Kevin Erdmann on U.S. housing supply

Posted on by

He writes,

Just a few cities are at the heart of the housing supply problem, most notably New York City, Los Angeles, Boston, and San Francisco, which I refer to as Closed Access cities. There are two very different housing markets within the United States: the Closed Access market, where new housing is highly constrained, rents rise relentlessly, and households are forced to make difficult choices as housing expenses eat up their budgets; and the rest of the country, where homes can generally be built to meet demand, housing construction is healthy, and housing expenses remain at comfortable levels for the typical household.

Pointer from Tyler Cowen.

This is an important point, which I would like to see stressed over and over. We do not have just one housing market in the U.S.

For the nation as a whole, Erdmann makes two claims.

1. There was no significant widespread overbuilding during the housing boom. This claim is contrary to many people’s impression, but pay attention to his statistical support.

2. There has been under-building since 2007. This claim strikes me as undeniable. But I saw an essay on Medium recently that tried to deny it, using what I thought were inappropriate and misleading indicators.

I strongly recommend reading the entire paper, or at the very least skimming it to get all the main ideas. He is doing important work.

Try competing with Facebook

Posted on by

Tyler Cowen writes,

I would instead start with the sentence “Most Americans don’t value their privacy or the security of their personal data very much,” and then discuss all the ways that limits regulation, or lowers the value of regulation, or will lead many well-intended regulations to be circumvented. Next I would consider whether there are reasonable restrictions on social media that won’t just cement in the power of the big incumbents. Then I would ask an economist to estimate the costs of regulatory compliance from the numerous lesser-known web sites around the world. Without those issues front and center, I don’t think you’ve got much to say.

He is commenting on a scheme for regulating Facebook.

I would instead start like this:

You didn’t come up with the idea. You didn’t build the business. Now that it’s here, who the heck do you think you are telling them how to run it?

That is from a brand new essay, in which I offer up my idea for a Facebook competitor. I’m sure that folks at Facebook have thought of my ideas and discarded them, probably for very good reasons. But I would much rather see people thinking like competitors rather than like fantasy-despot regulators.

The libertarian non-moment (Kevin Williamson)

Posted on by

Kevin Williamson writes,

But “libertarian” often means little more than “a person with right-leaning sensibilities who is embarrassed to be associated with the Republican Party.” (Hardly, these days, an indefensible position.) Libertarian sensibilities are popular because they enable the posture of above-it-all nonpartisanship, but libertarian policies, as [Bryan] Caplan and others have noted at length, are not very popular at all. Americans broadly and strongly support a rising minimum wage and oppose entitlement reform with at least equal commitment, and they are far from reliable supporters of free speech and free association or enforcing limits on police powers.

Pointer from Tyler Cowen.

By the end of the essay, Williamson wonders whether the Democrats might make some overtures to libertarians. But I get the sense that he is stopping short of going full Niskanen Center. That is, he doesn’t seem to be bad-mouthing libertarians as a way of trying to curry status with the left.

OK, so I scheduled this post over a week ago, and subsequently Williamson was fired by the Atlantic. Nothing to do with the column I quoted; he apparently is anti-abortion and does not mince words in expressing his opinion on that, and the severity of the way he expressed his views was the reason given for the decision to let him go. I don’t know anything about the background to his hiring or firing, but my instinct is to assign a very low probability to the official explanation being the full story.

Complex vs. Complicated

Posted on by

My latest essay.

When I was a graduate student in economics in the late 1970s, we were trained as if the economy is complicated, but not complex. We were told that if we learned enough mathematics and statistics and applied these tools, then eventually we could predict and control economic outcomes.

In fact, economic behavior is complex. There are too many causal factors, feedback loops, non-linear effects, and unprecedented phenomena involved to enable economists to control the economy precisely and reliably.

Please read the whole essay before commenting.

The narrative of a gender war

Posted on by

Tyler Cowen offers it.

I am struck by a recent poll by the Pew Research Center. Millennial women, defined as the group born between 1981 and 1996, favor Democrats by an extraordinarily large 47 percentage points. Millennial men also lean Democratic, but the gap is much smaller, only 8 percentage points. Because the Democratic Party has not had huge national triumphs as of late, the obvious inference is that the Republican Party is doing something to turn off those millennial women.

Another obvious inference is that the Democratic Party must be doing something to turn off older voters, both male and female.

Let me try to flesh out the narrative. Once upon a time, (say, 1930), higher education in America was not for the masses. Harvard was a place for upper-class WASP males, who were not necessarily the cream of the crop intellectually, to firm up their social connections while studying the classics from Western civilization.

