2020 is an outlier of a year, the kind of year that will be
discussed in seminars in 2154 as an economist presents the results of an
Acemoglu and Robinson style regression (they will all still be using Stata)
which shows that states that had relatively milder Coronavirus outbreaks in
2020 were 3 percentage points more likely to colonize Mars. But even on Mars,
in a virtual stadium where genetically engineered bowlers who propel bouncers
from cannons where their hands used to be, one ritual will be maintained, just
as it has been maintained in this asterisk of a summer: In the first innings of
every summer, the
England cricket team will collapse hopelessly against a
Captain who arrives with a point to prove after being roundly patronised by the local media. Nothing has felt normal this year – I’ve moved jobs and haven’t once been to my new office or seen most of my new colleagues in the flesh. So I’m deeply grateful to the England team for keeping one thing steady: the ability to punctuate even the most anticipated moments with comical incompetence, in this case, getting bowled leaving the bowl before a run has been scored.
- Summer is a good time for learning: those hours spent relaxing on a virtual beach needs a good book or podcast, and Planet Money have you covered. They’re running a summer school with Justin Wolfers and Betsey Stevenson, taking excerpts from their favourite episodes and explaining the economics underlying them in simple terms. The first episode tackles opportunity cost and sunk costs using online dating, marginal effects using Chicken McNuggets, and equilibria using Uber (transcript). Even for the economists reading, this is highly recommended: one thing Planet Money has always been great at is explaining economics with stories, similes and metaphors, and if you’re an economist with the ambition to talk to and convince people who aren’t, this is a skill you cannot overlook.
- General Equilibrium modelling gets a bad rap: for all that it will rarely settle an argument, there are some questions you just can’t get to without it. I really liked this piece by Stephie Fried and David Lagakos which uses GE modelling to estimate the effects on firm entry, employment and productivity. While none of this should be much of a surprise (hey, it turns out blackouts suck for people trying to make stuff!), it’s useful for investigating how and how much they might matter, and what the distributional effects may be.
- I couldn’t let the links pass this week without recognising my favourite discovery of the day: before he helped remake and bring to the mainstream the study of migration as a development issue and policy goal, and before he did the intellectual version of this to Jeffrey Sachs over the Millennium Village Projects, Michael Clemens played a small role in the development of the process for producing monoclonal antibodies, which may wind up being a major part of the response to Coronavirus. Typically, his thread explaining the process for developing them is extremely clear and well-worth reading.
- Now that I’ve mentioned the C-word, I may as well lean in on it. Andy Haldane’s speeches are always worth reading (this may be my favourite speech on the subject of economics ever delivered), and his take on the economic recovery from Coronavirus is excellent. He divides the cycle into four quarters, of which we are in the second. The good news is that he interprets the signs so far as consistent with a V-shaped recovery; but that the third quarter may reinforce the recovery or spin it into a vicious, downward cycle. His thoughts on the fourth quarter, the long term effects of the crisis on the structure of the economy is typically sober, but well-reasoned. Related: The Economist on the brutal current state of the Zimbabwean economy, over which mismanagement and Coronavirus have conspired to cast a very deep shadow indeed.
- [England are closing 99 runs behind, with 10 wickets in hand. Dom Sibley has managed to avoid a pantomime dismissal so far… perhaps they’ll make this competitive yet.] Is citizenship just a rent? At what stage of globalisation does it cease to represent something more than simply a lucky accident which determines 60% of your earnings potential? Branko Milanovic, as ever asking the deeper questions.
- Back to the Coronapocalypse for a moment: I’ve seen some argue that opening up economies requires a level of judgement that our poor, behavioural-bias-addled brains just can’t manage, and instead we need extremely clear rules and limits to prevent a second spike, like this Atlantic article. I’m sceptical. This feels like an enormous cop-out. Am I to understand that these behavioural biases are much worse in, say England or New York than Hong Kong? Is Vietnam populated entirely by homo economicus? No. The problem is not the failure to individually assess risk, but much more collective. It’s been a failure of Government, to learn from elsewhere, and of social norms. The difference between Stoke Newington Church Street, where barely one in twenty people wears a mask, and Causeway Bay, is not our ability to process risk. It’s that a social norm has developed in one of these places. Psychology and economics too readily reads the world in these individualist frames and sometimes misses what’s glaringly obvious: we are products of a society, and this influences our behaviours.
- Lastly, I came across a completely unexpected delight this week: Hilary Mantel’s 1988 review of Robocop. Apart from her spot on summary (“You absolutely cannot lose interest; every moment something explodes”), it made me wonder what film reviews by other famous authors would be like, or if they exist. Did Cormac McCarthy ever review Knocked Up? (“Life stirred in her. The world remained full of stupidity.”) What if JD Salinger had reviewed Steel Magnolias? (“I suppose you probably want to know if she lives or dies, but dammit, that’s not the point of it, and if you don’t understand the point, does the goddam movie even matter?”)… I am desperate to find more of these. Help!
Have a great weekend, everyone!