Palace in Petrograd--now St. Petersburg--100 years ago this week and arrested ministers of Russia's provisional government. They set in motion a chain of events that would kill millions and inflict a near-fatal wound on Western civilization.

. . .

The victims include 200,000 killed during the Red Terror (1918-22); 11 million dead from famine and dekulakization; 700,000 executed during the Great Terror (1937-38); 400,000 more executed between 1929 and 1953; 1.6 million dead during forced population transfers; and a minimum 2.7 million dead in the Gulag, labor colonies and special settlements.

To this list should be added nearly a million Gulag prisoners released during World War II into Red Army penal battalions, where they faced almost certain death; the partisans and civilians killed in the postwar revolts against Soviet rule in Ukraine and the Baltics; and dying Gulag inmates freed so that their deaths would not count in official statistics.

If we add to this list the deaths caused by communist regimes that the Soviet Union created and supported--including those in Eastern Europe, China, Cuba, North Korea, Vietnam and Cambodia--the total number of victims is closer to 100 million. That makes communism the greatest catastrophe in human history.

For the full commentary, see:

David Satter. "100 Years of Communism--and 100 Million Dead; The Bolshevik plague that began in Russia was the greatest catastrophe in human history." The Wall Street Journal (Tuesday, Nov. 7, 2017): A17.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date Nov. 6, 2017.)

October 10, 2018

"Wishing Only for More Time"

(p. A20) Walter Mischel, whose studies of delayed gratification in young children clarified the importance of self-control in human development, and whose work led to a broad reconsideration of how personality is understood, died on Wednesday [September 12, 2018] at his home in Manhattan.

. . .

In a series of experiments at Stanford University beginning in the 1960s, he led a research team that presented preschool-age children with treats -- pretzels, cookies, a marshmallow -- and instructed them to wait before indulging themselves. Some of the children received strategies from the researchers, like covering their eyes or reimagining the treat as something else; others were left to their own devices.

The studies found that in all conditions, some youngsters were far better than others at deploying the strategies -- or devising their own -- and that this ability seemed to persist at later ages. And context mattered: Children given reason to distrust the researchers tended to grab the treats earlier.

. . .

For the wider public, it would be the marshmallow test. In the late 1980s, decades after the first experiments were done, Dr. Mischel and two co-authors followed up with about 100 parents whose children had participated in the original studies. They found a striking, if preliminary, correlation: The preschoolers who could put off eating the treat tended to have higher SAT scores, and were better adjusted emotionally on some measures, than those who had given in quickly to temptation.

The paper was cautious in its conclusions, and acknowledged numerous flaws, including a small sample size. No matter. It was widely reported, and a staple of popular psychology writing was born: If Junior can hold off eating a marshmallow for 15 minutes in preschool, then he or she is headed for the dean's list.

. . .

In 2014, Dr. Mischel published his own account of the experiment and its reception, "The Marshmallow Test: Mastering Self-Control."

In at least one serious replication attempt, scientists failed to find the same results. Still, there is general agreement that self-discipline, persistence, grit -- call it what you like -- is a good predictor of success in many areas of life.

. . .

"I am glad that at the choice point at 18 I resisted going into my uncle's umbrella business," he wrote in the autobiographical essay. "The route I did choose, or stumbled into, still leaves me eager early each morning to get to work in directions I could not have imagined at the start, wishing only for more time, and not wanting to spend too much of it looking back."

For the full obituary, see:

Benedict Carey. "Walter Mischel, 88, Marshmallow Test Creator, Dies." The New York Times (Saturday, Sept. 15, 2018): A20.

(Note: ellipses, and bracketed date, added.)

(Note: the online version of the obituary has the date Sept. 14, 2018, and has the title "Walter Mischel, 88, Psychologist Famed for Marshmallow Test, Dies'.")

Mischel's book on delayed gratification, is:

Mischel, Walter. The Marshmallow Test: Mastering Self-Control. New York: Little, Brown and Company, 2014.

October 9, 2018

"No Clear Path" for AI to Match Humans in "Broad, Integrated, Flexible and Robust Understanding of the World"

The author of the comments quoted below is a Duke University Professor of Computer Science.

(p. A15) For those not working in AI, it can be difficult to interpret achievements in the field.

. . .

. . . the AI system solves problems in a very different way than humans.

. . .

Tasks that require responding to the same kind of standardized input over and over, with a clear measure of success, are a natural fit. Such tasks range from the diagnosis of medical images to flipping burgers. On the other hand, jobs that are messy and unpredictable and require an understanding of people and the broader world--I like to think of kindergarten teachers--will likely remain safe for a long time.