By the early 1960s, admission to higher education had become meritocratic, but many of the best colleges did not admit women. This was probably the peak period for “systemizers” to dominate the pool of undergraduates. The classics were still being taught, but many among this brighter cadre of students were gravitating toward the more mathematical and scientific disciplines. To be sure, pre-Med was an especially popular undergraduate choice because guys did not want to end up in Vietnam.

Two developments began in the 1960s that eventually created the state we are in today. One was the attempt to make higher education a mass-market phenomenon. The other was to ensure equal access to higher education for women.

To make a long story short, mass higher education for men was a failure, but for women it was a success. The result was that higher education came to be dominated by empathizers in a number of areas. In the humanities, the classics were displaced by “___ studies” courses, which required less systematic analysis. In these “_____ studies” courses and in psychology and sociology, objectivity gave way to the goal of raising the status of women and minorities.

In terms of voting behavior, we now have young, educated women who have bought into the cause of raising the status of women and minorities, a cause which is packaged with other left-wing causes, including socialism. But we have older Americans and younger less-educated men who have not bought into that cause. Hence, the gap noted by Tyler.

My sense is that, unfortunately, many of these young educated women have a strong streak of soft authoritarianism. If you want to know what it will feel like when they are in charge, read (the movie does not do it justice) One Flew Over the Cuckoo’s Nest. Today’s well-educated young women, and the men who affiliate with them, have a low tolerance for systemizers whose analysis does not lend support to the cause of raising the status of women and minorities.

In the end, I am not convinced that the gender-war narrative is sufficient to describe our current state. The urban-rural divide also matters. Think of a married couple living in a house on the edge of a small town. Then consider two roommates living on the sixth floor of an urban apartment building. These people will have different needs and expectations concerning government, and they are unlikely to vote the same way.

And then you have ethnic divides. And regional divides. I think that if we had an electoral system conducive to multiple parties, then we would have a situation like that in Germany or Italy today, with no coherent central majority.

A pro-civilization faction?

Posted on by

Jacob Lyles writes,

ProCiv probably favors a daring approach to institutional reform. Institutions like governments, universities, and the health care system represent society’s collective intelligence. When they are operating well, society is effective, productive, and nimble in addressing crises. When they are operating poorly, they can suck up infinite money while producing less and less benefit, a process sometimes referred to as “institutional sclerosis”. There is good evidence that American institutions are quite sclerotic. Infrastructure is slow to build and expensive compared to the past. Education and medicine are skyrocketing in price while most of that extra money goes to hiring administrators and regulatory compliance. A ProCiv point of view advocates for paying the cost to make bold reforms now in exchange for upgrading our collective intelligence to manage the challenges of the coming decades.

Read the whole post. The idea is that conservatives, concerned about the survival of civilization, ought to focus on avoiding catastrophic global risks while encouraging a lot of limited experimentation.

But I am afraid that “daring approach to institutional reform” and conservatism are not a natural match.

It seems that that what you would want would be to preserve institutions and norms that are helpful and to reform those that are harmful. Other things equal, conservatives have a bias toward preservation. Progressives have a bias toward reform. If we are lucky, then conservatives will preserve good institutions and norms while gradually accepting reforms that get rid of bad institutions and norms.

But what happens when the bad institutions and norms are cherished by progressives? Think of higher education, or Medicare, or Medicaid, or being non-judgmental about people who have children outside of marriage. The progressive does not see the need for reform, and the conservative is hesitant to attempt radical change.

Seemingly related: Scott Alexander’s summary of readers’ comments on Jordan Peterson.

The Debt Spiral

Posted on by

Several Hoover Institution scholars write,

In recent months, we have seen an inevitable rise in interest rates from their low levels of recent years. Rising interest rates and increasing deficits threaten to build upon each other to send public debt spiraling upward even faster. When treasury debt holders start to doubt our government’s ability to repay, or to attract future lenders, they will demand higher interest rates to compensate for the risk. If current spending and tax policy continue unaltered, higher interest costs will have to be financed by even more debt. More borrowing puts more upward pressure on interest rates, and the spiral continues.

If, for example, interest rates were to rise to 5 percent, instead of the Trump administration’s prediction of just under 3.5 percent, the interest cost alone on the projected $20 trillion of public debt would total $1 trillion per year. More than half of all personal income taxes would be needed to pay bondholders. Such high interest payments would crowd out financing of needed expenditures to restore our depleted national defense budget, our domestic infrastructure and other critical government activities.

See the post from John Cochrane, one of the authors. If investors, including the Chinese government, grow leery of U.S. government debt, then my guess is that we will see the tactics that are known as “quantitative easing.” That is, the Fed will grow the supply of reserves, so that it and the rest of the banking system absorb a lot of government debt. The trick will be to keep banks from doing a lot of lending other than to the government. My guess is that paying a low rate of interest on reserves won’t be sufficient, and instead some form of financial repression will be needed. By that I mean regulating banks in such a way that buying government debt is approved while making business loans is frowned on.

