30 April 2019

Meta Update

This is the 120th day of the year, and I have made 60 posts on this blog and 60 posts its sister blog, an average of one blog post per day so far this year and one post every other day on each of the respective blogs.

29 April 2019

The Too Perfect To Use Problem

This comic (about a sketchbook which is so perfect that its owner never uses it) also comes up not infrequently in military procurement.

25 April 2019

Popular Media In Languages I Don't Understand

I suck at foreign languages. I took some Latin by correspondence in junior high school and didn't get far. I studied French for four years in high school, but didn't learn enough to comp out of foreign language requirements in high school so I ended up taking a 5 credit French class roughy equivalent to advanced fourth year high school French, pass-fail, and managed to eek out a pity pass by showing up to class every day and turning in all my homework, which inevitably came back bathed in red ink. I've also picked up a smattering of Swedish and Korean words from family, a smattering of Spanish language words from daily life, and a smattering of Japanese and Korean words from watching TV in those languages.

My wife and I wanted our kids to do better and started them on Spanish early and continuously from pre-school though high school. My wife lived abroad with a host family for a while in high school and can speak passable Spain style Spanish, which she spoke to our children in frequently when they were little. Our daughter also spent part of a summer abroad with a host family in Costa Rica and has taken some Spanish in college. Neither of my children is truly fluent in Spanish, but my daughter comes close and has been able to communicate meaningfully in Spanish while in Mexico, and she is the best of all of us in Spanish. Both my son and daughter managed to score a 6 out of 7 on their respective IB Spanish exams (which is basically an "A" but not an "A+") on a test taken by college bound students all over the world which does not suffer from grade inflation. This is probably equivalent to a 5 on an AP Spanish test.

Despite this, about half of the popular media (music, television and movies) that I consume these days is not in English and not created for an English speaking audience. This is something I had regularly wished would be possible when I was in high school, but it took another twenty-five years or so for it to become reality (for me at least).

Back then, foreign language content was mostly limited to private screenings from foreign language teachers and professors, NPR opera, sacred music or international music programs (usually just once a week), and rare encounters with Spanish language media on TV or a.m. radio while traveling somewhere else (or, of course, when traveling abroad).

For the contemporary movies, TV and music this is mostly is made possible by Spotify, YouTube, Netflix, Hulu, Sirius XM and art house theaters in metro Denver (the Sie Film center and the Landmark theater chain), although some contemporary Spanish language music is available via FM radio and some Bollywood and Spanish language movies with subtitles and an occasional Japanese anime movie, are available in regular movie theaters. I read translations (at least once or twice) of most of the opera music and maybe half of the Latin music, and I've picked up enough church Latin over the years that I can usually figure out a lot of that myself without a formal translation if its just a Latin mass or uses very similar music. 

Probably about a quarter of the comics I read are written by non-English speakers and often are translations of the original foreign language versions. These are mostly (in order of frequency), Japanese and Korean. I also read three web comics by authors from Spain, one web comic by a Malaysian author and one by a Turkish author (each of which draws lightly but definitely somewhat from the local circumstances), and I have read comics in print by authors from Iran and India set in those countries respectively.  I've also read comics originally written in Japanese (in translation) set in quite authentic ancient Anatolian and contemporary Italian settings. This is made possible mostly via Webtoons, the Denver public library, and other online comics.

I regularly listen to contemporary music (in roughly the order of frequency): Bollywood movie music (India, mostly in the Telugu language with a little in Tamil or Hindi), J-Pop (Japan), K-Pop (Korea),  and popular music in Spanish, French, Vietnamese, Hebrew, Italian, Turkish, Finnish and now and then Arabic. I also listen to opera music (mostly in Italian, but a little bit of French, Russian and German), and choral music in Latin (mostly old religious music), neither of which, of course, are contemporary. I sometimes, but certainly not always, read translations of the Bollywood, the J-Pop, the K-Pop, Spanish and Italian lyrics, but rarely any of the others (among other reasons because I don't have a good enough ear to transcribe them and then translate them).

I usually watch foreign language movies and TV with subtitles, although rarely, I will watch dubbed versions, and every once in a while, on a lark, I will watch English language movies and TV dubbed in another language with English language subtitles.

The foreign language movies and TV include Japanese, Korean, Spanish, Turkish, Chinese, Taiwanese, Russian, French, Italian, and contemporary Hebrew language content and also Bollywood movies (mostly in Telugu but some in Tamil or Hindi).

This is every bit as worthwhile an experience as I had hoped it would be in high school and is a great way of lifting the veil of foreignness and mystery from foreign cultures. Of course, popular TV and movies don't depict the places where they are as they are in real life. But, where before I would have had absolutely no idea what life was like in these places, and thus made absolutely no assumptions, now I at least have some reference point for life in these places. (The multilingual but primarily English language Netflix TV series Sensate, which deliberately focused on awareness of global everyday life was also an eye opener on this score.)

One other observation, that may just be a selection effect (but honestly probably isn't), is that many the non-English language tunes incorporate short English words, phrases or sentences.

Another observation is that popular music from abroad incorporates differing amounts of local non-Western v. Western musical concepts. The only kinds of non-Western music I listen to enough to generalize regarding are Bollywood, J-Pop, and K-Pop music. Bollywood music has the most South Asian specific musical innovation, J-Pop has the second most local musical innovation, and K-Pop has the least.

