The Australian govt. passed a law requiring Facebook and Google to start paying for news content that appeared on their sites. However, the law did not specify any criteria for identifying pages that were in violation of the law.
This uncertainty creates a tradeoff when trying to design rules to comply with the law:
The documents show that Facebook deliberately created an overly broad process for deciding what was news and taking down supposedly news pages that swept up a lot of things that weren't news. And the document showed that it knew this. This was a choice. ...
The other thing Facebook didn't have ready was a process so that anyone who thought their page had been wrongly taken down could appeal to Facebook and ask to be reinstated. The company says it was still working on the appeals process when the takedown began. The massive takedown of Facebook pages may have wreaked havoc for the public, but for Facebook, it got the company back at the negotiating table with Australian lawmakers. ...
Within days, Australian lawmakers watered down the bill and added in language that said if Google and Facebook struck enough deals with the news publishers on their own, they could avoid that dreaded government run negotiation process: the so-called final offer arbitration.
There is a wing of the environmental movement that wants to punish consumerism, individualism, and America more than they want to solve environmental problems so they see an innovation agenda as a kind of cheating. Retribution is the goal of their practice.If you find yourself drawn to the weird atavistic sensibility to get back to the land (which would dramatically increase our carbon footprint--remember density is green), or unplug and return to a simpler (read dirtier, riskier, less interesting) golden past, don't. Instead read Steven Pinker's Enlightenment Now: The Case for Reason, Science, Humanism, and Progress.
In this elegant assessment of the human condition in the third millennium, cognitive scientist and public intellectual Steven Pinker urges us to step back from the gory headlines and prophecies of doom, which play to our psychological biases. Instead, follow the data: In 75 jaw-dropping graphs, Pinker shows that life, health, prosperity, safety, peace, knowledge, and happiness are on the rise, not just in the West, but worldwide. This progress is not the result of some cosmic force. It is a gift of the Enlightenment: the conviction that reason and science can enhance human flourishing.
...Many commentators, committed to political, religious, or romantic ideologies, fight a rearguard action against it. The result is a corrosive fatalism and a willingness to wreck the precious institutions of liberal democracy and global cooperation.
And as if to prove this point, The Atlantic shows up:
...the Enlightenment emphasis on the autonomous, rational individual can also lead to alienation and isolation, which make tribalist mythology all the more appealing.
When I get to demand and supply, I show students the unintended effects of rent control: a price ceiling below the equilibrium price results in shortages, as there are more people who want to buy at the controlled price than want to sell.
A new paper studying rent control in St. Paul shows that the policy doesn't even live up to intended purpose of transferring income from rich landlords to poor tenants:
For most of last year, Mr. Xi trumpeted a signature program known as “common prosperity” aimed at redistributing more of China’s wealth, amid concerns that elites had benefited disproportionately from the country’s economic boom. The program underpinned many of Mr. Xi’s policy drives, including a clampdown on technology companies that were seen as exploiting their market power to boost profits.But a year later, use of the term "common prospertity" is fading because
...the policies ... spooked business owners and slowed growth when Mr. Xi needs China’s economy to stay robust. He is preparing for political meetings expected to return him for a third term in power later this year.
$22,000/year (46 percent) higher more than they would have with their second-choice major
The price of a barrel of oil has shot up due to the Ukraine/Russia War and many felt the sting at the gas pump. This story at NBC News interviewed an owner of three gas stations in Texas who said he is losing money with the price increases.
“We’ve raised the price of fuel as little as we could [and] absorbed the price increases to cut into our profits,” he said. “On Friday, the wholesale price went up 21 cents. … Our price at the pump went up 11 cents.”
This indicates about a 52% pass-through of a change in industry marginal costs to prices, at least in the short-run. Slightly more of the burden of the cost increase falls on consumers with the rest falls on gas stations. The size of the pass -through is determined by both demand and supply elasticities. Perfectly elastic demand would generate a 100% pass-through while perfectly inelastic demand would generate no pass-through. This is somewhere in between and is consistent with recent estimates of the elasticity of demand for gasoline of -0.37.
The Ukrainians are offering 5 million Russian rubles and full amnesty to soldiers if they, “put down their guns and voluntarily surrender to prison.” That's about $47,000 or two years of average Russian GDP per capita. That may be enough to sway a wavering Russian conscript. But Ivan may not trust it. Would they better trust it if it came from the US?
