Ken Arrow was, until his passing today, the world’s greatest living economist. There are so many tributes to him all over the web that it would be superfluous for me to write another. Here’s a nice one.
President Trump wants to impose a 20% tariff on Mexican imports. How many Americans will that kill? Let’s play with some numbers.
The Bureau of Labor Statistics reports (I’m looking at Table 13 in that link) that in 2012, approximately 125 million U.S. households spent an average of $731 on fruits and vegetables. That’s about $91 billion altogether.
I learn from this page that the US imports about $9 billion worth of fresh fruits and vegetables each year from Mexico. That is, then, about 10% of our fruit and vegetable consumption.
I learn from various research reports around the web that the price elasticity of demand for fruits and vegetables is somewhere in the vicinity of .50. (Some say higher, some say lower). This means that a 20% tariff — as the president has just called for — will reduce imports by about 10%.
So the Trump tariff should reduce total U.S. fruit and vegetable consumption by about 10% of 10% — that is, about 1%.
(This is, deliberately, a considerable underestimate, since it entirely ignores the fact that the tariff will also lead to increases in the price of American vegetables, leading to further reduced consumption.)
Now here I learn that low fruit and vegetable consumption is associated with a higher risk of degenerative diseases, including cancer, cardiovascular disease, cataracts and brain dysfunction. “More than 200 studies in the epidemiological literature show, with great consistency, an association between low consumption of fruits and vegetables and high cancer incidence.” Many of the mechanisms for this are well understood. For example, folic acid deficiency leads to chromosome breaks and then to cancer. Your health risks do not drop off continuously with your vegetable consumption; instead there are sudden changes — you’re either above or below the level where chromosome breaks occur. (There are similar issues with at least eight other micronutrients — in addition to folic acid — that we get from fruits and vegetables.) About 10% of the U.S. population is below that critical level. Most of those have very low incomes. (The World Health Organization estimates that worldwide, about 5 million people a year die from inadequate fruit and vegetable consumption, and most of those are very poor.) For a first (very rough) approximation, let’s assume that those with folic acid deficiencies are in fact the poorest 10%. You can see here that these are people with individual incomes below about $10,000.
Romans Pancs, my friend from what is slated to be the other side of The Wall, observes in an email that a substantial fraction of the US population attends church, where they are fed a steady diet of alternative facts and fake (old) news. Yet not many people seem terribly outraged by this, and in fact churchgoers are widely respected for the power of their fact-free, unconditional faith.
Why, then, all the angst and anger and disrespect for those who place their unconditional faith in the fake news and prophesies purveyed by Donald Trump? Whence the double standard?
I have a separate question, motivated by the same observation: To what extent have the churches, by training people to accept obvious nonsense without blinking, created the condiitions in which Trumpism can flourish?
I’ll be glad to hear your answers to either question, or to both.
It was a pleasure and an honor to reminisce about Dee McCloskey for the Festschrift volume just released by the University of Chicago Press. It was less of a pleasure to discover that the U of C Press had ignored all the editorial corrections I sent them.
If you run into this volume, please don’t read my chapter. Read the corrected version here instead.
The indispensable Don Boudreaux riffs on a comment here at The Big Questions to observe that one cannot consistently argue that both a) Citizen’s United gives outsized political power to corporations and b) corporations need to be nudged out of their excessive focus on quarterly statements. Political contributions, after all, do not ordinarily pay off within one or two quarters.
One can, I think, maneuver around Don’s point by maintaining that corporations focus on both the short and long runs, putting too much emphasis on the short run, but still putting enough emphasis on the long run to make it worth manipulating the political system. But that’s a tricky maneuver, and kudos to Don for pointing out that there’s at least some serious tension here.
I submit that Hillary Clinton lost because she did not make even a minimal effort to make herself palatable to people like me — people who care primarily about economic growth, fiscal responsibility, limited government, individual freedom and respect for voluntary arrangements.
Because I care about those things (and for a number of other good and sufficient reasons), there was never a chance I would vote for Donald Trump. I gave money to Jeb Bush. Then I gave money to Ted Cruz. Then I gave money to the “Never Trump” movement that was trying to foment a revolt at the convention. Then I gave money to pro-growth Senate candidates. For me, the only remaining choice was between voting for Clinton and not voting for Clinton. (I also considered sending her money.)
I knew that if I voted for her, I’d never feel good about it. That was too much to ask. But I’d still have voted for her, if only she hadn’t gone out of her way to make me feel awful about it. And that she just would not or could not stop doing.
