Divergence in state population trends

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Antonio Chaves writes,

According to a study cited by the San Diego Union-Tribune, the majority of people who left California between 2007 and 2016 made less than $55,000 per year, and according to the New York Times, skyrocketing real estate prices have all but obliterated the black population in San Francisco. This black exodus is not limited to California. According to Forbes, many are also leaving Northern and Midwestern cities and moving to Sun Belt states in pursuit of better jobs and affordable housing.

The article assembles a lot of data on states that are gaining population and states that are losing population. The former tend to be red states and the latter tend to be blue states.

Disaggregated economy watch

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Mark Perry updates his chart on divergent inflation trends.

Seven of those goods and services have increased more than average inflation, led by hospital services (+211%), college tuition (+183.8%), and college textbooks (+183.6%). Average wages have also increased more than average inflation since January 1998, by 80.2%, indicating an increase in real wages over the last several decades.

The other seven price series have declined since January 1998, led by TVs (-97%), toys (-74%), software (-68%) and cell phone service (-53%). The CPI series for new cars, household furnishings (furniture, appliances, window coverings, lamps, dishes, etc.) and clothing have remained relatively flat for the last 21 years while average prices have increased by 56% and wages increased 80.2%.

These cross-sectional differences in price movements are an order of magnitude greater than the time-series variation of “the” inflation rate. Indeed, I read these data as saying that “the” inflation rate is pretty close to a meaningless number

Jonah Goldberg takes my side

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He writes,

For years, conservatives have quoted my late friend Andrew Breitbart’s pithy rephrasing of a very old idea: “Politics is downstream of culture.” The odd thing is that, almost overnight, many of the same conservatives now argue as if industrial and trade policy is upstream of culture.

I wrote,

Many observers emphasize economic threats posed by trade and automation. But I believe that the divide is mostly cultural.

Let me repeat something else I wrote in that essay.

In fact, I think it would be good for the Republican Party for a leading figure with a conservative agenda and a moderate tone to compete with President Trump for the nomination in 2020. The goal would not be to take Mr. Trump down but to set an example for a different Republican Party. This might give hope to those of us who wish for a political future that is less viciously tribal.

Start-ups and hardship

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Handle, who has been on a comment roll in recent weeks, wrote

it’s easy for kids to make and keep close – sometimes lifelong – friends when they see the same other kids at school, church, sports, and around the neighborhood for palling around. . .

. . .even while one thinks one is suffocating from claustrophobia and lack of privacy and just wants to bail out to the other, atomized anonymity side where the grass is greener, when people actually leave, they discover pretty quickly they feel terrible, isolated, lonely, uprooted, and aimless, and it can take a long time to adjust, and some never quite recover. Prison and the military are two good examples of that, but start-up culture seems to be similar in some respects.

The comment refers to Sebastian Junger’s claim that people derive satisfaction and meaning out of being associated with small groups under hardship. Imagine a stereotypical start-up, in which a handful of people work very long hours in an environment that is challenging, uncertain, and ambiguous.

When I started a business, I repeatedly watched The Compleat Beatles, a documentary about the iconic band. I picked up on a couple of points.

1. Because the narrator said that they were lucky to meet the right people at the right time, I made an effort to meet a lot of people (something I have not done before or since).

2. The film describes the hardship that the Beatles endured in Hamburg, where they lived in slum conditions and played exhausting marathon sets. A fellow musician said that with the long sets and tough audiences, “Either you got good or you gave up.” Taking that to heart, I often worked late into the night, even though the traffic to my site was on the order of 100 visitors a week when I got started.

No such thing as a free ledger

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1. Joseph Abadi and Markus Brunnermeier write,

A centralized ledger writer extracts rents due to its monopoly on the ledger. Its franchise value dynamically incentivizes honest reporting. Decentralized ledgers provide static incentives for honesty through computationally expensive Proof-of-Work algorithms

Thanks to a reader for sending me the paper. I am not sure that I buy, or even comprehend, the paper’s perspective on blockchain. But my takeaway is that you cannot just look at the costs imposed by centralized record-keepers and say “all those costs just go away with blockchain.” Other costs are introduced.

2. Sarah Oh writes,

Eric Budish of the University of Chicago presented that decentralized trust—a key component of blockchain—is expensive at scale, and more traditional, non-blockchain, mechanisms of trust like the rule of law and governance may be cheaper.

There ain’t no such thing as a free ledger.

Political indigestion watch

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Peggy Noonan writes,

But an end to political correctness in the arts and entertainment cannot come from the right. It can come only from the left. All the organs of entertainment and art in America, from Broadway to Hollywood, through Netflix , the museums and onward, are entities of the cultural left. They are run and populated by the cultural left.

They have the pertinent power. When conservatives write or speak against limits on free speech, what they say is heard by the left as mere reaction, a cover for intolerance, and so dismissed.

. . .The turnaround might begin—just one idea—when some powerful cultural entity produces a documentary featuring great figures of entertainment and the arts saying how they feel about limits to artistic expression. What their personal experience with political correctness is, how it has limited what they do, what the implications are. It would require significant cultural figures who are not identified with the right to speak their peace.

That hypothetical scenario would be part of what I call vomiting the Social Justice authoritarianism out of the system. Meanwhile, those on the left who agree with Noonan on this issue end up in the Intellectual Dark Web.

Kevin Erdmann on housing

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He writes,

Four main urban centers—New York, Los Angeles, Boston and San Francisco—share two important characteristics: They’re centers of new economic opportunity, and they permit new housing at rates much lower than their successful peers. Call them closed-access cities.

. . .The prudent path toward a stable housing market is more construction, more lending and more homeownership. Housing restrictions make economic growth painful by overinflating the price it takes to access the gains. Until they are reformed, many Americans will be stuck in the hopeless circumstance of running from booming regions rather than toward them.

You know Erdmann’s views from reading his comments on this blog and from reading Idiosyncratic Whisk. But the essay excerpted above appeared in the Wall Street Journal.

Kevin’s book, Shut Out, is available. Ironically, the Mercatus Center’s publisher is charging $34 for you to read the book on Kindle, and more for the print version. Talk about shut out!

Squelching talent

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Tyler Cowen said

Harvard and MIT are in fact remarkably good at finding, evaluating and attracting top talent. It is stunning how good they are at this, and we should not begrudge them that,” he said.

But what if the top economics graduate schools squelch the talent that they find, shunting it into mediocrity? What if all of these talented folks were instead given a wider perspective on problems and more encouragement to pursue knowledge through means other than mathematical models and stylized statistical analysis?

I ended up following a non-academic path after graduate school. From a status-within-the-profession perspective, this was a loss. From an intellectual growth perspective, it was a win.

What I write does not make it into the American Economic Review. So much the worse for economists who rely on the AER.

Question on marriage trends, continued

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Yue Qian says,

For analytical purpose, I classified each individual’s income by the decile he or she occupied in the income distribution of the 1980 and 2008–2012 analytic samples, respectively. My study showed that for a majority of couples, husbands were in a higher income decile than their wives regardless of the time period and the educational pairing of spouses.

Using sophisticated statistical models (log-linear models) to control for gender differences and shifts in marginal distributions of education and income, I found that the tendency for women to marry up in income was greater when they married down in education: Women were 93 percent more likely to marry men in higher income deciles than themselves among couples in which the wife had more education than the husband than among couples in which the wife had less education than the husband.

Pointer from David French. The paper itself appears to be gated. It seems pertinent to a post from a couple of weeks ago.