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When I was first learning to read and enjoy news and commentary, my thirst for acquiring more sources of information was hard to quench. There was a time when I would have something on the order of 5 newspapers and a dozen newsweeklies in my regular rotation. With the advent of not just the tidal wave of online communications, but the emergence of the anti-punctilious and click-baity and lack-of-thoughtfulness prove-your-pointism, I have been largely driven away from this excitement.

Even with great filtering of what hits my readers and inboxes and mailboxes, the rise of noise (in my not so humble opinion) has outpaced the rise of signal, making it harder for me to find accessible sources that are informative, provocative, thoughtful and enjoyable. This is part of the reason I have switched to much more long-form stuff, drier stuff even, and a major reason for the decline in blogging activity here at TUW. I just don’t want to be part of it, and it is coming at great cost.

In the meantime, I’ll hint to folks about some upcoming projects. I am working on the outlines of a book on the Economics of Climate Change (sure to be widely ignored or labeled as denialistic even as the approach is the convert the language of the economists/experts into something you might understand) and a short podcast/radio show that is basically me interviewing bright students about various topics of interest. I hope these end up happening. We’ll see.

Geoengineering Idea

One of my favorite movies of all time was Spaceballs. That’s probably because I was a young boy when I saw it, and have not watched it since. In any case, remember MegaMaid? You can imagine she can serve some very important climate functions. If we could construct carbon scrubbers for our atmosphere that would be one solution to the global warming concern. Or, if we could somehow eject carbon dioxide from the atmosphere, that would be cool too.

Well, maybe we are one step closer to implementing something like that! This new paper from Geophysical Research Letters demonstrates that not all CO2 across the globe causes warming in the same way. While the greenhouse effect is typically thought of as CO2 “trapping” radiation by preventing longwave radiation from going back out into space, the effects are not the same across all of the earth’s landscape. In fact, in Antarctica, larger concentrations of CO2 are the cause of … global … cooling.

That is a pretty stunning result. More CO2 leads, directly, to a cooler planet. Incredibly, more longwave radiation in Antartica is radiated back out into space than there is long-wave radiation emitting from the surface of the earth. Three points worth considering here, some more serious than others:

  1. It seems like if this were the case, then installing atmospheric fans to force CO2 to the poles would be a way to convert the dangerous warming properties of a-polar CO2 into safe polar CO2 –> megamaid if you will.
  2. It’s the NET EFFECT of CO2 that matters when talking about the “externalities.” In addition to CO2 being an important plant nutrient and essential for greening the biosphere, and in addition to making plants more heat and drought resistant, now we see that there are some instances where CO2 directly cools the planet.
  3. We obviously did not understand this until very recently – another reminder that we need to be humble, and also that even the most sophisticated computational models do not mean much if the underlying processes being modeled are not well understood.

In the latest paper on the impacts of minimum wage increases on the labor market opportunities for the targeted populations:

(wait, before I post the findings, you can obviously dismiss them because I have an agenda, and second, I remind you again that even if the findings below showed the opposite, that says little about whether minimum wages are desirable, and third, even if the findings below showed the opposite, the economics of the minimum wage does not ipso facto conclude that unemployment necessarily results. Be a good economist, what do you think it concludes? Simply that there is no free lunch – that mandating wage increases is not costless, and the challenge for both the theorist and empiricist is to identify exactly where these lunches are coming from).

So, here is the latest:

… My baseline estimate is that this period’s full set of minimum wage increases reduced employment among individuals ages 16 to 30 with less than a high school education by 5.6 percentage points. This estimate accounts for 43 percent of the sustained, 13 percentage point decline in this skill group’s employment rate and a 0.49 percentage point decline in employment across the full population ages 16 to 64.

Note that these are declines in the employment rate. If we see these young workers drop out of the labor force, then these effects will NOT show up as increases in the unemployment rate. Further, in a population of apx 200 million in that age category, a 0.49 percentage point decline is is about a decrease of employment of a million people. 

How about among the population 16-30? There seem to be roughly 7 million people (starts at age 18 and ends at 29) in this group. The latest minimum wage increase, according to the paper, reduced employment by 5.6 percentage points here?  This is about 400,000 fewer people employed. Note that this is just from this one particular set of minimum wage hikes and says nothing about the legacy impact on the labor markets of 75 years of minimum wage implementations (i.e. opportunities never created either due to changes in the structure of production to be more capital and/or high-skill labor intensive).

Those impacts seem unusually large to me. Imagine if I proposed a program that went something like this:

“Hi Everyone. Vote for Me. I am going to impose some new laws on businesses. They will be great. They will help some people. However, small businesses are going to be the ones actually paying for these new laws, and in addition, these new laws will result in 400,000 fewer young, low-educated people having jobs. Sound good?”

And of course everyone will agree to vote for me.

———————————————————

On the other hand, whether you “like” or “dislike” these kinds of results, I would be curious to see more systematic coverage of all of the obstacles to low-skilled and low-education individuals finding work, should they seek it – and just how important these particular price controls are among these obstacles. My sense (and this will have me summarily tossed from whatever tribe I am supposed to be in) is that (1) even though this is a carefully constructed study, it is picking up employment losses due to more than the minimum wage; (2) like all studies in the social sciences I am not trusting of the findings given that we do not see all of the regressions that were run and specifications chosen to find these particular results; and (3) That the impact of other things on labor market opportunities for low-educated people swamp even these large minimum wage effects. My reasoning on (3) is that the wouldn’t be any need or push for minimum wage legislation if low-skilled workers were very productive unless you have an unreasonable view of how many frictions there are in the low-skilled labor market.

