Economics & Marginalia: May 7, 2021

Hi all,

How is it possible that each weekend greets me like an oasis apparating to parched traveller in the desert while every week simultaneously flies by with more than 80% of my to-do list undone? Is the problem my systematic optimism bias on what I can achieve in a week? Or is there some sleight-of-time involved? Anyway. It’s Friday, again, which means the links are here. This week has seen elections, including one featuring the UK’s greatest political comedian (no, not Laurence Fox, who is – as Stephen Fry might say – a bad joke, and not even a very good one), Count Binface – who actually has a pretty good manifesto; the announcement of a new Muppet special (maybe Binface can make an appearance); and the biggest breakup news since Bennifer. And yet, somehow, none have owned my twitter timeline like the subject of the first links…

1. Last week I made fun of Jeffrey Sachs over his absolute certainty that an patent waiver for Covid-related treatments and vaccines was the right thing to do. As if to prove my point, the Biden administration announced that it would support waiving IP protections for Covid Vaccines and would work towards that at the WTO and holy moly did twitter blow up. Some of my colleagues (all of whom know more about this than I do) thought it was a mistake, some think it’s a sideshow (as does Alex Tabarrok), and others think it’s a good move that – at least – takes the issue off the table and paves the way for more impactful policy. One take that seems common, and wrong, is that patents don’t matter because scientists are mission-driven and their intrinsic motivation drives them to innovate to solve big problems. That might be true – but the people who mainly fund them aren’t so much. The answer is probably a research ecosystem with many bigger and more varied Government and cross-Government instruments, and consequently permanently higher taxes, but I’m not holding my breath while waiting for it.

2. I absolutely loved Tim Harford’s Lunch with the FT interview with Daniel Kahneman. Kahneman is an incredibly interesting (and humble) thinker, and his work has really influenced how I see the world in broad terms: that error, and multiple sources of it, are all around us and a natural part of our environment. The ideal world is not one that eliminates error, but that acknowledges and responds to it well. I didn’t even mind that he published a book, Noise, pre-empting the entire basis for my DPhil. I don’t even mind that analysis of the evidence presented in Thinking, Fast and Slow shows that a large number of the studies he cites to make his arguments have not been sufficiently proven to inspire great confidence (that is, they have failed to replicate or are unlikely to replicate). If all the books on our bookshelves had to be ‘right’, those shelves would be sparsely populated indeed. What I like about Kahneman is that his worldview is worth exploring. Some parts will be right (his own work with Amos Tverksy has held up for decades now), and some wrong. That’s not irrelevant, but it’s not the whole point.

3. Speaking of thinkers who are worth exploring, even if they’re not ‘right’, what would Marx make of the capitalism that exists in the West today? We no longer see that income and wealth are defined by where we sit in the process of production, since some of the top 1% are workers (though well paid ones); do Marx’s ideas collapse with this change? Branko Milanovic doesn’t exactly answer the question he poses, but he does use it to demonstrate how different capitalism is now from what it was when the foundational thinkers associated with it were writing.

4. And on the subject of that elusive top 1%, Matt Collin’s new paper is a blockbuster. He uses leaks from an Isle of Man bank to discover more about who the people who use these havens are, where they come from, how politically connected they are in their home countries and how much the use of these havens are underestimated in the most commonly used statistics on them. And if the paper is too long for your weekend read, the thread is a wild ride, and a great summary. And it’s a good excuse for not getting episode 3 of Paper Round up just yet.

5. Another paper that caused a lot of argument on my twitter stream was Dave Evans and Susannah Hares’ paper on foundational literacy and numeracy. It’s useful to kill the straw men before going further: they think it’s important, and a worthy subject of development attention. But they also find that the research underpinning it has rather more holes than you’d like, and that balancing a range of objectives of the education system is important, and should be explicitly pursued.

6. And once again: econ has a problem. A new NBER paper finds women less likely to be promoted even after controlling for publications, citations, grants and grant values – unlike a number of other fields studied, including statistics. You know it’s bad when we’re worse than stats.

7. Lastly, I started rewatching the Sopranos with my wife a while ago, and when we got to Series 3, Episode 11 I was reminded why – at its best – it is still the greatest TV show ever made. Paulie and Christopher get lost in the woods in South Jersey. That’s it. There’s a – maybe – dead Ukrainian involved, and Tony’s affairs are getting out of hand, but really, it’s just Paulie and Christopher bickering in the woods. The Ringer has the oral history of Pine Barrens, including interviews with Christopher, Bobby Baccala and Steve Buscemi who directed it. And if you’ve never seen it, I’ve solved your weekend for you.

Have a great weekend, everyone!

R