Category Archives: books and book reviews

More medical treatment, less health

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In a book review, Chris Pope writes,

Unlike many politicians and pundits, however, Mr. Kaplan doesn’t pretend that the situation is simply the result of overpayment for services that could be easily remedied with mandatory price cuts. He suggests, instead, that America’s high spending is the product of a sicker population, a higher intensity of care and the over-medicalization of care at the end of life. The author is skeptical of the capital-intensive innovations that excite investors, and he observes that R&D spending on drug discovery has seen diminishing returns. “To achieve the kind of scientific progress we enjoyed in the early 1970s,” he writes, “takes 25 times as many researchers today.”

This makes More than Medicine, by Stanford medical professor Robert M. Kaplan, sound like a re-run of my own Crisis of Abundance. There I argued that capital-intensive and skills-intensive medical services with high costs and low benefits are the main driver of the poor performance of our health care system relative to that in other countries.

I also would agree with Kaplan that the really big improvements in health outcomes come from outside of the medical-treatment realm. Think of urban sanitation, reduced pollution, healthier and safer working conditions, and reduced smoking. To me, that argues for taking dollars away from subsidizing demand for medical treatment and trying to apply some those dollars to efforts to improve public health.

But Pope points out that Kaplan writes as if we know how to solve our public-health problems, and we just need the will to do so. My impression is that problems like homelessness and obesity are very challenging, and we will need to sift through many potential solutions. Finding something that works and is widely applicable may not happen for many years, if ever.

A perspective on Adam Smith

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James Otteson writes,

Smith’s argument is that human morality is a social system that arises—like languages, like ecosystems, and like markets—on the basis of countless individual decisions, actions, and interactions but without any overall plan and with no overall designer. Each of us begins life with no moral sentiments whatsoever, but with an instinctive desire for mutual sympathy of sentiments. Interactions with others—and, in particular, experiences in which others judge us—trigger our desire for mutual sympathy of sentiments and begin the lifelong process of finding ways to behave that stand a chance of achieving this sympathy, which Smith believes is, along with the desire to procreate, among the strongest social desires humans have. This trial-and-error process, which we conduct with others who similarly wish to achieve mutual sympathy, leads us to develop habits of behavior that reflect successful attempts. These habits eventually become, through suitable refinement, principles of behavior, and then come to inform our conscience. Because we develop these principles with others in our community, they can become a shared system of moral judgment

Otteson’s book and related media can be freely explored here.

Kevin Erdmann watch

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1. Joel Kotkin writes,

In fact, as a new Brookings study shows, millennials are not moving en masse to metros with dense big cities, but away from them. According to demographer Bill Frey, the 2013–2017 American Community Survey shows that New York now suffers the largest net annual outmigration of post-college millennials (ages 25–34) of any metro area—some 38,000 annually—followed by Los Angeles, Chicago, and San Diego. New York’s losses are 75 percent higher than during the previous five-year period.

. . .The top 20 magnets include Midwest locales such as Minneapolis–St. Paul, Columbus, and Kansas City, all areas where average house prices, adjusted for incomes, are half or less than those in California, and at least one-third less than in New York.

2. I now have a review copy of Shut Out. On p. 5, he writes,

we did not have a housing bubble. We had a housing supply bust–first in the places where people want to live, in places where there is more economic opportunity. That supply bust caused prices to rise to extreme levels in those cities–most notably in New York City, Los Angeles, Boston, and San Francisco–metropolitan areas I call the Closed Access cities. After the turn of the century, millions of households flooded out of those cities because of a shortage of housing–so many that they overwhelmed cities in the main destinations for those households, such as inland California, Arizona, and Florida. Then we imposed a credit and monetary bust on the entire country in a misplaced attempt to alleviate the problem.

I have a difficult time wrapping my head around the idea of a “supply bust.” It suggests a supply curve rapidly shifting to the left. I find it more plausible to think of housing supply in the Closed Access cities as relatively fixed, with demand increasing rapidly. But how to reconcile “demand increasing rapidly” with net out-migration without resorting to a Yogi Berra theory?

