Harvard economist Raj Chetty: how to improve income mobility

Any starting point that doesn't start with the fixed pie fallacy and focusing on bringing down the rich instead of bringing up the poor, I think, is a good one though I wonder if each party is just looking to for what it wants to hear (WSJ):

In a presidential campaign where candidates from both parties are blaming globalization for a shrinking middle class, a 36-year-old India-born economist has a different explanation: Bad neighborhoods and bad teachers rob poor children of the chance to climb into the middle class.

His solution? Help the children and their families move to better neighborhoods.

Can machines replace human intuition?

A study around one algorithm not only suggests yes, but the machines are faster as well (phys.org via Instapundit):

MIT researchers aim to take the human element out of big-data analysis, with a new system that not only searches for patterns but designs the feature set, too. To test the first prototype of their system, they enrolled it in three data science competitions, in which it competed against human teams to find predictive patterns in unfamiliar data sets. Of the 906 teams participating in the three competitions, the researchers' "Data Science Machine" finished ahead of 615.

In two of the three competitions, the predictions made by the Data Science Machine were 94 percent and 96 percent as accurate as the winning submissions. In the third, the figure was a more modest 87 percent. But where the teams of humans typically labored over their prediction algorithms for months, the Data Science Machine took somewhere between two and 12 hours to produce each of its entries.

Uber vs San Antonio

Moral of the story? The more consumers come directly in contact with markets/individual choice (enabled by technology) and governments, they choose markets and, er, choice (NationalReview via Instapundit):

We are at a very interesting historical tipping point. The willingness of states and political agencies to boss people and businesses around and to seize resources for the use of the political class has not abated, but their ability to do so is being challenged. San Antonio is a left-leaning city; its attitude toward business is far from Singaporean. The city authorities would love to be able to dictate terms to Uber — but they can’t. Nationally, we’re starting to figure out that you can’t really regulate marijuana; you can try to, and pretend to, but you can’t really do it. Trying to ban guns in an age when anybody with a 3-D printer can produce a dozen of them in his bedroom is absurd.

The problem with the Sanders phenomenon

First, the Foundation of Economic Education notes, is his (mistaken?) belief that the 'rich are getting richer' on the backs of the poor. The reality is somewhat different:

Senator Sanders is half right: the rich are getting richer. However, his assertion that the poor are becoming poorer is incorrect. The poor are becoming richer as well.

Economist Gary Burtless of the Brookings Institute showed that between 1979 and 2010, the real (inflation-adjusted) after-tax income of the top 1% of U.S. income-earners grew by an impressive 202%.

He also showed that the real after-tax income of the bottom fifth of income-earners grew by 49%. All groups made real income gains. While the rich are making gains at a faster pace, both the rich and the poor are in fact becoming richer.

The irony is that while the Democratic slate for President is made up of privileged white people, their advocacy isn't so much for policies that address poverty but bringing down the rich (or more precisely, high income earners - conveniently excluding the wealthy who already have capital and continue to generate wealth through their capital/inheritances, NYPost via Instapundit):

Progressives, in other words, are shooting at the wrong target. The moral problem posed by the distribution of wealth isn’t inequality.

It’s poverty.

The same issue? Frankfurt shows they’re not. Suppose, he says, there is a resource that will keep a person alive, but only if that person has five units of it. There are 10 people, and 40 units of the resource. If it’s distributed equally, everybody gets four units — and dies. To insist on equality in that case, he argues, “would be morally grotesque.”

Fortunately, says Frankfurt, we don’t really try to promote equality. Even those who worry about inequality adjust their consumption to their own assessments of their needs. They don’t reduce their consumption because it’s unfair for them to have money.

More (WashingtonPost via Instapundit): What Bernie Sanders doesn't understand about income inequality.

The end game for Lyft (and Uber?)

Jitneys on a mass scale (TechnologyReview). Fascinating read that includes a discussion of the efficient private network of buses in Zimbabwe (and much of Africa), the inefficiency of public transportation, and the coming promise of self-driving cars.

Will China end up leading the way on next generation nuclear?