24 April 2019

The U.S. Supreme Court Virtually Eliminates Class Action Arbitrations

The United States Supreme Court has a long history of favoring arbitration to a degree unmatched anywhere else in the world, and a strong aversion to class action litigation. 

As a result, today's 5-4 decision in Lamps Plus v. Varela, No. 17-988 (U.S. April 24, 2019), along the usual conservative-liberal lines, holding that class action arbitrations may only be conducted if an arbitration clause expressly and unambiguously provides that class action arbitrations are permitted, is not very surprising.  As the New York Times notes: "In earlier 5-to-4 decisions concerning fine-print contracts with consumers and employment agreements, the court ruled that arbitration provisions can require disputes to be resolved one by one."

Since almost no arbitration clauses expressly and unambiguously permit class action arbitrations and many prohibit class action arbitrations expressly, this ruling is effectively a death knell for arbitrations structured as class actions.

In the abstract, this doesn't seem surprising, but the problems are manifest when you consider situations like the currently pending 12,501+ arbitration claims brought by drivers against Uber challenging the classification of Uber drivers as independent contractors rather than as employees, an issue that really ought to be resolved just once (and which could be resolved just once in the ordinary court system with or without class action lawsuits). Handling those claims on a case by case basis has caused the process to break down as Uber has failed to meet its obligations under this clauses, such as its duty to pay the $1,500 filing fee in each one of those cases. As of December of 2018 when there were 12,501 claims pending:
Under the terms of the contract that Uber crammed down these drivers' throats, it must now pay $1,500 per driver to JAMS, the arbitration service it uses -- a total of $18.7m 
But Uber has only paid the filing fees for 296 of these drivers; and of those, only 47 have had arbitrators appointed to them. Uber has paid the retainers for only six of those arbitrators.
So, as it stands, Uber can easily have conflicting determinations, none of which are binding precedents, over whether its drivers are employees or independent contractors, that are binding on any individual driver, even if it can manage the immense administrative burden that it has abjectly failed to adhere to so far.

There are about 25 million employees (a little more than one in six) in the United States with arbitration clauses in their contracts, out of about 144 million people in the U.S. workforce who are not unemployed, according to USA Today in turn quoting a court opinion. Another source states that there are more than 60 million employees covered by such contracts (with higher rates at larger employers). More specifically, it finds that (as of April 6, 2018):
In reviewing the existing literature on the extent of this practice, I found that the share of workers subject to mandatory arbitration had clearly increased in the decade following the initial 1991 Court decision: by the early 2000s, the share of workers subject to mandatory arbitration had risen from just over 2 percent (in 1992) to almost a quarter of the workforce. However, more recent data were not available. In order to obtain current data for this study, I conducted a nationally representative survey of nonunion private-sector employers regarding their use of mandatory employment arbitration.
This study finds that since the early 2000s, the share of workers subject to mandatory arbitration has more than doubled and now exceeds 55 percent. This trend has weakened the position of workers whose rights are violated, barring access to the courts for all types of legal claims, including those based on Title VII of the Civil Rights Act, the Americans with Disabilities Act, the Family and Medical Leave Act, and the Fair Labor Standards Act.
The Supreme Court is currently considering a case challenging the inclusion of class action waivers in arbitration agreements. Class action waivers bar employees from participating in class action lawsuits to address widespread violations of workers’ rights in a workplace. The Court will rule on whether class action waivers are a violation of the National Labor Relations Act; their decision could have wide-reaching implications for workers’ rights going forward.
Key findings of this report
  • More than half—53.9 percent—of nonunion private-sector employers have mandatory arbitration procedures. Among companies with 1,000 or more employees, 65.1 percent have mandatory arbitration procedures.
  • Among private-sector nonunion employees, 56.2 percent are subject to mandatory employment arbitration procedures. Extrapolating to the overall workforce, this means that 60.1 million American workers no longer have access to the courts to protect their legal employment rights and instead must go to arbitration.
  • Of the employers who require mandatory arbitration, 30.1 percent also include class action waivers in their procedures—meaning that in addition to losing their right to file a lawsuit on their own behalf, employees also lose the right to address widespread rights violations through collective legal action.
  • Large employers are more likely than small employers to include class action waivers, so the share of employees affected is significantly higher than the share of employers engaging in this practice: of employees subject to mandatory arbitration, 41.1 percent have also waived their right to be part of a class action claim. Overall, this means that 23.1 percent of private-sector nonunion employees, or 24.7 million American workers, no longer have the right to bring a class action claim if their employment rights have been violated.
  • Mandatory arbitration is more common in low-wage workplaces. It is also more common in industries that are disproportionately composed of women workers and in industries that are disproportionately composed of African American workers.
  • Among the states, mandatory arbitration is especially widespread in California, Texas, and North Carolina, but in all of the 12 largest states by population over 40 percent of employers have mandatory arbitration policies.

Economic Justice Without Marxism

Several of the core premises of Marxist and neo-Marxist progressive economics are mostly wrong.  The big problem in capitalist economies is not exploitation of the worker, it is a failure of firms and individuals to take responsibility for anyone but themselves and those that they have contractual relationships with.