Much progress has been made in AI in a short time, so future breakthroughs are not unthinkable. For now, humans remain unsurpassed in their broad, integrated, flexible and robust understanding of the world.

. . .

. . . currently there is no clear path toward building such systems.

For the full commentary, see:

Vincent Conitzer. "Natural Intelligence Still Has Its Advantages; AI is disruptive, but it hasn't rendered humanity obsolete." The Wall Street Journal (Wednesday, Aug. 29, 2018): A15.

(Note: ellipses added.)

(Note: the online version of the commentary has the date Aug. 28, 2018.)

October 8, 2018

Automation Predicted to Destroy 19 Million Old Jobs and Create 21 Million New Jobs

(p. B5) At least 21 new job categories may soon emerge from technological and other societal changes, says a new report from IT-services and consulting firm Cognizant Technology Solutions Corp.

With titles such as "genetic diversity officer," "virtual store sherpa" and "personal memory curator," these roles aren't science fiction, the study's authors argue. Rather, they are identified as jobs many employers will have to fill within the next decade.

"It's easier to understand what types of jobs are going to go away," says Ben Pring, director of Cognizant's Center for the Future of Work, . . .   The idea behind the report, he says, was "to craft a credible narrative of what we're going to gain."

. . .

Mr. Pring and his colleagues say the dawning age of intelligent machines won't be without painful upheaval: They estimate about 19 million positions in the U.S. will be automated out of existence in the next 15 years, while employers create some 21 million new roles. At the same time, the majority of existing ones will likely be enhanced. "Work will change, but it won't go away," Mr. Pring says.

For the full story, see:

Vanessa Fuhrmans. "A Future Without Jobs? Think Again." The Wall Street Journal (Thursday, November 16, 2017): B5.

(Note: ellipses added.)

(Note: the online version of the story has the date Nov. 15, 2017, and has the title "How the Robot Revolution Could Create 21 Million Jobs.")

The Cognizant report, mentioned above, is:

Pring, Ben, Robert H. Brown, Euan Davis, Manish Bahl, and Michael Cook. "21 Jobs of the Future: A Guide to Getting - and Staying - Employed for the Next 10 Years." Teaneck, NJ: Cognizant's Center for the Future of Work, Nov. 15, 2017.

October 7, 2018

"Much Less" Poverty in U.S. Now Than 30 Years Ago

(p. A15) Instead of focusing on reported incomes, our work measures poverty based on consumption: what food, housing, transportation and other goods and services people are able to purchase. This approach, which captures the effect of noncash programs and accounts for the known bias in the CPI-U, demonstrates clearly that there is much less material deprivation than there was decades ago.

Other indicators support this finding. According to the American Housing Survey, the poorest 20% of Americans live as the middle class did a generation ago as measured by the square footage of their homes, the number of rooms per person, and the presence of air conditioning, dishwashers and other amenities. In terms of housing problems like peeling paint, leaks and plumbing issues, today's poor haven't quite matched the living standards of the 1980s middle class, but they are getting close.

For the full commentary, see:

Bruce D. Meyer and James X. Sullivan. "Hardly Anyone Wants to Admit America Is Beating Poverty; The White House tells the truth, but partisans on both sides are wedded to the idea of failure." The Wall Street Journal (Tuesday, Aug. 7, 2018): A15.

(Note: the online version of the commentary has the date Aug. 6, 2018.)

October 6, 2018

Hershey Gave the World Chocolate Candy and a Single, Very Rich, Residential School

(p. A19) In the early 20th century, Milton Hershey transformed chocolate from a luxury good to a working-class staple. It made him a fortune, which he used to establish Hershey, Pa.--a model company town 100 miles west of Philadelphia and the self-proclaimed "sweetest place on earth." He also established an orphanage, the Milton Hershey School, to provide housing and education primarily for children from the area.

. . .

Other early-20th-century philanthropists, such as Andrew Carnegie and John D. Rockefeller, left behind massive general-purpose foundations that underwrote experiments in medicine, science and higher education, Mr. Kurie observes, while Hershey "gave us chocolate candy and a single residential school in south-central Pennsylvania that remains little known outside the region."

. . .

. . . , [Mr. Kurie] suggests that the trust can be viewed as a model of philanthropic responsibility, even by institutions without a devoutly local focus. Mr. Kurie's most significant contribution here is to draw attention to philanthropy's "external stakeholders," those people and organizations "who are neither agents nor subjects of philanthropy but who are, for better or worse, caught up in its activities." He demonstrates how a philanthropic institution can continue to reflect a founder's vision while shaping and being shaped by the community that grows up around it, one whose bonds can often be bittersweet.

