We find that IPP capital entirely explains the observed decline of the US labor share, which otherwise is secularly constant over the past 65 years for structures and equipment capital.
IPP stands for intellectual property products. Nick Bunker discusses the paper. Pointer from Mark Thoma.
That’s not what I’m really doing, although it may seem like it. A commenter writes,
things like eBay show that enabling cooperation (which does not require the use of force) provides advantages that overwhelm the costs of punishing defectors. In this regard economies of scale favor an-cap
Taking existing institutions as an existence proof for the feasibility of an-cap is not a valid argument. The fact is that eBay exists in a world with government. People who use eBay probably assume in the background that if a situation comes up where they think that they are getting shafted they can take the other party, or eBay itself, to a government court. That court will resolve the dispute, and everyone understands going in what that process will consist of. If we suddenly switched to an-cap tomorrow, that process would have to be worked out, and in the mean time, people might be a lot more cautious about undertaking transactions on eBay, or anywhere else for that matter.
I am suggesting that people see government as an institution that gives them confidence that disputes will be resolved in a reliable, peaceful way. If you take away government, you cannot be sure that people will still have that confidence, even if you think that in theory they should.
Matt Ridley shares America’s eroding faith in institutions, but he doesn’t much believe in supervillains. He is a true libertarian, to an extreme you rarely see in American public discourse.
Similarly, I wrote that He offers full-frontal libertarianism.
Unfortunately, Tankersley goes on to say
In the world Ridley sketches in the book, everything will eventually work itself out for the better, thanks to free markets and survival of the fittest — so no one feels any obligation to try to change things for the good.
This is a straw man. No libertarian, including Ridley, expresses such a point view. Libertarianism is perfectly compatible with individuals feeling an obligation to change things for the good. What libertarianism rejects is the notion of equating “changing things for the good” with government planning and coercion. The day to day commercial activities of people change things for the good in an inexorable fashion, although the process works by trial and error, so it is never flawless. The attempts by politicians and government officials to change things for the good tend to work out less well on average.
annual global production of lithium has more than doubled from from about 16,000 metric tons in 2004 to over 36,000 metric tons by 2014. Even with this rise in quantity produced, the price of a metric ton of lithium carbonate has risen from $5,180 in 2011 to $6,600 in 2014.
He cites a report from Goldman Sachs on emerging themes, one of which is “Lithium is the new gasoline.” (The other claims in the report are also provocative.)
Changing our energy technology does not automatically eliminate scarcity. It is instead a form of substitution.
Back in the 1950’s, let’s say, I read your views in a book or magazine and wished to argue with them, I might have sent a letter to the editor or written an article of my own — preferably for a publication with high status (The New Criterion, say) or salience (Architectural Review) or visibility.(The Saturday Evening Post). I’d have to be reflective, I’d have to argue logically, I’d have to consider objections to my comments, etc. My piece would have to pass scrutiny by an editor and possibly be revised. And after that I’d have to wait for it to be published and for others to react, This was a slow process.
On the internet, I can react to opinions almost as quickly as I encounter them, with little screening for sense or relevance or accuracy. I can indulge my emotions IMMEDIATELY, which sadly provokes quick responses. And to make matters worse, a major source of satisfaction for internet commentators is getting their comments in particularly quickly, both to be noticed (“I’M FURZT DUDES!”) and to shape the discussion which follows.
I’m not sure if there’s a cure for this. My heart longs for the good old days of Little Magazines and earnest journalists living in garrets and Concerned Readers from the provinces penning their long Letters To the Editor. But that environment rested on exclusivity and economic supports of advertising and subscriptions which aren’t easily duplicated on the internet. It seems irrecoverable.
I would say that the Internet has given us three things, all of which are mixed blessings. I expect that Martin Gurri’s book, which I have just started [UPDATE: well, actually I have finished it, but as you know I work a lot with scheduling posts in advance, in part to discipline myself against reacting instantly], will speak to these.
1. More sources of information.
2. Less centralized filtering of information.
3. The ability to react instantly.
It is possible that all three of these are harmful to our culture. But I think that (1) and (2) can be more of a plus than a minus. (3) is what worries me. We are training people not to reflect, not to be charitable to those who disagree, not to try to open minds but to close minds–especially the minds of people who are inclined to agree with us. We encourage put-downs and “this one chart proves….” and ad hominem arguments.
My e-book The Three Languages of Politics describes the result: a strongly tribalized political culture, in which communication consists of signals that simplify issues so that they fall on each person’s preferred axis.
Maybe in a few weeks I will have forgotten about Martin Gurri and moved on to something else, but right now I am viewing everything in the newspaper through the lenses he provides in The Revolt of the Public.