An exciting nuclear race to watch that won't end with a mushroom cloud (TechnologyReview via Instapundit):

At Oak Ridge this week, Xu outlined a roadmap that shows that China is further along than any other advanced reactor R&D program in the world. China, which still gets nearly three-quarters of its electricity from burning coal, is racing to develop low-carbon energy sources, including both conventional nuclear plants and advanced systems such as molten-salt reactors. The largest emitter of greenhouse gases in the world, China aims to more than double its nuclear capacity by 2020, according to the World Nuclear Association.

Xu detailed a multi-stage plan to build demonstration reactors in the next five years and deploy them commercially beginning around 2030. The institute plans to build a 10-megawatt prototype reactor, using solid fuel, by 2020, along with a two-megawatt liquid-fuel machine that will demonstrate the thorium-uranium fuel cycle. (Thorium, which is not fissile, is converted inside a reactor into a fissile isotope of uranium that produces energy and sustains the nuclear reaction.)

In all, there are 700 nuclear engineers working on the molten-salt reactor at SINAP, Xu said, a number that dwarfs other advanced-reactor research programs around the world. The team has a preliminary design for a 10-megawatt thorium-based molten-salt reactor, and has mastered some of the technical challenges involved in building and running such reactors, such as the preparation of high-purity molten salts and the control of tritium, a dangerous isotope of hydrogen that can be used in the making of nuclear weapons. Limiting the production of tritium is a key research goal for the development of molten-salt reactors.

Theranos's science is questioned

I'm hoping they're wrong but WSJ has published a piece questioning the science at Theranos. The downside of producing science with little transparency...

The retreat in global poverty is because of, not in spite of capitalism

Do those who despise markets, really, in effect, just want people to be poorer? (Cato)

As Deaton notes that “the rapid growth of average incomes, particularly in China and India, and particularly after 1975, did much to reduce extreme poverty in the world. In China most of all, but also in India, the escape of hundreds of millions from traditional and long-established poverty qualifies as the greatest escape of all.”

The importance of growth cannot be overstated. There is not a single example of a country emerging from widespread poverty without sustained economic growth.

As University of Oxford Professor Paul Collier writes in his book “The Bottom Billion,” “Growth is not a cure-all, but lack of growth is a kill-all.”

Even people who were traditionally skeptical of the free markets increasingly recognize that private enterprise is the key to prosperity.

Bring out the world's smallest violin for the "inequality ... in breakfast sandwiches"

On the bright side, maybe it's more an indication of how far we've come? Too idiotic to satire (WashingtonPost)

The role that convenience has played in the rise of breakfast sandwiches rubs up against their gourmet counterparts. Many of the fancier versions, including those sold at BEC, are better eaten with both hands, a seat and a handful of napkins. They're sit-down breakfast sandwiches and run contrary to the very nature of the food. They have created a sort of bizarre form of food inequality.

This same duality, of course, is true of many foods — of hamburgers, for instance. But other sandwiches aren't as much a staple of people's weeks as those eaten at breakfast.

Nobel prize winner Angus Deaton on unwinding inequality

Inequality isn't as important as how it happens (HBR):

Whether international or domestic, inequality becomes intolerable when individuals who have gotten ahead for whatever reason use their power to pull further ahead—and even to render others worse off in absolute terms. When successful people—businessmen, lawyers, traders, doctors—use their success to change the rules in their favor, by lobbying or funding politicians, that success is no longer something to be celebrated. When they push for what they see as important without perceiving that others have different priorities—the rich have little need of public health care or public education, for example—they undermine the provision of public goods on which the rest of us depend. When they make it hard for those without wealth (or not beholden to wealth) to fully participate in society, they undermine the democratic process. Justice Louis Brandeis once said, “We may have democracy, or we may have wealth concentrated in the hands of a few, but we can’t have both.”

This is why, even as we recognize that some inequality is “good,” we find it so troubling. It is one thing for some people to escape deprivation and leave others behind. It is quite another when the escapees use their newfound freedom to block the paths of those trying to find their own way out.

More from an interesting study on race and inequality in the US (WSJ):

This data raises tons of uncomfortable questions with no easy answers. One question that Mr. Thompson and Mr. Suarez wanted to answer was why the racial wealth gaps in the U.S. are so large. This might sound straightforward–maybe the wealthy simply earned and inherited more money. But that’s not what the data shows. Even after accounting for different incomes, inheritances, education and other factors, these gaps between families of different races remain, especially among the wealthy. It turns out that documenting the gaps is only the first step.