For the full review, see:

Benjamin Soskis. BOOKSHELF; A Man, a Brand, a School, a Town." The Wall Street Journal (Monday, March 26, 2018): A19.

(Note: ellipses, and bracketed name, added.)

(Note: the online version of the review has the date March 25, 2018, and has the title "BOOKSHELF; 'In Chocolate We Trust' Review: A Man, a Brand, a School, a Town.")

The book under review, is:

Kurie, Peter. In Chocolate We Trust: The Hershey Company Town Unwrapped. Philadelphai, PA: University of Pennsylvania Press, 2018.

Eight Most Recent Comments:

PaulS said:

The "Machines Are Not Capable of Creativity" argument and the no-human-obsolescence argument seem to talk directly past each other. After all, the present-day world is stuffed to the brim (and well beyond) with government and other regulations expressly designed to suppress "creativity" at all cost, in the name of "safety". That is, in a context of irrationally radical risk aversion - the quest for absolutely zero risk - the societal "we" often seek to rid ourselves of "creativity".

Thus, "creativity" has become largely restricted to a minuscule minority (further shrunken by metastasizing copyright and patent regulations that concentrate funds ever more narrowly), and/or, sometimes, to tasks that matter little, such as entertainment. Most "jobs" or "gigs" are left as tightly controlled drone work. "True" artificial intelligence is thus utterly unnecessary to obsolete most of the humans performing them. "Big Data" and "Big Software" will completely suffice. (The last thing you want in a self-driving taxi, or even in a political-correctness-driven professorship, is "true" AI: at least for now, it would be a lawsuit magnet, far too unpredictable.)

With the definition of "safety" steadily metastasizing to include even the most utterly trivial discomforts (viz. the campus 'snowflakes'), the only excuse left for most jobs to exist might be a desire for "the human touch". Indeed, the lack of said touch is one complaint about kiosks that replace restaurant counter clerks or waiters.

But once the primary justification for jobs to exist is to enable the most affluent to go on receiving "the human touch" - i.e. to enable them to pull rank - the process will not end well. People hate to be on the receiving end of rank-pulling. We will become stuck with either a guaranteed-income approach, or else a widespread, intensely Luddite reaction.

This is all destined to become "interesting" - but likely, alas, mainly in the accursed sense.

PaulS said:

Probably this should be unsurprising for a number of reasons, even going beyond the article.

Today's zeitgeist, of course, tells us that everyone should become a Web designer living four to a tiny dorm room in a skyscraper in grossly overpopulated urban California. As if most tech products haven't been fully mature for years or even decades, with updates mainly confined to befuddling customers with never-ending capricious changes to the functions of device or software controls (e.g. quick, how exactly do you summon up the "home screen" this week? Or is said screen now a wholly inscrutable tri-level icon-menu?)

So, what use are more techies? But even if there are better things to do, many such things "don't get no respect" amidst the STEM panic.

Then there's the seasonal aspect. The great majority of construction - homes and otherwise - seems to be done, these days, in the torrid (and ever-rising, especially in paved-over urban areas) heat of high summer. This is not completely new, but, well, air-conditioning has been widespread for decades now. There's no longer much need or desire to go outside to escape the even worse heat inside buildings and houses. Even poor-ish countries like China are rapidly acquiring A/C.

Now, once central heat became widespread, people stayed inside to escape the freezing, dark depths of winter. That is a trope, for example, with Christie's Hercule Poirot, derided as a "dandy" by his presumably more manly fictional contemporaries, for disliking cold, chilly old English houses lacking proper heat. And indeed, rather little outdoor construction goes on in the north in January.

Given that, why wouldn't sensible people now also want to stay inside during the blistering heat of high summer? Certainly, there are many ways to earn a living without torturing oneself in a furnace. (And, ignore all the caterwauling, why wouldn't sensible kids want to play video games in a nice comfortable living room instead of parboiling miserably outside?)

At the end of the day, construction - i.e. working under awful conditions few humans wish to tolerate any longer - seems like a great opportunity for robotics. Alas, what is hyped as "artificial intelligence" (AI) is usually nothing of the kind, or else is so ultra-narrowly specialized (think chess or go) as to be of little or no broad use. Nonetheless, a great deal of robotics can be built already without true AI, and such AI will eventually arrive too.

So why isn't more robotics used? Why isn't more outdoor construction shifted away from high summer, as it is from the worst of winter, i.e. to spring and fall? Why isn't there tremendously more factory prefabrication? Why do so many construction sites - buildings and highways - still look, despite the use of diesel engines and such, so very nineteenth-century?