Immigration laws and others not enforced

Posted on by

Look at what I wrote more than 15 years ago.

many laws are the legal equivalent of oxymorons – legamorons, if you will. A legamoron is any law that could not stand up under widespread enforcement. Laws against marijuana use are a prime example. Rigorous enforcement of these laws on middle-class college campuses would cause a furor.

There are many other legamorons, where we have become accustomed to low levels of enforcement.

immigration laws
laws against sexual harassment
laws against betting on sports
speed limits
software licenses
laws against music sharing
laws requiring people to pay social security taxes for household workers

A couple of things have changed. Sexual harassment is not being overlooked any more, but that change is a cultural phenomenon more than a legal one. And iTunes, Pandora, and Spotify have created legal substitutes for Napster. It still seems like illegal music sharing happens on YouTube, but I guess Google makes enough of an effort to curb it that the music labels are not going as beserk as they did about Napster. Back in 2002, the consumer market for shrink-wrapped software was still a big deal. Now, not so much, I don’t hear much complaining about people using unlicensed software.

Read the whole essay. It makes a number of interesting points.

The Anti-tribal tribe

Posted on by

David Fuller writes,

Recently a new meme started doing the rounds on the Internet — the “Intellectual Dark Web”. The phrase was coined by the mathematician Eric Weinstein. It seems to have caught on — showing that whatever it is, quite a few people are recognising it — even though there’s a lot of discussion about what exactly it means.

. . .one of the things that unifies many of the thinkers in the IDW is a belief that the evolutionary strategies that got us to where we are now are unlikely to get us any further — particularly our hard-wired tribalism.

He links to the intellectual darkweb site, which is sort of a self-appointed unofficial hall of fame for the IDW. Also to a piece by Meghan Daum that appeared in a mainstream media outlet, the LA Times.

Reading Fuller’s essay and Daum’s column, I believe that my Three Languages of Politics book is in the IDW spirit. Also, at least a couple IDW hall-of-famers have read it.

Some challenges that the IDW faces:

–how to be non-tribal while opposing tribalism

–how to expose and overcome smugness without becoming smug about it

Where I get news

Posted on by

A reader asks,

What sources do you use to gather “news”? I have become quite cynical and skeptical of most major news outlets. I am certain that one must consider multiple sources of news to gather a general understanding of what is going on. I am just interested as to where you gather your news from.

In general, I think that competition for attention favors “outrage of the day” stories and disadvantages important stories that do not feed the outrage machine. I try to lean against.

1. My print news source is the Wall Street Journal.

2. I dropped my subscription to the Washington Post. I sort of miss the editorial section, which has some balance to it. But the front section is devoted to undoing the 2016 election. No doubt this caters to the tastes of many of the Post‘s readers, but it does not make for reliable prioritization of stories or for balanced coverage within those stories. Also, the Sunday Outlook section has too many pieces that look like undergraduate essays written to please the sociology professor. Instead, the Journal‘s Saturday Review section often has interesting material.

3. I check Google News once or twice a day, just to see the headlines. Interestingly, they almost never show me headlines from the Journal, but they always show me headlines from the Post. So I don’t

4. Blogs are less shrill and more useful for following news than other social media. But the blog ecosystem functioned better when there were trackbacks, the Google newsreader and Google blogsearch. And no Twitter. As it is, I use Feedly to check blogs. Even though I am not interested in the outrage-of-the-day stuff, it often gets enough blog coverage to keep me from missing out entirely. As an aside, I believe that some of the stories that outrage people on the right, such as college campus hijinks, are not covered in the mainstream media very much.

5. I never turn on a TV. I would not be able to pick out of a police lineup any of the reporters or pundits whose names I see mentioned on blogs, much less anyone who is less well known.

6. All I do on Twitter is echo my blog posts there. Not sure I should even do that.

7. I check Facebook once or twice a week. But I really want Facebook to show me personal items from my friends, not so-called news. I only click on a news-type story if it seems really interesting and different from what I might see anywhere else. That does not happen very often.

Update: Jordan Greenhall, one of my current favorites, says,

I have recently fully unplugged from social media because social media is almost completely toxic, which is to say that when I go into any social media environment I find myself decreasingly capable of making good choices and increasingly willing to make bad choices, because it has that effect. Now, this is an interesting problem because we’ve got billions of people who are now connected on social media.

And by the way I don’t just mean social media; think also broadcast media… if I read an article in the New York Times there’s a 99% chance that I’m worse off rather than better off. Books, particularly old books, by the way, are things that we can still rely on because they take so long to write and to read. They have this cool concept… that has to do with a differential time element—so books are slower than other things.