Saturday, March 26, 2016


Andy Puzder writes about "Why Restaurant Automation is on the Menu."  Here is more (H/T MR). More now seen in Sweden but probably coming your way (H/T Craig Newmark)

Just in time for the next pronouncement that minimum wage hikes have no costs. Here is Hillary Clinton's latest (H/T Craig Newmark). The panderers will swear that the moon is made of blue cheese -- if it would get votes.

I thoroughly enjoyed Robert Gordon's (no relation) The Rise and Fall of American Growth.  He likes the years 1870-1940 best. This the period when Americans' consumption opportunities (health, transportation, entertainment, labor-saving devices in the home and the factory, etc). expanded as never before. Gordon suggests that many of these were one-time leaps and are unlikely to be repeated.

Who can tell? We do know that tech will get better and opportunities to substitute for low-skilled labor will only grow. Are politics and technology accelerating away from each other? It's a scary thought. The irony is that the people who talk this way insist that they are put on this Earth to "help people" -- and mostly to "help" the less fortunate. Also scary.


Here they are.

Thursday, March 24, 2016

Elite opinion

It's very hard to reconcile the "you have more to fear from slipping in a bathtub than from terrorism" meme with the coverage of the horror experienced in Brussels and other places that have been hit. Perspective is always elusive but rhetoric and sloppy thinking are easy. Yet, Barack Obama invoked the same idea in his recent interview with Jeffrey Goldberg. Well and good to remind people that the greatest thing to fear is fear itself, but credibility matters too.

Everyone takes risks all the time. We have come to terms with (adjusted our actions to) the riskiness(es) we know. We have been in and out of bathtubs, autos, and airplanes and have accepted the plausibility of the low relative frequencies of mishap that have been reported to us. But this leaves out the impossible-to-assess risks of using airports or trains stations in Brussels -- and places unknown.

When enough people are put off by the tone and substance of elite opinion, they start looking around for other sources. We get the likes of the current crop of presidential contenders. 

Sunday, March 20, 2016


We live better than our lowliest ancestors because we have learned to cooperate. The two sources of non-zero-sumness in our lives are market transactions (gains from trade) and love (chosen other-regardingness). Writing in today's NY Times Magazine, Adam Davidson notes "Donald Trump's obsession isn't just egotism. It reveals a dangerous and outmoded vision of the whole economy." The transactions ("deals") that Trump knows best are zero-sum. Davidson notes that coming out of the crony world of New York real estate, this makes some sense.

Yes, there are inevitably winners and losers from some international trade agreements (see my March 16 post) but the net gains are immense. Finding ways to assist the losers should start with the lower public schools. Those who nevertheless support the lower school status quo (except the standard call for more public moneys) are no more than hypocrites.

This is where Donald Trump and Bernie Sanders see eye-to-eye: the market economy is simply a place of conflict where I get the better of you or vice-versa. Mutually beneficial exchanges (which occur daily an uncountable number of times) are missing from their world.

Here is Scott Alexander's review or Trump's Art of the Deal. But it matters less whether Trump is real good or real bad at zero-sum deals.  The problem is that these are the only trades he knows about.


More on zero-sum politicians.

Thursday, March 17, 2016

Doomsday failure

I happen to have been in Washington DC the night before the great Metro shutdown. It appears that some power cables were bad and had to be replaced quickly over safety concerns.  The night before local TV news was full of the usual traffic doomsday coverage. Who would go to work? How? Would lateness to school be excused? (Yes) Would teleworking be allowed? (Yes). How much surge pricing would Uber require?

The next morning, I took an Uber from Georgetown to Dulles for just over $40 in just over 30 minutes. No surge pricing. No traffic. My driver mentioned that there had been no problem all morning.

It was about the same when LA's 405 shut down for 24 hours recently. "Carmageddon" came and went; the hype and fears were wrong. Note this from the Wikepdia coverage: "In reality, traffic was lighter than normal across a wide area ..." It was also this way back in 1984 for the LA Olympics. Traffic doomsday never came. People are not stupid and make all sorts of plans and adjustments.

Doomsday predictions have a long history of being wrong. But people do like to worry. This tendency seems to overcome credibility concerns. Will climate change cause massive coastal flooding? Have beachfront property values been falling or rising?

Wednesday, March 16, 2016

Cosmpoplitan complexity

You would think that Smithian specialization and exchange as the basis of our prosperity is a no-brainer. Sad to say, you would be wrong. This WSJ op-ed notes (once again) the sad state of political discussion on this issue in the U.S. this year. It's not just Trump. Cruz, Clinton and Sanders pander to the same "low-information" (polite expression) crowd.