Every time I listened to her recite the litany of reasons not to vote for Trump, I cheered her on. But she seemed incapable of getting through a speech without veering off into the loony-land of free college and unfree trade. Most disturbingly — partly because it was most disturbing and partly because she harped on it so often — was the glee with which she looked forward to rewriting other people’s labor contracts and vetoing their voluntary arrangements. Do you want to accept a wage of less than $12 an hour in exchange for, say, more on-the-job training or more flexible work hours? Hillary says no. Do you want to forgo parental leave in exchange for, say, a higher salary? Hillary says no. And on and on.
Johanna Bobrow is by day a biologist at MIT, often by night a musician (both solo and in groups), sometimes in between an aerialist, and always my friend. When I first saw this video, I told her it was awesomer than the most awesome awesomeness ever. I firmly stand by that judgment.
There are approximately 22 million veterans of the United States Armed Forces. They are served — not always well — by the Veterans Administration, with a budget of about $182 billion a year. That’s almost $8300 per veteran per year.
Which raises the question: Why, exactly, do we have a Veterans Administration? My guess (and admittedly it’s only a guess) is that an overwhelming majority of those veterans would much prefer to lose the VA and get a check for $8300 every year instead.
Of course some veterans get end up claiming a lot more than $8300 a year in VA services due, for example, to combat-related trauma that manifests itself only years after leaving the service. But with $8300 a year, you can buy a lot of insurance against such contingencies (and with 22 million veterans each having $8300 a year to spend, there are sure to be a lot of new insurance products available).
R.I.P. Leonard Cohen, a major contributor to the soundtrack of my youth. I trust it is not inappropriate at this moment to pay tribute with this brilliant, weird and spot-on parody by the Austin Lounge Lizards. Herewith Leonard Cohen’s Day Job, from the (thoroughly brilliant) album Employee of the Month:
The following analysis assumes (as seems likely) that Trump has won Minnesota, Michigan, Arizona and Alaska, while Clinton has won New Hampshire. This gives Trump a total of 316 electoral votes, or 46 more than he needed.
Gary Johnson’s vote share exceeded the Trump/Clinton margin in 10 states, 6 of which (with a total of 38 electoral votes) were won by Cliniton and 4 of which (with a total of 75 electoral votes) were won by Trump.
Therefore, without Johnson in the race (and assuming that his absence wouldn’t have switched any Clinton voters to Trump voters or vice versa), Trump might have won as few as 316-75=241 electoral votes (making Clinton the president-elect) or as many as 316+38=342.
From there, you can draw your own conclusions.
Hey, stay calm. Germany elected Hitler, and they survived okay.
Less flippantly, there are some silver linings in this very dark cloud:
None of this remotely compensates for the prospect of living in an America where Trumpian stormtroppers go door to door ferretting out people to deport. None of it compensates for the Trump Depression that we’re in for if he’s serious about his trade policies. But it’s something.
Throughout this election season, Scott Adams (the Dilbert guy) has been right when I (and a whole lot of others) have been wrong. On his blog, Adams kept patiently explaining why Donald Trump would be a strong contender, while I and a great many others believed (or maybe just hoped and therefore believed we believed?) that Trump was a flash in the pan. Each of the many times that Trump seemed to take himself out of contention, Adams predicted he’d survive and even thrive — and each time, Adams was right.
Now, however, Adams has turned his attention from Trump’s merits as a candidate (where Adams seems to have had a great deal of insight) to Trump’s merits as a potential president. And here, despite all his past successes, I am quite sure that Adams has outrun his expertise. Policy analysis and political analysis are, after all, two very different things.
From Adams’s most recent blog post:
Today’s quote is dedicated to all the undergraduates who are contemplating law school:
I cannot understand how any gentleman can be willing to use his intellect for the propagation of untruth, and to be paid for so using it.
|–Anthony Trollope, Orley Farm|
Today’s quote is from my friend Romans Pancs, who is currently entertaining some other friends at his home in Mexico City and writes to report on their activities:
I escaped for a break home when they went to the Museum of Anthropology… No one has been able to explain to me what’s the point of studying failed civilisations when I can study successful ones by visiting Macy’s.
It’s said that Pythagoras had a man put to death for blabbing in a public bar that the square root of two is irrational. Today I hope I can post this without fear of reprisals. I don’t know who first drew this beautiful proof, which works equally well in modern English and in ancient Greek:
Larry Kotlikoff is probably the smartest, the most honest and the most thoughtful person ever to run for President of the United States. His platform is well worth a read. The latter part is crammed with carefully considered policy proposals. I’d be very happy to see his tax and health care reforms adopted wholesale. I might vote for him.