Denton's observations of the Indian and Chinese economies (WSJ): "China and India are the success stories; rapid growth in large countries is an engine that can make a colossal dent in world poverty."

Why the acquisition by EMC by Dell may just be delaying the inevitable

It's not really all that new, but it's finally having a significant impact with the recent blockbuster $67b acquisition of EMC by Dell (WSJ) - a look at some of the winners and losers (Wired):

The Cloud. The term has taken on so many meanings in recent years. But keep in mind: most of these meanings come from IBM, HP, EMC, Dell, Cisco, and other companies that don’t want to be fucked by it. The best way to think about The Cloud is this: It’s the way that the giants of the Internet—aka Amazon, Google, and Facebook—build their businesses.

These companies built Internet businesses so large—businesses that ran atop hundreds, thousands, even tens of thousands of computers—they eventually realized they couldn’t build them with hardware and software from established vendors. They couldn’t use traditional storage gear from EMC. They couldn’t use servers from Dell and HP and IBM. They couldn’t use networking gear from Cisco. They couldn’t use databases from Oracle. It was too expensive. And it couldn’t scale. That’s another buzzword. It means “helping an online operation achieve world domination.”

What's exciting is that this distribution of computing power means that computing power will only continue getting cheaper and become more widely/easily available without the significant upfront costs that were previously required.

The ongoing fight for school choice

The idea of school choice, has made substantial inroads, but Charter Schools have got a long way to go and the fight won't be easy (WSJ):

More than two decades since charter schools first appeared in the U.S. as an experiment, they are poised to become mainstream in many parts of the country. About 2.5 million, or 5.1% of public-school students, were enrolled in charter schools in the 2013-2014 school year, up from 300,000, or 0.7%, in 1999-2000, according to federal statistics.

Nearly every major city has charters, challenging the traditional public-school model as parents increasingly send their children to these privately run but publicly funded institutions and politicians allocate more tax dollars.

The dispute in Boston and similar clashes in Baltimore, Philadelphia and Los Angeles are surfacing as local charter schools reach or surpass a 15% to 20% market share in those cities.

Transatomic: rethinking and rebranding atomic energy

Funded by Peter Thiel's Founder's Fund, a startup to watch (Wired):

Transatomic’s technology is complicated. Most nuclear energy technology is complicated, if you’re not a nuclear physicist, but Massie and Dewan’s approach might be especially so. Most of the industry uses light water reactors to generate energy in nuclear plants; but Transatomic uses molten salt reactors, which use nuclear waste dissolved into salt. The concept was first tested in the 1950s at Oak Ridge National Laboratory in Tennessee. Recently, a small group—including a group called Energy from Thorium—began campaigning to reintroduce the technology.

Technology vs government: a reminder of how government has evolved

Technology serve consumers, governments serve themselves (TechCrunch):

Fixed, a mobile app that fights parking tickets and other traffic citations on users’ behalf, has had its parking ticket operations blocked in three of its top cities, San Francisco, Oakland and L.A. after the cities increased the measures they were taking to block Fixed from accessing their parking ticket websites.

[...] Founder David Hegarty once noted that over half of tickets have an issue that would make them invalid, but the city didn’t tend to play by its own rules when arbitrating disputes. That made Fixed’ “win” rate only 20%-30% on tickets, as of earlier this year. (When the company won, it charged a success fee of 25% of the original fine – a reduction in what a customer would have otherwise paid.)

However, even when customers didn’t beat their ticket, the app could help automate the payment without having to use a city’s often outdated website. A more recent addition, “Ticket Guardian,” handled tickets for you automatically and alerted customers to new ones by monitoring government websites.

Of course, the cities haven’t been welcoming to an app that was aimed at helping locals not pay their tickets by automating the process of jumping through legal loopholes. When Fixed began faxing its submissions to SFMTA last year, the agency emailed the startup to stop using their fax machine. When Fixed pointed out that it was legal to do so, the agency simply shut off their fax.

Brutal.