The Problem Is Indifference And Not Exploitation

The rich and the big businesses they own, predominantly, don't get rich by exploiting the poor. Instead, the profit for other businesses, from the middle class and from the affluent. They don't share the wealth equitably with their employees but they also often compensate and/or treat their employees and contractors better than the average employee or contractor. Their sin is not exploiting the poor but ignoring them. They don't employ them because the poor don't have the skills, the education and the social skills that they need. They don't seek them out as consumers of their goods, which the poor can't afford. They take no responsibility for the plight of the poor, which they leave to others, and try to avoid having to pay for the needs of the poor. They would prefer a world without poor people, in which a larger share of the population included potential employees and customers. But, they also bear no particular ill will to the poor except the individuals who steal from them or personally disrupt their businesses. So long as the poor leave them alone, they don't care one way or the other about them.

To be clear, there are indeed people who do attain wealth by exploiting the poor. There are bail bondsmen. There are owners of payday loan companies, pawn shops, and rent-to-own firms. There are slumlords who don't deal fairly with their tenants. They run ghetto grocery stores. But these people are often middle class themselves, and at most millionaires, and they aren't politically or economically particularly powerful.

Between the predominant share of the rich and the big business owners, and those who exploit the poor, are those who exploit the more gullible members of the working class. There are people who run for profit colleges that collect lots of tuition subsidized by government grants while turning out few well trained graduates. These are the people who charge to provide services that are available from the government for free. These are the people who own Walgreens and its rural counterpart, Dollar General, that mark up goods by 30% when legitimate grocery stories manage with 3% margins, selling convenience and laziness in comparative shopping. These are the people who run multi-level marketing schemes and try to get people to sell door to door. These are the people who run "pot lots" selling bottom of the barrel used cars with hidden defects. These are fast food franchise owners who hire unskilled marginal workers and pay them a minimum wage that forces them onto welfare rolls despite having jobs. These are the people who sell goods on TV through informercials. Some of these people end up making tens or millions of dollars or in rare cases even more.

This is true even on international scales. Multinational big businesses do shift manufacturing and other jobs that can be diverted to places with lower wages than they have to pay at home abroad. But, they also tend to pay better, to treat workers better, and to show more corporate responsibility and environmental consciousness than the domestic businesses in the places they put their factories and call centers and warehouses. They become major sources of employment and economic development in places that would otherwise have stagnant economies. The create a local working class and middle class where there was once only poverty. When they do behave badly, they are easier to hold accountable with shame and subtle regulations imposed on imported goods. These businesses are sending jobs abroad and undermining the economic well being of the people at home that they ignore instead of turning into employees and consumers. And, those decisions can be catastrophic for the large segments of the domestic economy and work force. But, again, big businesses contribute to economic malaise by leaving people out of their world, not by exploiting the people who are part of their world relative to the context those people find themselves in. 

Clothing retailers aren't exploiting poor American textile workers, they are creating a domestic economy without any textile workers while creating an entire textile industry full of manufacturing employees and the managers who supervise them in lower wage markets in China and Southeast Asia. If anything, they help the poor and working class Americans whom they do business with at all as consumers, by making clothing available at unthinkably low prices that even economically struggling Americans can afford.

Big Businesses And The Rich, Generally, Are Not Agitators For War

The vast majority of businesses, large and small, and the vast majority of affluent people profit from peace and trade and are hurt when war breaks out. They are cosmopolitan, globalist and tolerant. They aren't malevolent and don't wish anyone who leaves them alone ill will, but they aren't bleeding hearts either and are content to leave what they perceive as other people's problems alone.

An increasingly isolated handful of businesses are defense contractors who are part of Eisenhower's military-industrial complex. But, even they, for the most part, aren't too concerned about whether or not their wares are actually used. They make money when affluent nations are afraid and feel the need to spend money to defend themselves without regard to whether or not this is actually necessary. 

They churn out warships in a world where you can count on your fingers the number of naval battles that have taken place since World War II. They turn out air to air dog fighting aircraft in a world where there are only one or two ace pilots in the world because they are so few instances of air to air combat. They sell amphibious assault vehicles in a world where there hasn't been a significant amphibious assault in sixty years. They produce thousands of massive nuclear missiles that can level a metropolitan area in a single blow despite the fact that it has never made military sense to do so. There are little ones that mass produce bayonets that haven't been used in combat with any regularity in the last hundred years, or as one of my former clients did, or continue raise war horses for the military in the post-Vietnam era that have been obsolete since the charge of the light brigade.

This isn't to say that big business does not influence foreign policy. But, mostly, that takes the form of currying favor from oil rich despots whose resources are needed to fuel the modern economy. They would far prefer a world where Africa was full of prosperous villages and cities, instead of genocidal wars and sprawling slums. But, they have no idea how to make that happen and default to their standard strategy of ignoring the poor instead.

The Real Problem Is Structural Unemployment And Underemployment

Understanding the nature of the problem is critical if we are to find solutions that work.

You can train machinists and tool and die makers all day, but it won't do much good in an economy where a huge share of the manufacturing takes place abroad.

