Month: July 2018

China doesn’t want your rubbish

I was a bit surprised to hear (from one of my students) that China banned the import of “low value materials” for recycling in the country in July 2017. This move has raised panic in many countries that had been using China as a “dumping ground” but also some head shaking among economists who prefer to see more, rather than less trade, as trade allows countries and people to specialize in what they do best (“comparative advantage”). 

I think those reactions are not as important as two other points. 

First, it shows that the Chinese government is willing to “stand up” for its people, by blocking the import of garbage. That perspective might be slightly distorted by nationalism and NIMBYism, but it is probably more popular with citizens than efficiency or potential job losses in the recycling industry. (It’s also popular with proponents of the “circular economy” who want to see more local management of inputs and waste outputs.)

Second, I don’t think there will be many job losses, as this move fits into a trend of “greening” China that has been developing over the past decade. This trend might be invisible in the statistics for air quality or coal consumption, just as it is perhaps over-emphasized in the massive deployment of solar and wind power, but there’s clearly something going on. In this case, I see an “interesting” (not accidental) confluence between the sudden drop in international demand for Chinese recycling services (via the ban on imports) and a growing desire to clean up China, which translates into a domestic demand for recycling. The ban, in other words, might be part of a plan to shift Chinese productive capacity towards domestic consumers.

For evidence of an intentional shift, I’ll note that China has been placing less emphasis on export-led economic growth and more emphasis on the domestic-driven sort (since the 2011-2015 Five Year Plan), meaning that an increasing share of firms and workers are now selling goods and services to fellow citizens rather than internationally. *  

How far do they want to go? Guess…

My one-handed conclusion is that China’s ban on imported waste is part of its ongoing policy of improving life for its increasingly wealthy citizens who demand better, cleaner lives.

* Read PDF reports from McKinsey (2009) and the Demand Institute (2015)

Weekend reading

  1. This is indeed what cyber warfare will look like. Stay tuned, but people may not know its happened until years after it’s too late.
  2. “Transwomen are to women…” and an economist on how s/he transitioned and knew she “succeeded”: men ignored her ideas.
  3. This Argentinian hitchhiked across 90+ countries to meet people and understand our common humanity.
  4. Alcohol is not good for sleep and melatonin for sleeping.
  5. A math-economist on markets and complexity.
  6. Zuckerberg won’t fire himself on handling the world’s “social network utility.” It would be better if he did and Facebook was reorganized as a non-profit that served its users instead of its advertisers (and Russians).
  7. “The brilliance of the Russian move is to make domestic failure into foreign policy success. No one in Russia thinks that Russia is a success in conventional terms. What their leaders want them to believe is that everyone else is also a failure.“
  8. Manipulating Amazon’s book rankings (and revenues), a romance.
  9. Rural Arizona flounders as its farmers pump aquifers dry and residents “cope,” unable to find consensus or pass a law on sustainable use.
  10. The Dutch governing coalition says it “needs 2 years” to write a law for deposits on bottles and cans (as a means of reducing litter), in the meantime “hoping industry can fix this.” What a failure of public service.

H/T to DL

So what happens in a drought?

If you were walking along the path on an island in Gothenberg’s archipelago, you might have thought you’d run into another selfie-mad idiot, but that’s me doing a TV interview on drought in the Netherlands.

Not just any idiot

Only a few seconds of that interview was aired (I show up at 2:40), but my main points — that farmers and nature would bear the brunt, unlike citizens who would still have 24/7 drinking water — have been showing up in the news, along with some interesting infrastructure implications:

My one-handed conclusion is that heat waves and drought, which are getting worse with climate disruption, are going to cause a lot of trouble for people as well as lower our standard of living. (I just spent €50 on a fan that I could have spent on wine!)

Quantified disappointment

I am a big fan of statistics, facts and data, and the internet has made quantification easy, fast and cheap. In fact, I think a little too easy, fast and cheap for our own good (or my own good).

As you know, you can get market data by the second, count your “friends” on social media, see precisely how much something you’ve done is “liked,” or even check your bank balance as you ride an elevator. 

As a blogger, I can get data on how many visitors come by my site, which posts are viewed more often, where these visitors come from, and so on.

Except now, on this blog, I do none of those things that I used to do at Aguanomics. I dropped tracking to reduce flows to the “data dragnets” deployed by Google (via their free “Analytics” service), Facebook (via their “like” button) and other services. I also chose ignorance for my own sanity, as I have no real way of using the data to write better posts (I don’t use advertising, so I don’t need to refine garbage clickbait posts), and I can’t really get a quality feedback from quantified activity. 