My colleague, Tim Wunder, says the US should back these offers on deficit reduction grounds alone. For all 200,000 Russian troops thought to be involved, this would come to $9.4 Billion. The US House just approved $13.6 billion in aid to Ukraine so it is cheaper than funding the war. Not all have to accept the offer for the invasion to collapse. The other thing about this strategy is that we can afford it while the Russians could not afford to reciprocate. Tim suggests an extra amount thrown in if you "bring a friend." Bring a whole platoon and get even more. Heck, work it like a multi-level marketing campaign.
Yes it would be cheaper, but moral too.
Vladimir putin, so intent on bringing Ukraine under his control, is neglecting the problems facing Russians at home. A survey conducted between February 17th and 21st—that is, in the week before Mr Putin’s invasion—by the Levada Centre, an independent Russian pollster, found that 43% of Russians between the ages of 18 and 24 wanted to leave the country for good. And 44% of those who hoped to emigrate cited the “economic situation” as their motivation.Moving to higher valued uses
Need a forecast of how the Ukrainian / Russian conflict will be resolved? Ask the prediction markets! Predictit has created a security that tries to get at this. The price of this instrument can be interpreted as the probability that Putin holds onto the Russian presidency through the end of 2022, as determined by the collective wisdom of people willing to stake money on their beliefs. It started at 84% on 25 Feb but is closer to 74% as of 28 Feb.
In Russian cities, anxious customers started lining up on Sunday in front of A.T.M.s, hoping to withdraw the money they had deposited in banks, fearful it would run out. The panic spread on Monday.
...On Monday it plunged further, with the value of a single ruble dropping to less than 1 cent at one point. As the value of any currency drops, more people will want to get rid of it by exchanging it for one that is not losing value — and that, in turn, causes its value to drop further.
In Russia today, as the purchasing power of the ruble drops sharply, consumers who hold it are finding that they can buy less with their money. In real terms, they become poorer. Such economic instability could stoke popular unhappiness and even unrest.
From software developers working for US clients:
Hello team, now I am in a save place in the mountains near the Poland. As --- mentioned I have laptop not so strong to use it for development. Tomorrow I will try to buy it in Mukachevo city and will try to return to the work. Network is poor, but I think I will have ability to work.A few words about war: russians are very bad peoples especially from Chechnya. They stopped a car and killed a family with 2 children’s we know this family they killed all of them, children’s 3-5 years old….. Family want to move from Kiev today. I took my child, wife and my mother and we fill safe. My father and sister couldn’t move from Kiev. They are on the front line with enemy. We have a contact with them. Hope they will be alive.Also tomorrow I will go and give my blood for our army.Please if you have time: share the information about Russians invaders in different channels. We need to stop them. This is terrible!!! lovely and pleasure capital of Ukraine Kiev was bombed all night. Millions of people are staying at home. It is a disaster!!!!!Be safe and pray for Ukraine.Best regards, -----
...pay transparency causes significant increases in both the equity and equality of pay, and significant and sizeable reductions in the link between pay and individually measured performance.HT: MarginalRevolution.com
Tim Harford ("The Undercover Economist") suggests that it is due to selection bias:
...in a country where the barriers to paid work for women are high, the few women who do have jobs at multinational companies are outstandingly good. These high‑flyers are promoted and paid more than the average man. This suggests that there are women outside the workforce who, if they did have paid jobs, would be well above average even if they weren’t superstars. If the barriers to their workforce participation could be lowered, they would raise the productivity of the companies that employed them.Bottom line: Inefficiency implies opportunity for those with the imagination and initiative to exploit it.
Interesting story from Wharton that illustrates a number of ideas from the book.
Airbnb was born in 2007, when two broke designers were trying to make rent on their San Francisco Apartment. When a design conference came to town, and hotels were sold out or charging surge prices, they bought some air mattresses put them on their floor, and rented them to conference attendees.
About ten years ago, I invited PJ to speak at Vanderbilt and had the pleasure of introducing him to my students. Thank you PJ.