More from Reason: I'm from the government, and I'm here to help (stop progress)

Angus Deaton of Princeton University wins the Nobel prize

A critic of foreign aid, particularly where it comes to economic development and state capacity, Deaton has been at the forefront of "understanding and measuring world poverty" according to Alex Tabarrok (MarginalRevolution). Deaton on foreign aid:

Unfortunately, the world’s rich countries currently are making things worse. Foreign aid – transfers from rich countries to poor countries – has much to its credit, particularly in terms of health care, with many people alive today who would otherwise be dead. But foreign aid also undermines the development of local state capacity.

This is most obvious in countries – mostly in Africa – where the government receives aid directly and aid flows are large relative to fiscal expenditure (often more than half the total). Such governments need no contract with their citizens, no parliament, and no tax-collection system. If they are accountable to anyone, it is to the donors; but even this fails in practice, because the donors, under pressure from their own citizens (who rightly want to help the poor), need to disburse money just as much as poor-country governments need to receive it, if not more so.

More from WSJ.

The cost of regulation

No matter the party, regulations just keep increasing - of course the good news, is that the politicians are starting to take notice (Mercatus):

It's been a long time coming, but structural reforms to the regulatory process are finally starting to reach the mainstream. Presidential candidates, and sitting members of Congress alike, are increasingly proposing ideas and legislation that would change the way regulatory agencies go about making regulations, rather than reacting to each individual regulation as it is produced (although, to be sure, that still happens, too). And it's for good reason that more and more people want to change the regulatory process.

In years past, it may have been easy for politicians to delegate responsibility to agencies and then act as if the issue had been solved. But the delegate-and-forget-about-it doctrine led to a fourth branch of government — the regulatory agencies — producing far more law than Congress itself, and accumulating a stockpile of regulations that is so large that it would require nearly three years for a person to read through the current federal regulatory code.

And the costs aren't incidental:

For our RegData project, we counted the number of individual restrictions — words and phrases that indicate a specific prohibited or mandatory activity — contained in the Code of Federal Regulations (CFR). In the 2014 CFR, we found about 1.1 million restrictions, each one every bit as legally binding as a law passed by Congress and signed by the president.

According to the 2016 Regulator's Budget by Susan Dudley and Melinda Warren, taxpayers spent about $62 billion on the production and enforcement of regulations, although that figure excludes a number of significant regulators for technical reasons — and both the budget and number of restrictions have grown consistently over the time they have been measured. Over the last 20 years, the regulatory budget has more than doubled in real terms, while the number of total restrictions has grown by about 220,000 — a 25 percent increase.

Government on whole milk warnings: "oops"

An argument of why governments should be slow to regulate and control (Cato):

Let scientists conduct research, let other scientists examine it, let journalists report it, let doctors give us advice. But let’s keep nutrition – and much else – in the realm of persuasion, not force. First, because it’s wrong to use force against peaceful people, and second, because we might be wrong.

The future of work and the impact technology will have

Interviewing artificial intelligence researchers on "whether or not technological advancements inherently create more job market opportunities than they destroy": the answers, somewhat predictably, are mixed (TechCrunch).

More: How AI could change the workplace (TechCrunch)

Though the environmental apocalyptic predictions change, the solution remains the same...

More government control (libertarianism.org). I'm not sure that's a coincidence.

Reshaping healthcare in the developing world

Getting healthcare right for the poor (WSJ):

Indian philanthropist and cardiac surgeon Dr. Devi Prasad Shetty is the Chairman of Narayana Health in Bangalore. Born in a small village, Shetty went to school in Bangalore before studying in the UK. After returning to India in 1989, Mother Teresa had a heart attack, and Dr. Shetty was called to operate on her. From then on, he served as her personal physician.

Shetty founded Narayana Health in 2000. He is often called the “Henry Ford” of heart surgery in India. 12 percent of heart surgeries in India are performed by Narayana doctors. Narayana Health is a network of 32 hospitals in 20 locations throughout India. The company provides affordable health care to India’s poorest citizens. Shetty plans to expand Narayana Health internationally to Africa, Asia and Latin America. His first hospital outside of India is in the Cayman Islands.