Most of the time capitalism is problematic not because it is exploitive or doesn't work, but because it carries out its tunnel vision objectives too well. Sometimes, big businesses do discriminate and hire and promote workers for unfair reasons. But, the big problem for us as a nation and economic community collectively, is that when capitalism grows too pure, people receive income and wealth solely based upon their own economic productivity.

But, as technology advances, an increasingly small group of people become profoundly productive, while an increasing share of people have skills and abilities that our economy needs less of than we have available. 

Robots have replaced assembly line workers. Heavy machinery operators have replaced ditch diggers and grave diggers using shovels. E-filing ad email has put people who printed and copied and mailed and delivered physical paper communications out of work, leaving only the content generators and a few editors. Giant freighters and tankers with skeleton crews have replaced small cargo ships with far more sailors. Self-service gas pumps have replaced gas station attendants. We are on the brink of a self-driving car revolution that will put hundreds of thousands, if not millions, of truck, bus and taxi drivers out of work. Robots answer phones that used to be staffed with receptionists and consumer service agents and operators. Webpages have taken the jobs of many brick and mortar store salespeople. Jobs that can be automated are eliminated, and technologies that make it possible to do the same amount of work more efficiently are reducing employment in those industries. Cheap foreign factories producing often high quality goods, have made new goods so cheap that last so long that it doesn't make economic sense to fix things that are broken, putting repair technicians out of work. Why hire a tailor to fix your dress or sew it yourself, when you can buy a new one for $7 in the time it would take for you to drop it off at the tailor's and pick it up again for about the same price?

The problem isn't mostly individual firms profiting from poverty. It is mostly that these firms, each acting autonomously in their own narrow self-interest, have created an economy that no longer needs unskilled and less skilled labor.

This problem isn't going away. Here and there a state like Oregon, ironically a state with a healthy high tech industry of its own, can preserve some jobs with luddite mandates like the requirement that all gas tanks be filled by gas station employees instead of customers. But, in the long run, technology is going to relentlessly, day after day, find ways to make the people who are still employed more efficient while reducing the size of the work force that the economy once used to produce the same goods.

Fortunately, jobs aren't a fixed resource. The fact that we now employ 2% of the work force (and a smaller percentage each new year) in farming, instead of the 70% of the work force we employed in agriculture in 1819, does not mean that 68% of the population is now unemployed. Greater productivity in farming made it possible to build more homes, produce more things in factories, provide more health care services, and sell more things made in factories.

Unemployment is fundamentally a failure of entrepreneurship, not a shortage of some fixed resource called jobs.

But, as increasing shares of the economy are provided by highly productive, highly skilled individuals assisted by technologies that make them highly productive, in every sector, we are collectively at a loss to know what to do with people who aren't highly educated, aren't highly skilled, aren't exceptionally intelligent, and aren't socially graceful people who play well with others. Our economy hasn't come up with anything useful for people like this to do. Maybe it never will. Certainly, in the short and medium term, we are going to have lots of "structural unemployment", and in the long run, everyone's dead.

Economic Justice

This doesn't mean that we are powerless as a society to do anything. The fact that the market economy doesn't have a way to employ someone for money doesn't mean that they have no value or dignity and should be deprived of economic resources.

We haven't employed young children in the market economy for a century. We now have many skilled professionals who are not entering the market economy until their early, or even late, 20s. We are not worse for it. Collectively, our society has the resources it needs to allow lots of parents to opt out of the market economy for a while to raise their own children in a more hands on way, and even to home school them if they wish. Collectively, our society has the resources to let more people retire early in modest comfort, and to provide for people who are unable to be productive because they are disabled. Collectively, we can afford to let some people take time away from the market economy to care for sick and elderly family members. Collectively, we can and do afford to employ lots of people to hold far more people in prisons and jails to keep them away from everyone else because the inmates have mostly been disruptive and anti-social by the standards of the culture that operates that criminal justice system. Collectively, our society has the resources to allow people to produce goods and services as volunteers instead of driven by the marketplace.

While our market economy has little place for many of these people, the non-market part of our society has many ways to utilize there abilities and talents while respecting their dignity (most of the time, although some of the wasted human capital, like mass incarceration, is simply dead weight loss).

This is all well and good as long as we can find a way to cause the remaining workers who are now incredibly productive to share their earnings and wealth with the people whom our economy has no use for in paid employment.

Three Kinds Of Solutions

There are basically three ways that this can be done and in a just economy, we need to do all of them.

Loans, Savings And Insurance

The most capitalist and individualistic of the three is to have people either borrow funds before they work that are repaid while they work, or save while they work for retirement after they work, or pay insurance premiums while they work to cover the possibility that they might not be able to work in the future if certain things happen.

Taxes and Transfer Payments

The most statist of the three is to collect taxes from people who have income and wealth, but no so severely as to cause them to cease engaging in their highly productive work, and to transfer that wealth to people who aren't engaging in or can't engage in highly productive work, or can't work at all.

In kind transfer payments can be subtle. For example, funding for public schools and higher education is basically a form of transfer payment. But, because it isn't means based and is provided in kind rather than with a check, it doesn't feel like a welfare program.

Programs like Social Security are fundamentally tax financed transfer payments, but they are packaged in a way that closely resembles retirement savings and private insurance and the actuarial considerations that go into designing each are quite similar. They have a means based element, but its is muddied with a return on investment element that is based on past contributions rather than on current earnings.