All of them make personal consumption choices that involve many supply chains that cross multiple international frontiers. This includes your pair of Bentleys, Mr. Trump. Even U.S.-label autos are sure to include all sorts of parts that cannot be said to be "domestic."

Establishing any boundary beyond which trade is taboo (my front yard, my city, county, state, country, hemisphere) means higher costs. All of this may seem abstract when "the best argument against democracy is a five-minute conversation with the average voter." (W. Churchill)

Nevertheless, supply chains and their cosmopolitan complexity is the story. It must be emphasized again and again.


David Autor and Russ Roberts discuss winners and losers re trade with China. All shocks are redistributive, even ones that are net beneficial.


Economists react to the conversation.

Thursday, March 10, 2016

"The burbs"

Aggregations and simplifications are often useful. The downside is that they can obscure more than they reveal. Here is a discussion re capital aggregation. "Harbors and hammers" was the way Sandy Ikeda once described it. Arnold Kling worries over simplifications that see the economy as one big GDP factory. We throw away the field's signature intellectual achievement, the understanding of how an uncountable number of complex resource allocation choices are coordinated in a decentralized manner.

When it comes to land and location, the mantra "location, location, location" makes the point. But the people who study and discuss cities, still insist on categories that are ever less useful. "Suburbs" vs. "central cities" dichotomies are still popular. The many places that describe where most Americans live and work are no longer simply "bedroom communities". That was a post-WW II label. It hangs on as a cliche.

We get reports such as a "More and More People are Renting. Thank the Suburbs" from the WSJ. It cites recent NYU Furman Center research.

"Suburbia" is much more varied and much more interesting than back in the day when the name had meaning.  Most important, there is choice out there. A la Tiebout, people care about local government, and most especially local school districts.  There are about 13,500 school districts in the U.S., most of them in "the burbs" -- compared to just over 3,000 counties.

In a better world, there would be universal school choice, most importantly for the poorest among us who are forced into the worst schools -- and locked into them for the sole benefit of the teaching establishment and its political allies. You know who you are.

Until a better day arrives, most families with children will be evaluating the choices available to them. They will not look out there and see one homogeneous glob.


Re the problem of aggregation, political candidates are again arguing that free trade "hurts America" or "hurts Americans."  It benefits most Americans by way of lower prices when they shop.  It also benefits most Americans by incentivizing innovation and punishing inefficient operators. Surely, there are some short-term losers. Defining and estimating "most", "some" and "short term" is the challenge. It is ignored when the rhetoric sticks to simplifications and aggregations.

Tuesday, March 01, 2016

Design of cities

Hayek called attention to the fact that not all orders involve a designer. There are also spontaneous orders. Matt Ridley (among others) elaborates. Some writers note that cities too can be thought of as spontaneous orders. Perhaps emergent order more accurately describes the ongoing evolution,

But both, designed and emergent orders, play big parts in our lives. Everything on my desk within reach involves intelligent design. But these are all the winners of design contests that we call "the market." In that sense, they are also emergent.

Americans still refer to city maps, but Germans (and many others) call it the plan of the city (Stadtplan). Is there such a thing. Many architects have dreamed of designing major parts of cities. They surely have designed large and notable urban structures and environs, including parks, airports, train stations, civic buildings and halls, cathedrals, public squares, theme parks, mega-malls, arcades, etc. So why not go bigger? How scaleable is design?

In between the various grand projects are very large numbers of much smaller projects (even the occasional stand-alone home or store). These also have designers but these designers must pass a market test. Can the resulting aggregation be called a plan? It is actually an emergent phenomenon. Failing to grasp all this, many simply call the vast developments (dark matter) beyond the monuments "sprawl."

This is the question implicit in Wade Graham's Dream Cities: Seven Urban Ideas That Shape the World. The author examines the ideas of various designers who dreamed of going big. The usual big-think suspects are mentioned: Burnham, Howard, Le Corbusier, Moses, Mumford, Soleri, Speer, and many more.

None can touch Corbu, "He prescribed three main 'DECISIONS' [caps in original] upon which the plan would be executed: '1. Requisitioning the land for the public good. 2. Take an inventory of our cities' populations: differentiation, classification, reassignment, transplantation, intervention, etc. 3. Establish a plan for producing permissible goods; to forbid stoic firmness of all useless products. To employ the forces liberated by this means in the rebuilding of the city and the whole country." Frustrated, Le Corbusier turned to the Soviet Union ..." but "... the Soviet authorities didn't bite either ..." (p. 91).

The following is much better."Productive cities are rarely planned and built from scratch. They evolve from the myriads of actions of their inhabitants. They are works in progress and they remain works in progress, responding as indeed they must, to new challenges and new opportunities." (Angel and Blei, 2015).