That said, I’m annoyed by some of the rhetoric in the early part of the platform document, and I’ve attached some of my quibbles below. (These quibbles stop, arbitrarily, at the end of Kotlikoff’s chapter 4, which is not meant to imply that I have no further quibbles.) In a few cases, I’ve expressed these quibbles harshly. Let me, then, make this perfectly clear up front: I am sure that Kotlikoff has thought about some of this stuff harder than I have. Nevertheless, here’s some of what bugs me:
There is at least one national candidate for President this year who you can be sure really understands economics. That’s Larry Kotlikoff, a professor of economics at Boston University with a long string of high professional honors and a history of great accomplishment in both academics and public service (more here). His running mate, Ed Leamer, is no slouch either.
Kotlikoff and Leamer are not on the ballot, but they are registered write-in candidates (the result of a long and arduous process) which means that their write-ins will be counted (unlike write-ins for, say, Daffy Duck). This is a great way to send the message that you prefer a president who is in the habit of making sense. Here is Kotlikoff practicing that habit:
Trump did very well, in the sense that if you hadn’t already known it, you might not have guessed he was a madman. But nothing could be more infuriating than to hear him pitch himself as the candidate of change.
For many decades, the federal government has become bigger and more intrusive. Hilary Clinton wants it to be even bigger and even more intrusive. So does Donald Trump. In this they do not differ. She more or less admits it; he flat out lies.
So let’s remind ourselves that Trump wants a government that is more dictatorial regarding who you can trade with, where you can locate your business, the wage contracts you can negotiate, and who you can invite into your living room. He has no problem with entitlement growth, and when asked what he would cut, has consistently answered “waste, fraud and abuse”, suggesting that he has no problem with any of the big ticket items — no problem with a federal government that maintains Departments of Commerce, Labor, Agriculture, Education, Energy, Transporation, and all the rest of it. Given ample opportunities, he’s never even been able to muster a word of opposition to the Corporation for Public Broadcasting or the National Endowment for the Humanities.
Is Donald Trump a racist? I am aware of nothing that would make me think so, but I am also aware that I am not the person most likely to be aware of such things. But I’m not sure it much matters anyway. Under our system of government, and in the current century, it would be rather difficult, I think, for even the most racist of presidents to erect signficant barriers to trade between people of different races. As long as the darkness in a man or woman’s heart does no material harm, I think we can live with it.
On the other hand, Donald Trump is certainly a xenophobe, which makes him as unlikable as a racist, and matters a hell of a lot more, given the ease with which our government routinely erects trade barriers between people of different nationalities.
So the answer to “Is Trump a racist?” is: I’d guess not, I don’t really care (except insofar as I wish nobody were a racist), and it’s the wrong question anyway. The right question is: “Is Trump a xenophobe?”, to which the answer is yes — and it matters.
Is Donald Trump a serial groper? The evidence is mixed. On the one hand, he seems to have lived several decades in the public eye without any visible complaints. On the other hand, we have the notorious Carpe Vulva tape, along with the flood of accusations that followed. The fact that those accusations gibe so closely with the words on the tape could be seen as evidence either for or against their veracity.
But again, who cares, really? The extent of Trump’s boorishness, whatever it may be, seems unlikely to be much different in or out of the Oval Office, and is therefore largely irrelevant to whether it would be a good idea to install him in that office.
Between his blog, his New York Times columns and his textbooks, Greg Mankiw has probably contributed more than anyone else alive to the cause of economic literacy. But his most recent column is, I think, a rare miss.
The thrust of the column is that the estate tax is a bad idea because it violates the principle of horizontal equity by imposing substantially different tax burdens on substantially similar people:
Consider the story of two couples. Both start family businesses when they are young. They work hard, and their businesses prosper beyond anything they expected. When they reach retirement age, both couples sell their businesses. After paying taxes on the sale, they are each left with a sizable nest egg of, say, $20 million, which they plan to enjoy during their golden years.
Then the stories diverge. One couple, whom I’ll call the Frugals, live modestly. Mr. and Mrs. Frugal don’t scrimp, but they watch their spending. They recognize how lucky they have been, and they want to share their success with their children, grandchildren, nephews and nieces.
The other couple, whom I’ll call the Profligates, have a different view of their wealth. They earned it, and they want to enjoy every penny of it themselves. Mr. and Mrs. Profligate eat at top restaurants, drink rare wines, drive flashy cars and maintain several homes. They spend their time sailing the Caribbean in their opulent yacht and flying their private jet from one luxury resort to the next.
So here’s the question: How should the tax burdens of the two couples compare? Under an income tax, the couples would pay the same, because they earned the same income. Under a consumption tax, Mr. and Mrs. Profligate would pay more because of their lavish living (though the Frugals’ descendants would also pay when they spend their inheritance). But under our current system, which combines an income tax and an estate tax, the Frugal family has the higher tax burden. To me, this does not seem right.