As evidence (for myself), I can think of the many terrible articles on topics I know that get 1000x the reads/likes/shares on other sites, along with dozens of ignorant, simplistic, and trying-to-be-helpful-falling-on-deaf-ears comments. I can also remember “Ask Me Anythings” that I’ve done on Reddit that had 300 to 5,000 upvotes. Those votes disappointed and thrilled me, respectively, and they did reflect different degrees of engagement, but they did not perhaps represent failure or success to readers. If anything, I had more time to give better answers in the “slow” AMAs than I did in the popular ones, where the same question was asked ten times, and I struggled to give short answers to everyone.

We all know that it’s taboo to “talk salary” with friends, family and co-workers because those conversations rarely go well. Maybe it’s nice to know that you make more than anyone, but does that knowledge actually mean anything? Are you happier? Healthier? What about your relations with work colleagues? At my university job, we know we make roughly the same salary because we’re on a bureaucratic scale, and that knowledge removes at least one source of friction that might exist at a job where people are paid based on their negotiating skills, the boss’s prejudice and/or some quantified dimension that may not correlate very well with your actual contribution. 

When I give grades to students, I see exactly the same dynamics: They give too much attention to the grade (especially when nitpicking to raise it) and  too little attention to my comments on what they did right and wrong and how to improve. They resist when I say “grades don’t matter,” as they know that many graduate schools and hiring departments will judge them by their grades, but maybe that filtering indicates that study or work in those places will involve an endless chase after even more grades or KPIs? 

I’m rather happy and relieved to lack data on how popular this new blog is, as it leaves me free to think more about what to write. I am happy to be off Facebook (and, soon, Twitter), as I don’t need to worry about how many likes my latest brainfart post gets, or from whom, or in comparison to the paid popularity of some “thought leader.”

It’s no accident that (sane) people ask “do you love me?” when they need some attention instead of “how much do you love me?”, as it’s easy to be pleased with “yes” and far-too-easy to be disappointed with “7.8.”

My one-handed conclusion is that we need less, not more, quantification in our complex, multi-dimensional, and unique lives.

What quantification would you banish to improve your life? Why don’t you?

Weekend reading

  1. The Netherlands is in drought >> 
  2. Are Americans buying big houses to show off (and risk) their wealth?
  3. A long but insightful look at US-China relations — and how Trump’s personality is undermining America’s future.
  4. A libertarian leaves China after 9 years. Read this essay on rule of law bureaucratic dictatorship.
  5. A podcast with Richard Thaler, a behavioral economist who was in the lead to push back against the “mathurbation” version of economics that doesn’t work in reality
  6. American intellectuals trying to break out of the D-R axis
  7. A very nice podcast on bringing civility back to American discourse
  8. The academic left that downplayed Cambodia’s genocide
  9. How the Dutch use sand dunes to filter their drinking water
  10. What’s the value of crypto? Read this interview with Vitalik Buterin, creator of the ethereum protocol.

The gender-pay gap misses manly risk

The debate over the gender-pay gap has raged for years, and we know quite a bit about it. This 2017 paper, for example, indicates that the gender gap has been shrinking while the motherhood gap has persisted.

I’m not here to question these findings or the “fairness” of the gap, but reflect a little more on motherhood, risk and productivity.

As a first step, let’s agree that men tend to take more risks than women, on average. These risks might be good for society (inventions! discoveries!), but they can be bad for individual men (death!) or their firms (bankruptcy!), so risk will be relevant to firms, profits and productivity.

Turning to motherhood, we know that it’s predictable (at least in the last few months that might lead to maternity leave), that it’s likely to reduce a mother’s availability for the job, and probably going to lead to even less risky behavior by a mother who wants to take care of herself, her child(ren), and family.

Employers might pay women less for their predictable chance of having children but fail to reduce men’s pay for the unpredictable risks they bring…

Taken together, we can suppose that employers might pay women less for their predictable chance of having children but fail to reduce men’s pay for the unpredictable risks they bring to the firm. The list of such risks is long and stereotypical: lying salesmen, heart-attack stress, over-aggressive purchases,  bad hires based on hunches, sexual harassment, etc. These risks are hard to predict or plan for, so they are more like uncertainties (“known unknowns”) than risks that can be insured against, which means that firms may be “paying too much” for the generic male employee.

My one-handed conclusion is that the risk of a woman having a baby might  be correctly priced in terms of a wage discount while the risk of errant male behavior may not be correctly priced, meaning that men (especially those who are younger, childless and/or aggressive towards their careers) may be paid too much, relative to the risk they represent to the firm.

Note: This post also links to my earlier post on “pondering” because women — in my experience — tend to wait and ponder before acting while men rush into action without as much reflection. (Got an angry email to send? Write it today but send it tomorrow, after a good sleep and careful reread.)