One of Gurri’s themes is that elites now make unrealistic promises to the public, and the public soon discovers this, discrediting the elites. So, in today’s WaPo, the lead story is about world leaders denouncing the North Korean test of a hydrogen bomb. The public is going to view this as a government failure. After all, back in the Clinton Administration, they reached a deal with North Korea that was supposed to keep it from going nuclear altogether. The WaPo buries the issue of the Iran deal in a different story, and there the spin is that the Iran deal is a success because Obama paid attention to it while he let North Korea slip his mind. My guess is that this talking point is not going to work with the public.
The second top front-page story is headlined Germany targets a surge in vitriol (the digital version uses different wording but gives the same message). Later down in the story, you read about the New Year’s Eve rampage in Cologne that was “allegedly committed by gangs of young Arab and North African men.” My guess is that the public thinks that the lead story is the rampage, not the vitriol. And the public sees the rampage as evidence of government failure in its promise to absorb immigrants without problems. (Of course, I am over-generalizing when I say “the” public, but you can be sure that I am describing a significant segment of the population.)
UPDATE: A Failure by Germany’s Elite.
Another of Gurri’s themes is that the elites are blindsided by the public. The elites take it for granted that they are competent and that their authority will be respected. When the public revolts, the elites’ first inclination is to go into denial.
I have just about finished reading The Revolt of the Public. It is an important book, but not easy to digest. I give Virginia Postrel a lot of credit for boiling it down fairly well, but there is more to it than fit in her write-up.
Back in the 1990s, a lot of people tried to forecast the impact of the Internet on politics. Libertarians thought that it would lead to a more libertarian world. Social democrats thought it would lead to a more social democratic world. I don’t recall any conservative prognostications.
Gurri says it could lead to a more nihilistic world, one in which newly-empowered outsiders tear down elite control structures but are then left with the question, “Now what?”
Gurri says that elite insiders have difficulty coming to terms with the revolutionary implications of the new communications environment. Cue Ross Douthat, trying to explain why he did not foresee the Donald Trump phenomenon.
Now if I wanted to avoid giving Trump his due, I could claim that I didn’t underestimate him, I misread everyone else — from the voters supporting him despite his demagoguery to the right-wing entertainers willing to forgive his ideological deviations.
In fact, I lean toward that view. There was a market niche available, and Trump happened to fill it. Some of it reflects his individual skill, but I am not inclined to put too much emphasis on that.
The point about “right-wing entertainers” is well taken. For years, conservative talk radio personalities have railed against “RINO’s” (Republicans in Name Only) and claimed that if the Republicans stopped nominating me-too candidates and instead ran a real conservative for President they would win. The way that I look at it, anyone who really believed in the need for Republicans to nominate someone reliably conservative would prefer almost any Republican candidate in the race other than Trump. (I am hardly alone in that view.) But it seems that the talk radio hosts are happy to toss prior convictions out the window in order to excite their listeners.
I keep going back to the 1960s. In 1964, Barry Goldwater was nominated by an insurgency, and he got crushed. I think that in 2016 the insurgent candidate with the highest chance of getting the nomination (and I put his chances at well under 50 percent) is not Donald Trump, but Bernie Sanders. And I think that if Sanders is nominated, then he will get crushed.
In any case, Gurri provides the best analytical framework I have come across for understanding current politics, both here and in other countries. Ross Douthat should give it a read.
Health care prices aren’t being set in a well-functioning competitive market. Some geographic markets just lack competition in health care. But in many others, prices for hospital services are being negotiated in ways that result in big variations between geographic areas–like prices for a given service in one place being a multiple of what it costs in other places. In turn, these different prices being charged are linked to big differences in spending across geographic areas. Moreover, all of this is happening in a setting with potentially large cross-subsidies–potentially running in either direction–between private health insurance and public health insurance programs like Medicare. It’s all part of the reason why designing policies to slow the rise in health care spending is so difficult.
What you will hear is that the problem is with our free-market health care system. For many people, “free-market”
serves as an all-purpose boo-word. Of course, my own view is that health care regulations are what are most heavily implicated in the high, opaque pricing of medical services.
Admittedly, it was a significant intellectual achievement to show that the weaker trading partner benefits from trade, even if the stronger partner is better at everything. But those fixed differences have largely disappeared in many markets. The question of what should be produced, and where, is now answered by dynamic processes of market signals and price movements, driven by human ingenuity and creativity. The cost savings resulting from successfully dividing labor and automating production processes dwarf the considerations that made comparative advantage a useful concept in economics.
Read the whole thing. In The Book of Arnold, I express a similar disappointment with Ricardian comparative advantage, because it is always taught as the “two by two” case, which hides the complexity of specialization in the real economy.
From the NYT,
At more than half of the branches of the country’s biggest banks, including SEB, Swedbank, Nordea Bank and others, no cash is kept on hand, nor are cash deposits accepted. They say they are saving a significant amount on security by removing the incentive for bank robberies.
The country is that far along in its use of electronic payments.