The problem with this argument is that it’s not an argument against the estate tax. It’s an argument against any tax (other than a pure $X-per-person-per-year head tax). Try it:
They were both so dreadful in so many ways that I don’t have the heart to review it all.
But just because it came near the very end, this is what sticks in my mind.
I am paraphrasing from memory here, but I believe that Mrs. Clinton “accused” Mr. Trump of having said that:
Quite independent of the question of whether Mr. Trump did or did not say these things, in what sense are these accusations? Specifically:
From researchers at Harvard, here is stunning time-lapse photography of something that (as far as I can see) might or might not be evolution. A bacteria colony spreads out across a giant Petri dish, hits an area with a high concentration of antibiotics, appears to be stopped in its tracks, but then slowly breaches the boundary in a limited area and is soon spreading as before until it reaches an area with an even higher concentration of antibiotics, and the story repeats:
According to the narrator, the barrier is being breached by a small number of antibiotic-resistant mutants, which then reproduce like crazy, at least until they come into competition with other mutants, etc. In other words, evolution.
Now I’m sure this is an extremely naive question, but I hope someone can offer an answer that will leave me less naive: How do we know this is evolution as opposed to learned behavior?
With the new school year underway, and mindful of the fact that many economics students read this blog, let me repeat this periodic warning: Your econ profs are likely to offer you an “opportunity” to subscribe to the Wall Street Journal under the newly renamed Wall Street Journal University program. (I like to think, but of course do not know, that the renaming had something to do with the repeated warnings on this blog and elsewhere regarding the old Journal-in-Education program.)
I realize it’s implausible that a well-established institution like the Wall Street Journal would be running a credit card scam. Nevertheless, they are. When I subscribed through the old “Journal-in-Education” program, they tacked an extra $900 in phony charges onto my credit card bill. I called them repeatedly, they repeatedly acknowledged the “error” and promised to fix it, and, repeatedly, nothing happened. After a year, I got a refund for $450. After another year — and countless hours on the phone — I got an additional refund, still short of the entire amount. Most audaciously of all, they told me I could have the remainder of my refund if I agreed to attend a marketing event. They still have my money.
I am a long-time subscriber to the Journal and have never had these problems with subscriptions bought in the ordinary way. The Journal-in-Education, or Wall Street Journal University, or WSJ-Prof, or whatever else they’re calling it, program seems to be a separate entity that plays by its own tawdry rules. Don’t get mixed up with them.
Spoken by a character who has joined the Army in 1942, and has been issued a bombsight:
A bombsight— I hadn’t made pilot but at least I would be riding up front— allotted to me by a government which didn’t trust me with it and so set spies to watch what I did with it, which before entrusting it to me had trained me not to trust my spies nor anybody else respecting it, in a locked black case which stayed locked by a chain to me even while I was asleep— a condition of constant discomfort of course but mainly of unflagging mutual suspicion and mutual distrust and in time mutual hatred which you even come to endure, which is probably the best of all training for successful matrimony.
|—The Mansion (Volume 3 of the Snopes Trilogy)|
The feller you trust aint necessarily the one you never knowed to do nothing untrustable: it’s the one you have seen from experience that he knows exactly when being untrustable will pay a net profit and when it will pay a loss.
|—The Mansion (Volume 3 of the Snopes Trilogy)|
For several years, TheBigQuestions.com has been hosted by Bluehost, and I’ve been very happy with their service.
No longer. As some of you have mentioned, and many more of you have probably noticed, the site has been running very slow the past few days. Occasional glitches like this are to be expected, of course. But in this instance, Bluehost’s customer service (which has always been great in the past) has been abysmal. One representative kept me on hold for nearly half an hour before coming back to direct me to a generic web page that lists various reasons why a site might run slow. Another told me there was an unusually high load on the server, which would certainly clear in the next few hours (that was days ago). I’ve dealt with about a half dozen of these guys, at most two of whom have taken the problem seriously, and they haven’t been able to help.
So: It’s time to move, I think. Those of you with relevant experience: Who do you recommend?
Because what somebody else jest tells you, you jest half believe, unless it was something you already wanted to hear. And in that case, you dont even listen to it because you had done already agreed, and so all it does is make you think what a sensible feller it was that told you. But something you dont want to hear is something you had done already made up your mind against, whether you knowed—knew it or not; and now you can even insulate against having to believe it by resisting or maybe even getting even with that-ere scoundrel that meddled in and told you.
|—The Town (Volume 2 of the Snopes Trilogy)|