Economics & Marginalia: November 26, 2021

November 26, 2021

Hi all,

What a week. My prediction in the last round-up was exactly right: a few hours after clicking ‘send’ I was in the grips of some foul plague concocted in my son’s nursery, no doubt one of several parents in this corner of North London to have spent a large portion of this week lying under about 20 blankets and wearing a hat. It even meant I missed the first episode of Hawkeye, which is on tap for tonight instead. And speaking of foul plagues, the news that yet another mutant Covid strain has emerged (in Gauteng this time), and is no doubt just checking its luggage and waiting for the gate for its flight to the UK to be announced has put something of a dampener on the weekend plans. Vaccine supply in South Africa might not be constraining now, and so perhaps not directly to blame for this mutant’s genesis (let’s hope it’s more Bailey Hoskins than Wolverine), but it’s hard to escape the feeling that the developed world has massively shot itself in the foot by paying so little attention to vaccine availability, uptake and logistics in developing countries. And that’s without the enormous moral failings this neglect has also exposed.

  1. Illness and the prospect of this nu variant has put something of a dampener on my mood, but you know what cheers me up? Every year, without fail, the DI crew unearth a paper-of-the-year candidate in their JMC series, and this year it’s this stunning work from Juan Felipe Riaño. Just describing it leaves me weak-kneed in admiration: he has collected data on every single public sector worker in Colombia from 2011-2017 to investigate how nepotism affects the public sector there, and how legislation to dampen this effect failed so summarily. He documents how valuable family ties are in attaining bureaucratic jobs and promotions, that there is negative selection into promotion among those connected bureaucrats (i.e. they are not better than non-promoted colleagues unlike unaffiliated bureaucrats who gain promotion) and that when legislation came into force that made promotion of family members more difficult, they instead were granted rewards through pay rises. It’s an amazing piece of work, and calls back to another DI JMP paper from a while back, Guo Xu’s brilliant paper on the costs of patronage in the British Empire.

  2. Another paper I am excited about is this forthcoming work from Almunia et. al., which uses data from Ugandan VAT returns to show that a substantial number of private firms make consistent, costly—to themselves—mistakes in how they report their taxes. While the net effect is still that firms avoid taxes, this heterogeneity relates to something I’ve found in my own work: even well-qualified, highly selected people make regular mistakes. I suppose if these mistakes are sufficiently costly they will be self-correcting (firms can go bust or be competed into oblivion). That isn’t obviously the case in the public sector settings I study.

  3. I found this super-interesting: Branko Milanovic very clearly sets out the organisational structure of socialist labour-managed companies (both de jure and de facto, for example, the unspoken requirement that the company director be approved by the Communist party members in the company) and the implications it has for both company politics and final outcomes (in terms of productivity and wages). I feel like there’s an Oliver Williamson-style paper in this blog post, if it hasn’t already been written by Kornai.

  4. Tim Harford on the carbon tax is just as worthwhile as you’d expect. He is always so good at pointing out the slightly less obvious implications of policy proposals in terms anyone can understand.

  5. Two good CGD pieces on climate finance, sort-of companions and sort-of antagonists: first, Clemence Landers and Nancy Lee point out that IDA has a stunning $180 billion in equity—which they could leverage to unlock ‘serious’ climate money. When Clemence explained this at a seminar I attended recently, it was a proper struck-by-lightning moment: I don’t think many people have realised just how much money is left on the table by the extreme conservatism of how IDA is treated. Mark Lowcock, on the other had, explains what he thinks bilateral and multilateral agencies should focus on most, and it’s not how much money is available, but how it’s used, structured and distributed. I don’t think these pieces really sit at odds with each other. You can and should listen to both.

  6. It’s Thanksgiving, and while many economists made jokes (even a couple that made me chuckle, like Peter Hull being thankful for the Central Limit Theorem), I quite liked Alex Tabarrok’s take: be thankful for the Green Revolution (and the research from Doug Gollin and co-authors about it). The world would not be nearly as good as it is without it.

  7. And to close, I have no idea why they’re doing it, but the Ringer have a sequential list of who sat atop the throne of New York rap music from 1979 to the present day. You can pick holes in the list (Rakim should have the throne much longer than he does—who else would write the couplet “I hold the microphone like a grudge/B’ll hold the record so the needle don’t budge”; as should X, and I’m not convinced by Fiddy’s place on here), but I strongly recommend spending the weekend going down a youtube rabbit hole with this list. And perhaps one day this guy will join them on the list: a high schooler who has turned the Epic of Gilgamesh into a rap… which, let’s be fair, the original isn’t far off.

Have a great weekend, everyone!


CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.