Weekend reading

  1. Gendered path dependency hinders corporate performance
  2. We are moving from “endless” to scarce sand for the same reasons as the increase in scarce water: growing demand and mismanaged supply.
  3. Ex-EPA head Gina McCarthy talks about environmental policy, how the Trump team is doing it wrong, and why America is still in Paris. Watch “Environmental policy and the assault on science” (she starts at 6:45).
  4. A brutal, but fair, critique of a Dutch policy failure (taxes on expats)
  5. This essay on a struggle with student debt is heavy on pathos but not logos, as the author’s debt is the result of “pay whatever it takes for the degree(s) in English literature.” The Baby Boomers found themselves through sex,  drugs and questioning authority; their children are finding themselves indebted to authorities issuing certificates of knowledge.
  6. Melatonin is useful for sleep but don’t overdose.
  7. Speaking of [this blog], here are a few things economists agree on.

Review: Doughnut Economics

Kate Raworth’s book (2017) has attracted a lot of attention. Students has asked if I “teach the doughnut.” Raworth is feted as a rockstar at various festivals. Some reviewers claim a “breakthrough… that will help save the planet.”

So I had to take a look at this book, and a look was all I took.

First — and no surprise — Raworth has not discovered or uncovered anything. She’s just written out a number of well-known ideas that economists have discussed for decades.1

Second — and quite annoying — Raworth presents these ideas as a radical rejection of “conventional economics,” but her strawman caricature of those conventions is based on a Frankenstein-copy/paste-mess of ideas that are usually out-of-date, discredited or merely misinterpreted (by her).2

Third — and thanks god — she does explain a number of useful concepts that economists (and other social scientists) have been exploring for years. These ideas include many that I use for teaching and research, which is why I was not really impressed by the doughnut. (FYI, the idea is that we don’t want to “fall in the hole” of being too poor and miserable, nor “exceed the boundary” of unsustainable behavior.) With this in mind, I might recommend her book, as I would recommend Freakonomics or Economics: A Users Guide, except that all these books distort what economists actually do and the economic method. Raworth, in other words, gives a distorted view of economics (often derided as the “Econ 101 perspective”) that is likely to deceive readers into thinking they understand when all they’ve learned is a superficial perspective that falls apart when questioned.

I often say that an expert is someone who knows what’s missing from an argument (and thus what questions to ask). From this perspective, I can say that Raworth’s arguments are full of holes and wishful thinking.

Fourth — and here’s my elitist perspective — Raworth’s background (BA and MSc degrees from Oxford; 10 years at Oxfam) means that she has lots of real world NGO experience but lacks experience with markets and economic theory. It’s thus no surprise that she’s suspicious of “neoliberal markets” and unaware of economists’ work on market failures, environmental economics, etc. I often say that an expert is someone who knows what’s missing from an argument (and thus what questions to ask). From this perspective, I can say that Raworth’s arguments are full of holes and wishful thinking. I would have been interested in her analysis of development, as Oxfam’s model puts far more reliance on “good people helping poor people” (and often failing because they are either not that good or just do the wrong things; read my paper) than on poor people helping themselves (and succeeding when corrupt governments and dodgy aid groups are not conspiring against them).

Fifth — and here’s my impatience — I didn’t read her whole book. Indeed, I could barely manage the first two chapters before I sat down to write this. Her prose is chirpy and her passion clear, but I disliked her preachy and snide tone (“it’s us good ones against them bad ones, dear”) on topics that are familiar to me and better discussed by other writers. (I’m now reading The Secret of Our Success and — wow –Heinrich’s work is stunning; review to come.)

Sixth — and here’s the (w)hole — Raworth seems eager to toss out the baby (economics) with the bathwater (her confusions of economics with politics, human actions with human aspirations) in her quest to “think like a 21st century economist.” The sad part is that many all of these ideas were in circulation among economists in the 20th century, but not in general circulation. Why not? Because many people don’t like sharing the commons, many people want new cars, and many people, sadly, don’t care about poor people. So Raworth doesn’t need to “fix economics” as much as “fix humanity.” I doubt that this message will reach her readers — probably all of whom are well-meaning and well-off but politically naive or powerless. In every course I teach, I emphasize that markets are embedded in society/politics but that markets (where “excludable” goods are managed) have nothing to do with development or sustainability — the “non-excludable goods” that Raworth doughnut emphasizes — which are subject to political and community management.

Bottom line: I give this book 4-stars for its aspirational discussion of how we should behave, its selective review of useful economic ideas, and its overall emphasis on ideas that economists have been working on for 50-plus years. If you want to understand how economics actually works, then start here or here [pdf]. If you want a good overview of “political-economic thinking” and the state, then listen to Pete Boetkte (and read his SEA paper).