A new PLos One study by Lisa Powell and Julien Lader, compared beverage consumption in Seattle and Portland after Seattle, but not Portland, instituted a "sugar tax" on soda. They found a 7% increase in beer consumption in Seattle relative to Portland. They estimate the cross-price elasticity to be 0.35. The tax was meant to cut the medical costs of obesity due to excess sugar intake. The social costs to additional beer drinking may be even higher. Not only is beer calorie rich, people tend to function less well while inebriated, leading to various injuries. Below are the raw trends in beer sales.
From a managerial perspective, beer distributors who anticipated the substitution would have increased production enough to maximize profits from this shift in demand.
Growing up seeing the NASA Apollo missions, it was easy for me to believe that I would see rockets flying all over the solar system. Despite the triumphs of the Shuttle, ISS, and Mars rovers, the next 40 years did not quite live up to expectations. But the last 10 did. For forty years, the costs barely budged but they have fallen one hundredfold since 2010! See this cool info-graphic on truly revolutionary changes in costs.
The WSJ gives us a clear answer: NO.
Although this is a gross simplification of the argument, ESG investing to save the environment means buying fossil reserves and leaving them in the ground where they lose all their market value.
The ESG paradox: "if you don't lose money on ESG investing [relative to non-ESG investing], ESG investing doesn't work. Take your pick."
“In venture capital, you think a lot about so-called adverse selection,” Mr. Andreessen says. “ ‘Why am I so lucky as to be the person you’re trying to raise money from?’ You want to get to positive selection, the best people coming to you.”
...
“Super-talented” people, Mr. Andreessen figures, leave academia or big companies because they realize they’re “swimming in an ocean of mediocrity.” Hence the positive selection for venture capitalists.
Here's why:
Mr. Andreessen starts with the replication crisis in scientific studies, especially in psychology—over half of studies can’t be replicated. I suggest “studies show” are the two most dangerous words in the English language.
HT: Quinn
Interesting article about how market institutions are changing with blockchain technology:
Double Marginalization occurs when two firms within a supply chain "compete" for the value the chain creates. The upstream firm's margin becomes part of the marginal cost incurred downstream which then gets magnified by the downstream firm setting its margin. Prices are too high, output is too low, and further investment is less profitable. If the firms were to integrate, they would "marginalize" only once, leading to increases in consumer surplus and profits to all parties.
An analogous effect occurs when a turnover tax becomes a value added tax (VAT). A turnover tax, or sales tax, is a margin on all firms within a supply chain while a VAT represents a single margin. Firms in a supply chain tend to merge simply to avoid multiple turnover taxes. In "How Distortive are Turnover Taxes? Evidence from Replacing Turnover Tax with VAT," Xing, Bilicka and Hou investigate what happened in China when taxation transitioned from a turnover tax to a VAT. Without the motive to avoid double marginalization, firms can now outsource more if outsourcing is more efficient. As predicted:
The reform increased sales, R&D investment, and employment for affected service firms, which is primarily driven by outsourcing from downstream manufacturing firms. We document that smaller and less innovative manufacturing firms outsource more, and reallocation increases the quality of innovation for affected service firms.
The ability of these companies to vertically integrate all the way down to the level of the physical infrastructure of the internet itself reduces their cost for delivering everything from Google Search and Facebook’s social networking services to Amazon and Microsoft’s cloud services. It also widens the moat between themselves and any potential competitors.
Maxim: Consider all costs and benefits that vary with the consequence of a decision [if you miss some that is the hidden-cost fallacy]; but only costs and benefits that vary with the consequence of a decision [if you consider irrelevant ones that is the sunk-cost fallacy].
On Christmas day, the headline in the NY Times business section was As Prices Rise, Biden Turns to Antitrust Enforcers. Larry Summers immediately [and correctly] bashed the idea:
“The emerging claim that antitrust can combat inflation reflects ‘science denial,’ ” tweeted Harvard economist Lawrence Summers, a senior official in the Obama and Clinton administrations. “There are many areas like transitory inflation where serious economists differ. Antitrust as an anti-inflation strategy is not one of them.”
In the late 1970's, I heard John Kenneth Galbraith, the economist in charge of price controls during WWII, say much the same. He called the idea "the last refuge of a vacant liberal mind." The turn of phrase was so elegant and shocking--at the time, I was a liberal--it has stayed with me.