One possibility is non-resident foreign buyers making up the difference. Another possibility, going back to the supply bust idea, is that there is a lot of reconstruction taking place with the existing housing stock, and while these houses are being fixed up, no one is living in them.

Overall, there are a lot of cross-currents here, and there are multiple housing markets even within a single metropolitan area. It’s a difficult picture to sort out.

Martin Gurri watch

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Noah Smith suggests that from a historical perspective, the revolt of the public is not new. He cites the period from 1789-1848 as well as the 1960s.

These were two former eras, one far in the past, one recent, in which spontaneous activism and popular rage led to widespread rejection of elites and endemic political chaos. And yet in each case, the public didn’t need Facebook or Twitter to revolt – all it needed were pamphlets, independent newspapers, books, or that ultimate information technology, word of mouth.

So the Revolt of the Public might not be such a new thing under the sun. Instead, it might be a recent manifestation of a recurring phenomenon – a periodic eruption of popular discontent. Such a cycle might be driven by improvements in information technology – the printing press, telephones, radio, blogs, and now social media. Each time information technology improves, it might lead to an explosion of chaos and rage while elites and institutions struggle to adapt. But each time in the past, the slow-moving engines of government, business, and media have eventually figured out how to put the lid back on public rage. It may turn out similarly this time.

A conference on moderation (Martin Gurri watch)

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I attended this event on the 25th.

There are two videos, one for the morning talks, and one for the afternoon talks. If you watch the video for the afternoon talks, near the end, close to the 4 hour, 11 minute mark, I ask the last question at the session that featured Tony Blair.

My father would have been proud. He always liked to measure the social distance that he traveled from his childhood with Yiddish-speaking parents in the St. Louis ghetto. Finding me in the same room with the former British Prime Minister would have given my father lots of nachas, so to speak.

My review of the conference overall:

David Brooks gave a lucid, entertaining opening speech. About minute 44-45 in the video, he gives an account of contemporary progressiveness that could come straight out of my three-axes model.

Earlier, he cites Andrew Delbanco’s The Real American Dream, which argues that America has had three phases of animating cultural idea. Until around 1830, it was “God.” Americans were fulfilling God’s will. From then until World War II, it was “nation,” meaning manifest destiny for the United States. After the war, it became the “self.”

Brooks argues that the individualism of the latest phase has reached its end as a successful animating idea. We need a cultural paradigm shift. He suggests that what might work better now is a form of communitarianism, in which we care about children (not just our own), the dignity of work, our local living places, and racial and social integration. We need for politics to be less important.

In the end, his “politics of love,” as he calls it, is easy to ridicule, and he recognizes that. But he tries hard to justify his proposal.

The first panel was “Why isn’t the center holding?” and it included Martin Gurri. Not surprisingly, I found Gurri’s remarks the most compelling. But I think he also came through to people in the audience who were not as familiar as I am with his views.

Frances Lee did make the interesting point that as political parties separated on ideological grounds (recall that 60 years ago, the Democratic Party was an amalgamation that included Northern African-Americans and white segregationists from the South where African-Americans were kept from voting) and elections became close enough that either party could win, party loyalty has strengthened. There is fear that if you work with the other side, you are helping them win, and this fear is expressed very strongly in the primary-voting public.

I got to ask a question at this panel. I wanted to make the point that the political divide is a subset of a broader cultural divide. It’s about the 2 hour and 9 minute mark. I don’t think anyone wanted to answer the question, but Brink at least helped to clarify what I was trying to get at.

The next panel struck me as less focused. I did note that Damon Linker cited a poll that suggests that in the 2×2 quadrant of left/right and social/economic issues, the least populated quadrant among American voters is the libertarian one of socially on the left and economically on the right. Will Wilkinson expressed doubt that any poll holds for very long, because American voters are volatile on the issues. Yascha Mounk suggested that demagogic politics is on the upsurge because people want contradictory things (I would say that in economic jargon, they don’t appreciate trade-offs), and politicians must try to cater to that.