Single payer health care systems like Medicare are also fundamentally tax financed transfer payments. But, again, since they are not means based and involve benefits provided in kind, they don't feel like a welfare program. Also, note that a single payer system like Medicare doesn't mean that the entities receiving the payments have to be governments or government employees. Medical professionals and hospitals are still independent private entities that just happen to get reimbursements from a government agency instead of a private health insurance bureaucracy.

Allocating Responsibility

The intermediate possibility is a civil society solution. We can find a reliable way to make people who are engaged in highly productive work responsible economically for people who are not engaging in highly productive work in the market economy. 

The classic example is the family. Some members of a family are working age adults who participate in the market economy, while supporting children who haven't yet entered the work force, stay at home caretakers for children, the disabled and the elderly, disabled members of the family, and retirees in the family. And, in the short lived "traditional" modern economy where all able bodied adult men of working age got jobs, married, had children, supported their wives and children and elderly parents and disabled family members, and the elderly parents and disabled family members usually didn't live terribly long because medical care was mediocre, this worked out fine.

But, it doesn't work out fine when a large share of the able bodied adults in a community or social caste can't find work that the market economy will pay them to do without heavy subsidies or artificial regulations.

When the capitalist and individualist approach fails to support someone economically, either the government, or some private individual or firm needs to step up.

In Japan, one of the ways that this was done was with a lifetime employment system that employed a substantial share of the adult population in medium sized to big businesses. Companies that became more efficient couldn't dump employees who had been made obsolete into the society without economic support. If one of these firms found a way to do something with fewer employees it only made economic sense to do so if they could find some other way to gainfully employ the displaced employees. Basically, Japan treated structural unemployment caused by increased efficiency as an externality and required firms to internalize that externality. This no doubt slowed economic growth for these firms (which was tolerable at a time when technology borrowed from abroad assured healthy economic growth even if that growth was not optimized). But, it also greatly mitigated the social upheaval associated with rapid industrialization. And, given the fact that unemployment is a failure of entrepreneurship, placing the responsibility for finding new employment for displaced workers on entrepreneurial business owners, rather than unemployment office government bureaucrats, does seem wise.

Another way this could be done is to create a literal right to a job that is a responsibility of each local community. In India, a government program hires anyone who shows up on a day labor basis to carry out low skilled public works jobs. Unlike private enterprises, who need to make a profit, a program like this has mixed motives. Yes, it wants to get public works like sewer lines and roads built. But, it also wants to provide economic support for people who would otherwise have been unemployed, and to use economic incentives to put employers who are trying to pay less than the minimum wage and/or are offering conditions inferior to the public works program out of business without having to hire a lot of regulatory enforcement agents to punish employers who do. If this approach means that it costs $30 million to complete a project that could have been done with more efficient and skilled private sector workers for $20 million, then the government is implicitly spending $20 million to build the project, and $10 million on an economic support program that preserves the employability and dignity of the recipients while simultaneously keeping them on the job and hence not idle and prone to make trouble, thereby reducing the criminal justice and corrections system budget. And, the government is providing $30 million of economic support to families that would otherwise be unemployed at an effective net cost to the government of $10 million, making it a highly efficient way of providing economic support to families of people who would otherwise be unemployed. But, if the government day labor on demand program only pays the minimum wage and provides only the legally mandated working conditions, then it isn't discouraging people from working for private businesses that can afford to hire workers for a living wage in decent working conditions, which are really the only kinds of businesses we want to have in our society if we can help it.

In the 1950s, medium and big businesses in the United States started a program of what I call neo-feudalism. Your employer provided not just your regular paycheck, but also provided your health insurance, your pension for your old age, your disability insurance, and your life insurance. Medium sized and big businesses were made responsible for the social safety net needs of their employees and their nuclear families. Also, while unlike Japanese companies with lifetime employment, U.S. companies were permitted to have layoffs (although rarely needed in a time period when the economy was growing rapidly and there was a shortage of workers), union-management collective bargaining agreements made unemployment insurance unnecessary in non-layoff situations, by allowing employers to fire employees only for good cause. This neo-feudal system began its long decline, however, starting in the early 1970s, when U.S. firms after 25 years of only briefly interrupted growth and labor demand, started to offshore and automate jobs and laid off workers (often whole factories and devastating entire communities), this fell apart, and a union whose bargaining power for the last quarter of a century had been built on unlimited demand for labor even if it wasn't very skilled was undermined, culminating today in a situation where the demand for less skilled labor is so low that private sector union participation rates are lower than they were when U.S. labor laws were first enacted. Unions now survive only in the public sector, where almost no jobs can be offshored, immigrants cannot compete with native born citizens for employment in most cases, and the service sector functions involved like law enforcement and teaching are not easily automated, thus insulating public sector unions from the economic forces that undermined their private sector counterparts.

The better your society is at making someone responsible for everyone at the most grassroots possible level, the less your society needs to tax people to provide transfer payments.

One can imagine a system in which there are competing "commonwealths" that collect taxes imposed as they see fit from residents in exchange for providing a package of social safety net types needs to its members, with the line between premiums for membership and taxes blurred.