PaulS said:

Wonderful. Let's go for strict temporal gating as well as spatial gating. Exile everyone not made of money to the anti-social hours of the clock as well as the monster commutes of the far reaches of Queens and Staten Island. How about fixing the subways, and abolishing the nonsense that makes it take 90 years to build one small 2nd Ave line? How about dispersing the overconcentration of people a bit? It's a huge country and modern communication exists. How about paying for same by taxing the living daylights out of the billionaire rentier class who create the problem by forcing ever more people to cram into highly dysfunctional megacities as the price of having any income at all? You gotta love the nexus between airheaded liberals who want to pile everyone on Earth with a sob story into a few US-ian megacities (rather than fix their own governments and problems), and economics types who then want to punish the very same folks by blocking off absolutely everything with an extortionate toll gate. Not.

PaulS said:

"when the alternative is to have $10 and go thirsty"

In the real world, the politics will get "interesting" with respect to folks who *don't* have $10 to pay for what normally costs $1 or $0.10, and will therefore go thirsty, or be stranded, or worse. Then, also be aware of simple resentment. Then, aggravate the anger with runaway inequality so extreme that the elites running the show will not be inconvenienced in the slightest by any likely level of 'gouging'. Then brace for a social explosion.

All told, it seems fatuous to expect very many people to be happy about being charged, say, an entire car payment just to get home across town from the holiday party. (It seems even more fatuous to expect happiness when the 'gouging' comes as an ongoing life-upending surprise, as with I-66 in Virginia.)

It helps to instead ground oneself in reality. After doing so, it's ridiculously easy to imagine the relevant government and/or employer simply declaring, for example: "If you wish to be allowed to drive a taxi at all, then you will make yourself available, to some specified extent, even at times that may be inconvenient for you."

Indeed, such rules and regulations are utterly banal and commonplace. Nary a soul would weep for Uber if it and its drivers were regulated - even rather harshly - in such a manner. Of course, some souls would become exercised over the minor economic inefficiency of such regulation, but they would number far too few to matter.

PaulS said:

"Dr. Gray was skeptical about the causes of climate change, prompting vitriolic exchanges with other scientists. Judith A. Curry, who was chairwoman of the School of Earth and Atmospheric Sciences at the Georgia Institute of Technology, accused him of 'brain fossilization.'"

I had no idea. These days, after all, Curry is very much in the doghouse as a "climate denier". Wow. What, then, can we deduce about the typical (or merely politically-correct?) level of hysteria in the "climate community"? Of course, many in said "community" would force most of us back into the Stone Age while they themselves continue to jet across the world at whim to attend "conventions" in order to signal virtue by delivering half-hour diatribes on saving the "planet" from impending doom.

Maybe, then, The Donald is right (???!) that it is fairly safe to behave just as the doomers do, and ignore the threat - and their own diatribes - as a practical matter? Wouldn't that be weird?

PaulS said:

Another case in point: between them, Google, Tesla, and others have spent countless billions on mapping the USA, enough for at least $1000/mile including every last obscure Forest Service track. That should be more than enough to catalog everything down to the embossing style on every manhole cover. And yet a person can find their way to Grandma's new house with vague turn-by-turn directions or a vague line-sketch that shows no details whatsoever about the road surface or the sidewalks or the crosswalks. And a person will manage the task without needing, in advance, a finely detailed map of the current construction projects, including lane changes etc. But that severe incompleteness won't stop morally-posturing politicians from forcing autonomous cars onto the populace years or even decades before they are actually ready for unsupervised consumer use. That is the essentially only kind of use they will get in the real world. After all, politicians love to posture, they love to toady up to rent-seeking billionaires, and they love photo-ops of themselves gawking at shiny new tech gadgets. Note that when signals were first installed on the Chicago El, the accident rate went up for a time, as trained motormen became careless about watching where they were going. Not-so-trained consumers will be far too busy fiddling with their phones to be ready to take over on a split-second's notice.

PaulS said:

And there will be unicorns. So we'll have some remote working, but we'll be jailing ever more techies in a few obscenely overcrowded, otherworldly-expensive megacities. Just as Microsofties once told us wasting two days on the now-infamously godawful airlines just to physically attend an hour meeting was going away, but both the meetings and the airlines only got worse and worse.

So not really a big deal, just another stylistic business fad. Those come and go like mayflies - while being crammed, confined, and nailed down, remains eternally.

rjs said:

there's a lot GDP doesnt capture, but i'm not sure where Feldstein is coming from about statins...the consumption of drugs is included in the non-durable goods component of PCE, consumption of health care services by themselves account for 12% of GDP, and R & D would be included in investment in intellectual property products.. the problem is that everyone is trying to make GDP into something it's not...it's a measure of goods and services produced by the economy, full stop. it's not intended to measure increases in life expectancy or well being, or any other intangibles..



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