The third panel turned me off quite a bit. Often, the discussion veered into philosophical and historical trivia. When it got back to present-day reality, it seemed to consist mostly of ritual expressions of contempt for Mr. Trump. At one point, Professor Levy implied that the Republican Party as an institution would benefit by having a prominent conservative Senator utterly denounce Mr. Trump. While I think that it would help to have a Republican challenge Mr. Trump in the primary in 2020, that challenge should serve to articulate what mainstream Republicans want the party to stand for. The challenger should in no way denounce Mr. Trump but instead should commit to supporting whoever the party nominates in the general election. And, no, William Weld does not get my endorsement for the role.

Denouncing Mr. Trump as Mr. Levy recommends would amount to the political equivalent of a suicide bombing that fails to even approach its target. Mr. Trump does not depend on establishment support in the way that President Nixon did. When Nixon lost the establishment, he was gone. But today a politician’s personal brand is more important than establishment support. See Tyler Cowen’s column on the young Democratic congresswomen. In general, hearing Professor Levy’s pontifications reminded me of the refrain, “You want more Trump??? This is how you get more Trump.”

In the hallway, Elaine Kamarck, a Bill Clinton Democrat who has written a book on primary politics, expressed her view that the winner of the Democratic nomination in 2020 will be someone who drives down the “center-left lane,” as she called it. I suggested that the convention might arrive with 12 candidates each having 8 percent of the vote. She ridiculed that possibility. If there had been time, it should have been possible to formulate a bet. A simple one would be, “A center-left candidate will arrive at the convention with more than 40 percent of the delegates.” Presumably, she would bet for this. I would bet against it. I would not bet more than a few dollars, because she knows much more than I do about the subject. That is what would make it fun if I won.

What do I think of the overall project of reviving a “third way” or a moderate center? I was skeptical going into the event, and I remain skeptical.

I would like to see a more moderate tone in politics. But oddly enough, Levy speaks for me when he writes,

if “moderate” is the name of a substantive position, then it risks being nothing at all, or at least nothing stable, only something defined with reference to the shifting sense of who counts as extreme.

I look at the “shifting sense of who counts as extreme” differently than he does. To me, it looks like the Overton Window is racing full speed to the left. In fact, the window has moved so far to the left that I think most young Democrats see Blair and Clinton as far right-wingers. Consider that when Barack Obama ran for President, he was against gay marriage, and by the time he left office his Administration was pushing trans-gender bathrooms. Consider that President Clinton took pride in balanced budgets and gave thought to fixing entitlement programs*, and now we have Larry Summers and Jason Furman writing that with interest rates so low the government should do a lot more borrowing and spending. And of course, socialism is now a yeah-word and capitalism is a boo-word among Democratic politicians.

After Munich, Winston Churchill said,

for Czechoslovakia and in the matters which were in dispute has been that the German dictator, instead of snatching his victuals from the table, has been content to have them served to him course by course.

I cannot support a moderation that amounts to serving the left’s victuals course by course. Get the Overton window to stand still, or maybe move it back to the right a couple of notches; only then we can talk about moderation.

*one of the event’s panelists, I believe it was Damon Linker, suggested that Clinton was getting ready to propose entitlement reform until a certain #metoo episode weakened him politically

Martin Gurri watch

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Who said this?

Most politicians do not have excellent social media skills, but many will try to get noticed and have an impact (or at least hire staff members who will). As more politicians up their game on social media, more of these attempts will hit home. Ocasio-Cortez will have competition. The influence and reach of political celebrities will grow stronger, and the parties will become weaker yet.

This may be a more important trend than what is sometimes called political polarization. But what does this new, more intense celebrity culture mean for actual outcomes? The more power and influence that individual communicators wield over public opinion, the harder it will be for a sitting president to get things done. (The best option, see above, will be to make your case and engage your adversaries on social media.) The harder it will be for an aspirant party to put forward a coherent, predictable and actionable political program.