Mixed Solutions and Prospects For Our Future Political-Economy

Of course, it isn't important to be a purist about it. It is perfectly acceptable to provide for some people who are no longer or not currently economically productive through the private sector, to provide for others by allocating responsibility, and to provide for others with taxed and wealth redistribution programs. Indeed, every society does all three of these in different proportions. A country like Sweden is heavy on the tax and transfer payment approach. A country like Japan is heavy on the responsibility allocation approach. And, a country like the United States is heavy on the private sector approach with retirement savings being heavily employer and private account based and education often financed through student loans.

The U.S. doesn't want to go the route of either Sweden or Japan, both of which have drawbacks. But, it is also becoming increasing clear that the U.S. is over reliant on purely private sector contractual arrangements. So, going forward, the U.S. needs to both institute more transfer payments and to find better ways to allocate responsibility.

20 April 2019

Boy With Luv Lyrics

The lyrics of this BTS/Halsey collaboration are almost evenly split between English and Korean.

워워워워워
워워워워워
워워워워워
워워워워워
모든 게 궁금해 how's your day?
Oh tell me (oh yea oh yeah, ah yea ah yeah)
뭐가 널 행복하게 하는지
Oh text me (oh yea oh yeah, oh yea oh yeah)
Your every picture
내 머리맡에 두고 싶어 oh bae
Come be my teacher
네 모든 걸 다 가르쳐줘
Your one, your two
Listen my, my baby
나는 저 하늘을 높이 날고 있어
그때 니가 내게 줬던 두 날개로
이제 여긴 너무 높아
난 내 눈에 널 맞추고 싶어
Yeah you makin' me a boy with luv
Oh my my my, oh my my my
I've waited all my life
네 전부를 함께하고 싶어
Oh my my my, oh my my my
Looking for something right
이제 조금은 나 알겠어
I want something stronger (I want it)
(워워워워워)
Than a moment, than a moment, love
(워워워워워)
I have waited longer
(워워워워워)
For a boy with, for a boy with luv
널 알게 된 이후 ya (oh)
내 삶은 온통 너 ya (ya)
사소한 게 사소하지 않게 만들어버린 너라는 별 (oh no)
하나부터 열까지 (ay, ay)
모든 게 특별하지 (ay)
너의 관심사 걸음걸이 말투와
사소한 작은

Translation available here.

18 April 2019

Electric Planes Require Better Batteries

The best lithium-ion packs today have an energy density of around 200 Wh/kg, which is still enough to power short haul small airplanes. 

At 800 Wh/kg, batteries can power a 737 sized commercial plane for 600 miles. At 1,600 Wh/kg, you can replace 80% of fossil fuel planes with battery powered ones. 

In theory, about 4,000 Wh/kg is possible. In practice, bleeding edge technologies are flirting with 600-1000 Wh/kg.

All according to this Twitter thread.

Of course, better batteries have all sorts of potentially profound, economically disruptive implications. If you can get batteries with double the energy density and half the cost, electric vehicles will capture perhaps 90% of the market share of motor vehicles without meaningful government subsidies relative to gasoline and diesel powered vehicles.

Better batteries also mean laptops and phones that don't need to be charged daily, more off the grid battery packs where generators would be used today, and more.

The other key economic factor is the price aviation fuel, gasoline and diesel fuel, all of which are largely a function of the price of oil and the tax rate on these fuels. Electric vehicles make more sense in California where gas currently costs as much as $5 per gallon (in part, because of a $1.26 per gallon gas tax v. 33 cents in most states), than it does in Colorado where gas currently costs about $2.50 per gallon.

Not All Industries Are Equally Resilient In During Recessions (And This Matters A Lot)

One of the best new ideas that increases accuracy in econometric modeling is to place great importance on the relative degree to which different parts of the economy are resilient.
Modern macroeconomic theories were unable to foresee the last Great Recession and could neither predict its prolonged duration nor the recovery rate. They are based on supply−demand equilibria that do not exist during recessionary shocks. 
Here we focus on resilience as a nonequilibrium property of networked production systems and develop a linear response theory for input−output economics. By calibrating the framework to data from 56 industrial sectors in 43 countries between 2000 and 2014, we find that the susceptibility of individual industrial sectors to economic shocks varies greatly across countries, sectors, and time. 
We show that susceptibility-based growth predictions that take sector- and country-specific recovery into account, outperform—by far—standard econometric models. Our results are analytically rigorous, empirically testable, and flexible enough to address policy-relevant scenarios. We illustrate the latter by estimating the impact of recently imposed tariffs on US imports (steel and aluminum) on specific sectors across European countries.
That is the abstract of a new piece by Peter Klimek, Sebastian Poledna, and Stefan Thurner in Nature Communications (via Marginal Revolution).

17 April 2019

What Is The Economic Impact Of Closing Schools For A Day?

Economists love natural experiments. One that happens pretty regularly is that most of the schools in a metropolitan area are closed with little warning.

Usually, this is confounded with the economic impact of a weather emergency like a blizzard. How much of the economic impact is due to the weather and how much is due to the school closings?

But, today in Denver, schools are closed across the metro area because of a credible threat from an armed eighteen year old woman that she will carry out a school shooting in memory of the Columbine shooting. So, we have a natural experiment that disentangles the weather impacts of a surprise metro area-wide school closing event and the school closing impacts themselves.