 

My Holiday Wish

That not only is all research conducted in a double-blind manner, but that we publish and present it double blind too. Do you believe citations would be unchanged? Do you believe what is reported is unchanged? Part of my motivation here is that the academic enterprise is very much zero-sum or negative – see tournament theory.

All of these accept the premise that future damages from anthropogenic warming will be serious, i find this to be a useful discussion strategy:

  1. Climate change will cause massive heat and drought and leave people in need of food. OK, compare then, the most effective and optimistic scenarios for reducing CO2 emissions and preventing warming (and their costs) with simply reducing global agricultural tariffs and quotas, reducing agricultural subsidies, and freeing up the regulatory process?
  2. Sea level rise and natural disasters will put many people in harms’ way. OK, compare then, the most effective and optimistic scenarios for reducing CO2 emissions and preventing warming (and their costs) with reducing subsidies for living in high-risk areas and for allowing population to migrate slowly to higher ground as the “at -risk” capital stock depreciates.
  3. The heat from the planet will be a drag on productivity. OK, compare then, the most effective and optimistic scenarios for reducing CO2 emissions and preventing warming (and their costs) with an evolution of production patterns, ala Signapore, to adjust to warmer temperatures?
  4. Poor nations will suffer disproportionately from climate damages. OK, compare then, the most effective and optimistic scenarios for reducing CO2 emissions and preventing warming (and their costs) with an improved political system in those poor nations, and a reduction in barriers to international migration. Remember that some estimates suggest that the average well being of a poor person can increase by as much as a factor of 20 if we allow them to migrate to capital-rich and “institution-rich” areas of the world.

As any good economist can tell you, the “solution” (i.e. tradeoff) to any social cost problem does not necessarily imply that social costs are eliminated, or that the thing producing the social cost be stopped. It is fabulously incredible to watch 40,000 people at a Climate Conference and untold thousands reporting on it (including economists) simply ignore or miss that most elemental point that any Environmental Economics student learns in the first week of classes. For an analogy, think of other costs of production, such as electricity costs and labor costs. Surely having to pay these costs are “regrettable” but does a solution to a production problem entail eliminating 100% of our workers and 100% of our energy?

I next propose a tax on marriage homogeneity! Why? Well, Tyler Cowen points to some new research:

Assortative mating is returning to Gilded Age levels

Patterns of intermarriage between persons who have varying levels of educational attainment are indicators of socioeconomic closure and affect the family backgrounds of children. This article documents trends in educational assortative mating throughout the twentieth century in the United States, using socioeconomic data on adults observed in several large cross section surveys collected between 1972 and 2010 and on their parents who married a generation earlier. Spousal resemblance on educational attainment was very high in the early twentieth century, declined to an all-time low for young couples in the early 1950s, and has increased steadily since then. These trends broadly parallel the compression and expansion of socioeconomic inequality in the United States over the twentieth century. Additionally, educationally similar parents are more likely to have offspring who themselves marry within their own educational level. If homogamy in the parent generation leads to homogamy in the offspring generation, this may reinforce the secular trend toward increased homogamy.

Ignoring the possibility that more homogeneous marriage matches may themselves be reflections of inequality and stratification, think about the policy implications of these results of you are planning on leveling the playing field for those who did not win the lottery in life. Where are the proposals to “tax” marriage quality? You can imagine it would be very easy to police – add up the years of schooling of both parties and if those years exceed some specified number, then we impose a huge tax on the marriage, or simply forbid it. We could also forbid marriages where the sum total of schooling falls below some threshold.  There would of course be no downsides to all of this – and I cannot even conceive of a way that the “Gilded” families could get around such a high-minded and well-intentioned plan.

In the meantime, I’ll prepare the business plan I have for my new private tutoring company.

Efficiency Friday

A tax on university endowments and a tax on college tuition would seem to me to be pretty efficient and equitable taxes. On the equity side, the wealthiest people in America work for, have graduated from, attend and will attend universities – so it targets the 1% pretty well and almost all people in the top 20%. On the efficiency side, will colleges like MIT and Yale and Amherst pick up and leave just to avoid the tax?

I today stand united with everyone who stands strong in the effort to promote a more just society, and I begin by agreeing that taxing colleges and universities is a major step toward that goal.

We already know that the United States is among the most “socialist” (not the right use of the word) health care “systems” in the world – with nearly 90% out of every medical dollar that is spent being spent by someone other than the customers.

I never bothered to do these calculations, but here is a chart from Avik Roy (yes, I know, a right wing ideologue, so feel free to make believe it is made up):

Happy Festivus

Gas

Riddle Me This

Is it a widely held view that “other countries'” medical systems are superior to the United States?

Is it a widely held view that “other countries” get better medical outcomes for lower costs than in the United States?

Then, riddle me this: why is it so impossibly difficult for a foreign trained doctor to come to the United States to practice medicine? Is a doctor that is trained, for example, in Finland, or Singapore, and who has worked there for 10 years, able to come here and hang out the proverbial shingle?

Inquiring minds want to know. I do not believe you should bring this up at your Friday evening dinner parties – you’ll either get crickets or a really haphazard answer that is probably an ugly anti-foreign argument in disguise. I have a better piece of advice for you, go drink one of these beers and discuss their deliciousness with your friends:

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