Actually, it was Tyler Cowen, but it echoes The Revolt of the Public.

But Tyler reaches this important, sobering conclusion:

Finally, the issues that are easier to express on social media will become the more important ones. Technocratic dreams will fade, and fiery rhetoric and identity politics will rule the day.

Speaking as an economist. . .

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Suresh Haidu, Dani Rodrik, and Gabriel Zucman write,

Neoliberalism — or market fundamentalism, market fetishism, etc. — is a perversion of mainstream economics, rather than an application thereof. And contemporary economics research is rife with new ideas for creating a more inclusive society. But it is up to us economists to convince their audience about the merits of these claims.

Pointer from Tyler Cowen. The authors are launching a project called “Econoimsts for Inclusive Prosperity.”

1. The use of neoliberalism as a boo-word puts me off right away. I see it as a sign that this will be an exercise in government fundamentalism,, government fetishism, etc. When they are uncharitable to those of us who say “Markets fail. Use markets,” it becomes really hard for me to be charitable to them.

2. Anat Admati has an essay in which she advocates higher capital requirements for banks and opposes tax policy that encourages debt finance rather than equity finance. It is a reasonable case. But I recommend my essay on the book that she co-authored, in which I suggest that the households who ultimately supply the funds for banks might prefer less equity and more deposit-like liabilities than what the book proposes. That essay is a Kling Klassic on capital structure.

3. Atif Mian has an essay that suggests that the extravagant wealth of some people leads to an excess supply in the capital market. Less-wealthy people are lured by low interest rates and weak credit screening into borrowing too much, making the financial system unstable. His solution is to have government confiscate more from the wealthy and redistribute it to the less-wealthy. I think that there is only a low probability that he has correctly diagnosed a problem. Even if he has, I imagine that one can come up with much better solutions.

4. Those are the two essays about which I can be the most charitable.

5. My main point is that I am becoming quite allergic to phrases like “economists say” or “economics says.” I know that I used to employ such phrases, but I have done so only sparingly, and from now on I plan to avoid them completely. Don’t argue from authority. Just state your proposition and defend it. Along these lines, I have had a strict personal policy for many years of not signing petitions of the form “economists who favor X” or “economists opposed to Y.” I dislike the implied tone of “I have credentials, you must listen to me.” I would sign a petition in favor of refraining from ever using the phrase “Speaking as an economist. . .”

On hiatus

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Until February 19. I am away from my computer, and I keep messing up HTML.

Also, there is nothing to write about. Covington? Northam? If we have the luxury of turning these stories into headlines, then we are either doing very well as a country or else we are desparate for distractions from whatever real problems we have.

A few days ago Tyler Cowen recommended a book called Whiteshift, which claims that the cultural disruption we are experiencing is due to whites feeling threatened demographically. I probably should examine the book. Off hand, though, I think that Martin Gurri has a better explanation, because I don’t think Whiteshift can explain the Arab Spring or Greece or Spain. Gurri’s story is that elites are getting knocked off their perch in the age of the Internet.

In the U.S., I see a progressive elite that pounds the table insisting that it stands against oppression. And we have a conservative elite that pounds the table insisting that it stands against barbarism.

The 2016 election exposed the conservative elite as a slim minority.

The progressive elite is larger, but it is still just a minority. I think it is in a precarious position. Puritanism always provokes a backlash. And just as the Republican base decided that the conservative elite is not worth supporting, might non-white ethnics at some point decide that the progressive elite is not worth supporting? One can envision a scenario in which the progressive elite finds itself as beached as the conservative elite finds itself today.

Kling on Robert Plomin

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My review says,

Plomin is optimistic that with larger sample sizes better polygenic scores will be found, but I am skeptical. Unless there are unexplored areas in the existing data sets, such as non-linearities or interaction effects, my guess is that there are diminishing returns to enlarging the sample size.