The e-mail server is down here, with no prospects of a resumption any time soon, but I’m still bashing out the links in the hope that the internet pixies will do their magic and send them off into the matrix (as an aside, that was probably the most unrealistic thing about The Matrix – the fact that Neo didn’t try and upload ‘Kung Fu’ to his brain and get a persistent error message along the lines of ‘Error 253. Please contact your system administrator.’] Anyway, if you’re reading this, I’d like to pretend that it’s because in a fit of Andrew Wiles-level creativity, I’ve fixed the problem, but more likely I’ve been shown how to do it by a kindly young person less afflicted by technophobia.
1. Speaking of technophobia, I don’t have a Twitter account, and have no intention of ever creating one. Some of you may have noticed that Donald Trump does. It’s stream-of-consciousness, unfiltered character has led some to speculate that an algorithm could be programmed to respond to Trump’s tweets automatically to outplay the market and make money. They’re making progress, and down to 10 seconds in responding to information from the tweets at a level the market can detect. As Nick L pointed out, it took markets 3 minutes to respond to the results of the Italian referendum, which makes me think they’re paying more attention to Trump’s twitter than actual world events. Related, Twitter’s founder spoke about Trump’s use of the platform recently. It’s true it’s given a more direct line to the thoughts of the President – a bit like visiting an abattoir to see how animals are slaughtered. Probably good for you, but certainly not always pleasant. Sad!
2. Is anyone out there doing more important research than Raj Chetty and his team looking at inequality in the US? The richness of the data and analysis they’re producing is pretty much unprecedented. They’ve now examined looking at ‘absolute social mobility’ – that is, the proportion of the population which earns more than their parents did at age 30(ish). It’s an extraordinary paper, charting the slow death of the American Dream. The NYT focus on the finding that people born in each successive decade since 1940 are less likely to out-earn their parents. In the 1940s, you had a great chance of doing so, but if you were born in 1980, your chances are no better than a toss-up. The research shows this is mainly due to inequality: the most dramatic finding (scroll down to the second line graph) is that this decline is sharpest for those in the middle of the income distribution. The extremely rich have always been pretty unlikely to achieve it (though this covers only income, and wealth may show a different pattern); and the very poor have always been pretty good at getting a little bit further. But there’s a middle income trap – the middle class no longer can expect to do better on earnings than their parents. 538 link this with some other recent research, too. The original paper is here, for the very keen. Excellent stuff.
3. These ideas link in some way to this flawed but interesting post from Dietrich Vollrath, asking if people would be willing to accept less income in favour of more evenly distributed work (not income, mark – more people having jobs, even if income inequality remains high). It’s interesting, because I think many economists essentially see some of the rollback on globalisation as essentially making this trade-off. It’s flawed because, as a colleague pointed out to me, the logic might not hold. The trade-off is only an apparent one – one would expect unemployment to be temporary, as we find stuff for people to do (especially if wages fall); and secondly with sufficient redistribution you might expect many people to accept the lack of a job and spend their time doing other things. I’m not so sure – we know that short-term unemployment might turn in to long term unemployment as human capital erodes; and as Keynes said ‘in the long run, we’re all dead’. And I do think there is intrinsic utility to work, though it’s not necessarily large.
4. Speaking of trade-offs, The NIESR suggest that reducing immigration might add around £100-200 quid a year to the paypacket of low-income workers, but at the cost of around 6% of GDP. Well, that’s what the report says, but I’ll be darned if you could work that out from some of the media coverage.
5. Of course, migration might be a triple-win with the right structure. CGD have been good on this topic, and here’s a thoughtful piece from Caitlin McKeown and Theo Talbot.
6. I loved this: apparently, Chinese tourists are flocking to Kidlington. As someone who has been to Kidlington, I feel like there should be a huge sign on the road in saying “回头！这是一个陷阱!” (I take no responsibility for the accuracy of the Google translate services I just used, by the way – but apologies if it accidentally came out with something rude). On a more serious note, Brautigam and co. have looked at whether African firms are learning from Chinese investment in this paper.
7. And lastly, scroll down to page 20 here for a magnificent rant from Nick Crafts on the role of experts in public discourse and policy making. I would like to quote the whole thing, but I particularly loved this line: “[Anti-intellectualism] is really bad news for the general public because ignorance is not bliss — especially in the context of the making of economic policy”. He also goes on to make a point that Christopher Godden, who spoke after dinner at our last economics conference also made: economists must also engage with the public; we can’t just complain that they don’t listen to us. It’s not always comfortable to step out of the echo chamber, but it’s very, very important.
And bang on cue, the internet is back. Someone clearly wanted their links. Have a great weekend, everyone!