[...] First of all, we have invested a huge amount of money in the infrastructure of the hospitals. If the same amount of infrastructure is provided in hospitals in the U.S. and Europe, it hardly gets used for eight to nine hours a day. We use our infrastructure for 14 to 15 hours a day. Secondly, we perform one of the largest number of heart surgeries in the world. Through working with us, companies capture 12% of the Indian market for cardiac health care. This brings our input costs down. Third, we’re also an academic institution training heart surgeons, cardiologists, perfusionists and nurses. We conduct 79 training programs on campus, so half of the workforce here is not paid by us. They are students undergoing a training program.

If "labor-friendly policies" are so friendly to labor...

Why do so many laborers choose to move to more conservative states that are purportedly less friendly to labor? (theDailySignal)

The so-called “progressives” love to talk about how their policies will create a worker’s paradise, but then why is it that day after day, month after month, year after year, people are fleeing liberal blue states for conservative red states?

The new Census data on where we live and where we moved to in 2014 shows that the top seven states with the biggest percentage increase in in-migration from other states are in order: North Dakota, Nevada, South Carolina, Colorado, Florida, Arizona, and Texas. All of these states are red, except Colorado, which is purple.

Meanwhile, the leading exodus states of the continental states in percentage terms were Alaska, New York, Illinois, Connecticut, New Mexico, New Jersey, and Kansas. All of these states are blue, except Alaska and Kansas.

Do Americans need to be protected from pay day loans?

According to the Consumer Financial Protection Bureau (CFPB), yes (theDailySignal). One predictable consequence that will be written off as "unintended": the people who they're aiming to help will be worse off as they will have fewer financial options.

Philanthrocapitalism

I'd object to the term capitalism - which isn't what the Nation author thinks it means, but he raises a few interesting points about the influence specific business people just because they bring money from other realms into development (especially when they argue against the very markets in which they created value).

On the other hand, it's their money to spend and waste as they please. No one is forcing us to listen to what they say.

"Not a victim"

Her story makes talk of microaggressions and "triggers" seem absurd. The story of one 16 year old girl's escape from North Korea (Reason.com):

"I watched the movie Titanic and I was shocked. Like, how could this kind of ridiculous film exist? I'd never seen people dying for love, except dying for the regime and the party."

When Yeonmi was thirteen, she and her mother escaped into China, where they were kidnapped and sold into slavery: "Chinese government, if they catch us, will sell us back to North Korea, so we are very vulnerable in China. Chinese people, they know that."

Sex traffickers took advantage of that vulnerability. "That's what happened to both of us, my mother and me." At the time, she didn't know what sex was. "I didn't even know what kissing was."

Read the whole thing.

What overregulation?

"One in three jobs in the US economy now requires government permission to hold — and many jobs requiring licenses pose no health risk." Because paperwork shuffled back and forth between bureaucrats while restricting competition creates jobs? (Cato)

This isn't going to end the way they think it will...

Obama Administration seeks to regulate temp agencies out of existence (DailyCaller):

The joint-employer standard has been around for decades. It normally helps to establish which company has responsibility over employees when multiple companies contract with one another. If one company is found to assert enough control over the employees of a company with which it holds a contract, the two companies will both be considered employers over the employees.

The NLRB has been trying to expand upon the standard. Critics like the International Franchise Association have argued the rule change is an attempt to benefit unions. This is because it’s much easier to unionize one large joint-employer as opposed to many separate employers that just so happen to contract with one another.

“For manufacturers, this case is yet another example of the NLRB changing well-established and functioning labor laws,” Amanda Wood, director of human resources for the National Association of Manufacturers, told the Washington Examiner. “Without a justifiable and sufficient change in circumstance and in how the business community operates.”

Environmentalism: an excuse to use tax payers to make the rich richer?

From Reason:

Do poor people drive Tesla roadsters? Not exactly. The average household income of Tesla owners is just shy of $300,000 per year. Low end models begin at $70,000 but rise to over $105,000. Fortunately, the Feds take a bit of the sting out of the price by handing over a $7,500 tax credit to purchasers of electric cars. A new study, "The Distributional Effects of U.S. Clean Energy Tax Credits," by two energy economists at the University of California, Berkeley finds that the rich are the chief beneficiaries of billions in federal tax credits aimed at encouraging people to buy and install energy efficient and low-carbon technologies.

What does it mean to live in poverty in the US?

