Economics & Marginalia: October 25, 2024

Hi all,

Sports are sometimes hugely unpredictable: the Pakistan cricket team can be unbeatable or a complete rabble on any given day; indeed, they can shift from one to the other in a matter of minutes. At present, they’re looking unbeatable, but like the weather in Ireland—if you want it to change, just wait for a few minutes. But sport can also be reassuringly constant: the bet “LeBron James will do something absurdly athletic on the basketball court” would have been guaranteed money at any point in the last 22 years. Basketball season is upon us again, and once again, the greatest player in history enters the season as one of the few best players on the planet. His inevitability and longevity were both summed up in this tweet: both probably the best player on the court and literally the father of one of the others (and not in a weird Tucker Carlson kind of way).

1. It’s not just Lebron that’s inevitable: it’s the Spring Meetings, which means there will be reams of soul-searching about the future of the World Bank and IMF, as well as some absolute drivel. While you’d hope that the UK Prime Minister’s office would have a better grip of how the Washington institutions work, and how debt relief will need to be funded, at least some of the old hands have been a bit more measured, and intelligent. Raghu Rajan’s piece in Project Syndicate was a good one: he argues that governance reform is the only alternative to obsolescence. His suggestions are clever: some measure of governance reform is a political imperative to maintain legitimacy, but he proposes coupling that with depoliticization of advice and operations at the same time. My own view is that the institutions will be able to pootle along, dodging these questions, for a while, but Rajan is correct that in the long run, these are the only end points.

2. When Branko writes about inequality, you drop everything and read it. This, a stocktake of what we know about how inequality changed over the ‘long pandemic’ period (~2019-2023) in China, India and the US, is excellent. Branko’s grip of the detail underlying inequality statistics is masterful, as his ability to relate it to politics and big picture political economy questions. Three striking things: the rate at which the rural poor have closed the gap on their urban counterparts in China; the absence of good, official Indian data; and the incredible pro-poor effect of the Covid stimulus checks in the US—possibly the biggest (though temporary) American inequality reduction policy in living memory?

3. And while we’re talking about the evolution of incomes, let me remind you that the Baumol cost disease theory is still probably the most underrated thing in economics; Tim Harford explains it. I always think that the Baumol effect is the secret sauce of poverty reduction. Because most people don’t work in the most productive sectors, it’s the effect of those sectors on the rest of the economy that drives improvements in living standards, and that is through the Baumol effect. One thing that I do take issue with; the productivity of string quarters is infinitely higher today than it used to be, if you use the correct measure. The measure should not be how much music do they produce in 30 minutes, but how many people do they reach with the music they produce in 30 minutes. Thanks to tape recording, then CDs, then streaming, the answer went from being about 100 to about 1 billion for the most popular musicians. The nature of the good has changed (there is discrimination in the market: it is more expensive to be in the room with them), but productivity is a very tricky thing to conceptualise and measure.

4. This is a very cool paper by Yashodhan Ghorparde asking what seems like an obvious question, but is nevertheless an important one: would a swarm of locusts make you want to migrate? The answer, unsurprisingly, appears to be yes.

5. This is also cool: what do supervisors do? The flippant answer is ‘hassle you’, but apparently there’s more to it (I hasten to add that my supervisors are beyond superb and among the greatest human beings on the planet; please remember that at 360 review time). They also transfer tacit knowledge and support more junior colleagues improve, sustainably. Ritwika Sen’s piece investigates this using Uganda survey enumerators. I think this is an important research area, but I do worry about extrapolating too much from specific settings. One thing I’ve learnt in different places and jobs is that the supervisor-underling relationship varies widely. Also this week on VoxDev: how much do formal firms evade tax? And which ones are worst?

6. What is the methods section of an academic paper meant to do? And why do so few of them provide enough detail to actually reconstruct the, er, method?

7. Right, I’m going to have to word this one just right to avoid all your workplace email filters. Do any of you watch movies and wonder why modern films are so chaste? Why there isn’t more… um… intimacy in them? Me neither, but the Ringer clearly have. They’ve crunched the numbers and have concluded that there is a downward trend if the fleshpot-nature of modern cinema, and nevermind that the graph looks consistent with a flat trend to me, they’re gonna speculate as to why. A couple of observations: one, Italian cinema is basically 80% adult. Second, the main real trend is the increase in the number movies with no clothes-free interaction, which tracks with my experience. I remember has a kid watching movies that were rated as ‘acceptable’ for young people and some of them were fairly risqué; nowadays I worry more about casual violence when my little one watches tv than the other stuff. And third, they really underrate how steamy Indian cinema is, and always has been; there may not be much explicit stuff, but Salman Rushdie spent a chunk of Midnight’s Children talking about the ‘indirect kiss’ for a reason: Indian cinema has always found ways of circumventing social restrictions.

If you aren’t already sick of me, you can also hear me (and Olivia O’Sullivan, Patrick Wintour, David Lubin and Bronwen Maddox) on the Chatham House podcast; otherwise, have a great weekend, everyone!

R