* How many adults don't go to work because they work for the school system or have a job that is closely tied to the school system?

* How many adults stay home from work because they don't have child care? How many of them lose their jobs for doing so? How many of them default on regular monthly bills like rent or utilities or car payments or student loan payments or health insurance payments because they are paid hourly and the missed work reduces their monthly income?

* How many adults get work they wouldn't otherwise have when they are hired to provide child care on an emergency basis?

* How much does consumer spending on takeout and delivery food increase because children home alone may order out for food rather than try to cook or have what they would have eaten at school?

* Does consumer spending spike up because parents who choose to stay home with the kids do shopping that they would otherwise have done on a weekend?

* How does public transit ridership change? (In Denver, high school kids who would otherwise be entitled to school bus transportation to school get a bus pass to use on public transit to get to school rather than school buses.)

* How does spending on gasoline change? Does it fall due to less people traveling to and from schools and after school activities? Or does it increase due to travel to other destinations and increased food delivery traffic?

* How many kids go hungry because school was their primary source of breakfast and lunch?

* How many accidents are caused because many children are home unsupervised and get into trouble and even kids in daycare or with a babysitter may be overloading the caretaker's capacity?

* Do ER and urgent care visits spike on days like this one?

16 April 2019

Helping People Who Won't Ask For Help

One of the unifying themes of people who have made out particularly poorly in the modern United States is that a lot of them are people who won't, or can't, ask for help.

The very strong instinct of the American legal system, the American political system, American economic thought, and American culture is that people, especially adults, know what is best for them and will ask for help when they need it. Trying to help people who won't ask for it is considered an affront to their dignity and autonomy, and is likely to be counterproductive.

But, it is hard to believe that it is really that simple.

There are woman and children who experience abuse in their homes, but won't leave and won't cooperate with authorities who try to punish the abusers, or outsiders who try to get them to leave.

There are girlfriends and wives who fall in love with and rely on men who deal drugs or commit crimes, and don't know how to leave when they start to be drawn into the activities where they end up being the scapegoats who are punished harshly because they have no ability to turn in others whom they don't love more than themselves in exchange for leniency.

There are a lot of exploited illegal aliens and runaways, who know that they are being used and mistreated, but are adamantly opposed to going back to what they have fled. They don't think there are any alternatives, and sometimes, they are right.

There are foster children and former foster children who have nobody they can trust whom they can turn to, and aren't in one place long enough to develop ties with people they could come to trust, when then are mistreated or make a little mistake that causes their fragile survival system to collapse.

There are chronically homeless people who sleep in the rough on the streets, in alleys and entryways, over steam grates and in parks and riverbanks and underpasses. But, they aren't willing to stay in a shelter, even though many of those people each year die, suffer head trauma, and suffer hypothermia in winter and heat stroke in summer. They don't want to be there, but they haven't found a satisfactory alternative and don't know how to make one.

There are drug addicts who are addicted, tied to black markets full of dangerous criminals in order to feed their addictions, who are watching their lives fall apart. But, they can't summon the will to change and wouldn't know what to do if they could.

There are alcoholics who don't have to resort to black markets, but still lack the will and the knowledge they need to do something different as their lives, their jobs, their families fall apart, sometimes profoundly, and sometimes incompletely so that they can persist in their impaired state for a long time.

There are people with mental health conditions and developmental disabilities who need help managing their lives and their conditions, but by virtue of those conditions have trouble navigating the complex bureaucracies that can offer what little assistance is available. They are forced to act as advocates in a system designed for middle class people in good mental health with physical illnesses, but bureaucratic competence who have family to help them navigate the system.

There are senior citizens who never asked for help before and don't want to change that proud record now, even though they can't physically or mentally cope with daily life in a home established around the needs of a pair of middle aged able bodied adults, as their bodies and minds decline with age. They aren't very comfortable with computers and smart phones, but it is increasingly hard to get anything without using them.

There are veterans who were masters of the world, competently wielding advanced equipment and taking other people's lives with impunity, who return home with many skills that have little relevance to the civilian world, with instincts about how to interact with people that work less well in civilian life than they did in the military, and who not infrequently come back with both visible physical injuries and scars, and invisible injuries like traumatic brain injury and PTSD, and with mental scars even among those who haven't suffered any clinically diagnosable impairment. They've been taught to be tough and endure pain and trauma because that's what you need to do in order to survive in war, but this also creates internal psychological barriers to seeking help that is reinforced by the attitudes of your fellow service members while you serve, and by other veterans once your service ends.

There are people in poor, black and brown neighborhoods who learn that a call to police will often lead to police responses that affect the innocent, that lead to excessive uses of force, and that lead to abuses of the criminal justice system that discriminates severely against people who can't post bond and can't hire a private criminal defense lawyer.

There are jail and prison inmates who are being abused by fellow prisoners or guards with nowhere to turn which can provide effective protection but prison gangs that extract their own cruel dues and prevent them from returning to ordinary society.