Comparatively different to the rest of the world (DailySignal):

According to the government’s own reports, the typical American defined as poor by the Census Bureau has a car, air conditioning, and cable or satellite TV. Half of the poor have computers, 43 percent have Internet, and 40 percent have a wide-screen plasma or LCD TV.

Far from being overcrowded, poor Americans have more living space in their home than the average non-poor person in Western Europe. Some 42 percent of all poor households actually own their own homes; on average, this is a well-maintained three-bedroom house with one and a half baths, a garage, and a porch or patio.

According to the U.S. Department of Agriculture, only 4 percent of poor children were hungry for even a single day in the prior year because the family could not afford food. By its own report, the average poor person had sufficient funds to meet all essential needs and was able to obtain medical care for his family throughout the year whenever needed.

Seeing the poor as a monolithic block sets poverty reduction policies up for failure, argues Robert L. Woodson Sr. from Heritage (DailySignal):

Over the past 10 years, in spite of massive and growing funding of America’s anti-poverty agenda, the percentage of individuals able to support themselves free of government welfare has declined. The fundamental reason the nation has failed to effectively reduce dependency and promote self-sufficiency is that we’ve been misdiagnosing poverty.

People experience poverty for varied reasons. Remedies for poverty should take this diversity into account. Through my experience with the Center for Neighborhood Enterprise and the nearly 3,000 community groups working in low-income neighborhoods it has served, I have come to understand that there are typically four basic categories of the poor.

Read it all.

Where millenials are becoming entrepreneurs in the US

Interesting study on entrepreneurship amongst millenials (FastCompany):

The most recent index from the Kauffman Foundation found that 24.7% of all entrepreneurs were 20 to 34 years old, and those with college degrees were starting businesses in unprecedented numbers.

So where, exactly, are they starting all these businesses?

[...] 1. Birmingham, Alabama
2. Boise, Idaho
3. Boulder, Colorado
4. Nashville, Tennessee
5. Manchester, New Hampshire

Where they aren't:

1. Providence, Rhode Island
2. New Haven, Connecticut
3. Buffalo, New York
4. Albuquerque, New Mexico
5. Hartford, Connecticut

What's behind that "rapid decline in poverty, illiteracy and disease"?

Nick Kristof completely omits the lede (Cato):

The Homo sapiens has been on this earth for 200,000 years. For 99.9% of that time, we lived in ignorance, poverty and misery. What has changed? Reading the NYT, the reader is left with the impression that “good stuff,” like manna from heaven, suddenly was conjured up out of thin air.

Not so. The key to the improvements in the lives of ordinary people over the last 200 years were industrialization and trade, which generated historically unprecedented rates of growth. And the importance of growth cannot be overemphasized. There is not a single example of a country emerging from widespread poverty without sustained economic growth. As University of Oxford Professor Paul Collier writes, “Growth is not a cure-all, but lack of growth is a kill-all.”

It reminds me of Robert Heinlein's quote:

Throughout history, poverty is the normal condition of man. Advances which permit this norm to be exceeded — here and there, now and then — are the work of an extremely small minority, frequently despised, often condemned, and almost always opposed by all right-thinking people. Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty.

This is known as "bad luck.

Saving the world one t-shirt at a time

Trade not aid (Cato):

Garment factories in poor countries might look dirty and dangerous to westerners, but in fact, they are one of our best hopes for poverty reduction and human development...Western activists rail against 'sweatshops,' but among researchers and economists from left to right there is a consensus that these jobs are the stepping stones out of poverty. All countries that have managed to industrialize its economy and combat poverty in modern times have done so by moving into such labor-intensive exports markets.

Reimagining CO2 into something useful

Sponsored by Canada's oil sands industry, it's an interesting alternative to regulating our way to solving environmental problems (COSIA.ca):

The US$20 million NRG COSIA Carbon XPRIZE is a global initiative, operated by the XPRIZE Foundation, designed to accelerate new technologies by converting CO2 emissions from industrial facilities for electricity generation and oil and gas production into valuable and usable products.

The competition is structured as a two-track prize, with the new technologies tested at either a coal power plant or a natural gas power plant. A total of US$20M will be awarded to winning teams, with US$10M awarded for each track.

Of course the sad part, is that any current proposed regulation does nothing to account for any future innovations that might come out of this and would have far greater impact than the myopic regulations proposed.