There are people released from prison and jail who want to turn their lives around, but have gangs they were forced to join at some point before pressuring them, who don't have educational credentials or marketable skills or social capital who need to find a job to support themselves and stay out of trouble on a very tight timeline, who have forgotten how to live a straight civilian life if they ever knew after years in situations where different tactics were key to survival. But, if they admit that they aren't able to meet the demands imposed on them to a probation or parole officer, they are at grave risk of ending up behind bars again.

There are children in school, young adults in college, and adults at work who are bullied or sexually harassed or abused, who learn that their efforts to seek help from the people in authority often backfire and end up doing them more harm than good if the bullies can't be removed from the situation.

There a bright young people in failing inner city or rural schools from poor families who don't do what it takes to go to college, and either don't go to college or don't pursue the programs that would allow them to realize their greatest potential, because no one in their world is giving them default options that put them on that track, and their personal lives create missteps that thwart their academic performance, and they are terrified of incurring student loans that will be a burden on them and their families like the many people who tried to take that route and failed that they know.

There isn't a single solution. The details of the right way to make people aware of better alternatives, to create better alternatives where they don't exist, and to empower people to ask for help, differ for each of these groups of people. But, the class of problems in which people who don't or can't ask for help are suffering is pervasive, and while the details differ, often analogous strategies and problem solving approaches have wide applicability to these circumstances.

The U.S. Could Use Two Seaters That Aren't Sports Cars

The Jeep CJ-2A in the late 1940s was a rugged two seater vehicle that was just 59" wide and 123.5" long (another source say 130 1/8th") that weighed just 2,137 pounds. It had 8 3/4" of ground clearance and four wheel drive. It wasn't peppy, with a 0-60 times of 21.7 seconds. It wasn't fuel efficient either, 12 mpg city and 15 mpg highway. It was not for everyone, but it and its two seater successors were wildly successful.

Small is beautiful and over the years, lots of people appreciated that point. Now, there are basically only two two seater vehicles on the market that aren't expensive sports cars or pickup trucks:

* At one extreme is the Smart ForTwo (W453) which is 65.5" wide (v. 59.6" for the original) and 106.1" long (v. 98.4" for the original) and weighs 1,940 pounds (v. 1,610 pounds for the original). Its 0-60 time is 11.2 seconds (the original was 15.5 seconds). It is an urban commuter car.

* At the other extreme is the Mazda Miata MX-5 (ND) which is 68.1" wide, 154.1" long and weighs 2,381 pounds. Its 9-60 time is 6.1 seconds. It is a budget sports car.

There are other small cars on the market that are technical four seaters, although the rear seats are only suitable for small children.

* The Fiat 500 is 64.1" wide (the narrowest production car sold in the U.S.), 138.6" long, and weighs 2,363 pounds.

* The BMW Mini Hardtop is 66.5" wide, 143.9" long and weighs 2,315 pounds.

* The Nissan Vera Note is 66.7" wide and 161.4" long.

* The Nissan Juke (AWD) is the smallest all wheel drive car for sale in the U.S. (no longer sold in 2019). It is 69.5" wide, 162.4" long, and weighs 3,146 pounds.

For comparison stake, one of the best selling four door sedans in the U.S., the Honda Accord is 72.8" wide, 191.4" long and weighs 3,193 pounds.

The proportion of driving that is done off road is tiny for civilians and surprisingly, even the amount of hard core off road driving by the U.S. military when it is deployed in conflicts has been quite modest.

But, with households that are smaller than ever, there are lots of people for whom a two seater vehicle with only a little cargo capacity is sufficient to meet their needs, and the ability to fit into narrow and short parking spaces in urban areas is valuable, who would do drive in snow and on the occasional dirty or muddy road that would make all wheel drive and more clearance than the 4.6" clearance of a Mazda Miata (with rear wheel drive) desirable. The Smart ForTwo is also not a suitable snow car in addition to being incredibly underpowered.

Is it too much to ask for a reasonably affordable, AWD, CVT (i.e. non-manual transmission), reasonably fuel efficient compared to other subcompact conventionally fueled vehicles, two seater car that is 60" wide, 130" long, under 2,400 pounds, with at least 6.5" of ground clearance, a 0-60 time of less than 9 seconds, and a design that isn notable without being truly ugly?

This is not exactly advanced technology.

05 April 2019

Rebuilding Wealth

The Intergenerational Effects of a Large Wealth Shock: White Southerners After the Civil War

Philipp AgerLeah Platt BoustanKatherine Eriksson

NBER Working Paper No. 25700
Issued in March 2019
NBER Program(s):ChildrenDevelopment of the American EconomyLabor Studies 
The nullification of slave-based wealth after the US Civil War (1861-65) was one of the largest episodes of wealth compression in history. We document that white southern households with more slave assets lost substantially more wealth by 1870 relative to households with otherwise similar pre-War wealth levels. Yet, the sons of these slaveholders recovered in income and wealth proxies by 1880, in part by shifting into white collar positions and marrying into higher status families. Their pattern of recovery is most consistent with the importance of social networks in facilitating employment opportunities and access to credit.

It took fifteen years after the Civil War for the Plantation elites to regain their socio-economic status.

Anecdotally, my wife's parents were refugees of high socio-economic status from North Korea who lost immense family wealth during the Korean War. But, the members of their family managed to land on their feet after emigrating and have become affluent with largely self-made wealth since then.