  1. Example: The 1987 Brundtland Report
  2. Example: “There will be no shortage of the Earth’s resources, claimed the laissez faire economist Julian Simon in the 1980s, if markets are permitted to do their job.” That may be true by the strict definition of “market resources” such as oil or gold, but she uses this example to claim economists think “EARTH, which is inexhaustible — so take all you want” [p 70]. That statement is much broader, since Earth’s environment — as something we share in the commons — is not a market resource. This difference is known by the vast majority of economists (“negative externalities”) but I’ve written more here.

You can read all my reviews here.

Addendum (Dec 2022): This 2018 article on too much/too little energy use explains these ideas in a more reasonable way.

Weekend reading

  1. Blockchain and crypto will disappoint and succeed like other technologies
  2. Plastic straws provide insight into America’s cultural evolution, from eating out to women’s rights to environmental consciousness to political schism.
  3. Tech companies know more about your credit rating than credit agencies. Now what will they do with the information?
  4. Jean Tirole, a Nobel-prize-winning economist, on how to limit monopolistic abuses by tech companies. 
  5. Traditional statistics (with confidence intervals, degrees of freedom, etc.) is all wrong. We need to drop the math pretense and use our hunches, as recommended by Bayes.
  6. A short overview of six books discussing GDP and how it goes wrong
  7. This 1978 Q&A with Hannah Arendt is very relevant today: “If the ruling classes permit a small crook to become a great crook, he is not entitled to a privileged position in our view of history.”
  8. Climate change and rising seas expose the new normal of Florida: “We have to start relocating the things we value…”
  9. This 1965 view of abortion gives us as idea of the America that Trump and the Republicans want. (After watching Trump’s inaugural speech, I predicted they’d go after abortion. Make sure you vote in November if you support a woman’s right to choose when to have a baby.)

In praise of pondering

If you’re reading this, then you are probably subject to the forces of the “attention economy,” meaning that we have enough money to get by but not enough time to get to all the good stuff that passes our way.

(If you’re worried about money in the sense of “can’t pay the rent,” then stop reading and go cancel some subscriptions — recurring payments are the number one way that people “waste money. If you’re worried about time and are here, then thanks for “spending time” on this blog!)

In most cases, people with a lack of time tend to be flustered at the slightest delay. A traffic jam, lost pencil or new email can throw their whole day off. 

If that sounds familiar, then this post (and maybe this blog) is for you.

When I was getting going here, I told readers of my newsletter that I was thinking of putting more emphasis on “slow thinking,” but I was worried about that phrase. I wrote:

Slow seems to indicate lazy or waiting around. Thoughts?

To this, CC replied: 

I like to refer to ‘slow thinking’ as pondering – which seems to be a ‘dying art’ of sorts.  As a ponderer, I find that I have to be deliberate in isolating time to allow my mind to explore an idea/concept/thought, beating back the daily ‘timing alarmed’ tasks and demands of the ‘instant results’ society so many of us exist within. Take your time, David; the results will be more fulsome and clear for you… And then for us as you take the time to share with us.

For this reply, I thank CC,* and here are a few of my thoughts on this topic and how I intend to write here.

First, it’s difficult to think at all when you’re always in a hurry. I used to say the Dutch are “precisely casual,” and I still think that is true, but it’s awful hard to have a conversation that’s not “on the agenda.” Their (national) habit of stuffing each day means that mistakes lead to panic and innovations are unwelcome.

Second, I am constantly stimulated with new ideas when I go on vacation, read a book, or spend a few hours in conversation. It’s hard to pursue these activities when my to-do list beckons, but they deserve respect. At the moment, I am on holiday in Sweden, and I’ve seen lots of new things and talked to a variety of people. All of these experiences confront my “settled” view of the world, sometimes pushing me to rethink habits, sometimes exposing me to ideas I dearly need.

Over the past 15 years or so, I’ve had a number of wondering conversations with my father. Sometimes he drives me nuts (he’s a fan of Fox News) but sometimes he keeps me going for hours with an odd comment or question. These conversations — and many others with a variety of strangers — have helped me explore new ideas and reconsider “settled” truths.

Last week, for example, I was chatting with someone on China’s recent ban on importing plastics (and other “low value”) waste for recycling. At first, I thought that this was China’s way of standing up for itself as a nation unworthy of others’ garbage, but then I realized that China’s ban created an opportunity for it to increase recycling of its own plastic garbage, as there was now a lot of spare capacity looking for inputs. This shift was an exact parallel to China’s recent shift in emphasis from exporting goods to meeting domestic demand. Where was the supply for that demand coming from? The exact same industrial base that had grown so large (and efficient) in the decades of exporting to other countries! I’m not sure if there’s any master plan at work here, but it sure makes more sense to me than other explanations. 

Third, I here’s two cheers for writing by hand, reading on paper, and talking without an agenda.** This recent article on typesetting says it well:

Technological innovation, in the conventional sense, won’t help us slow the publishing process back down. Slowing down requires better thought technology. It requires a willingness to draft for the sake of drafting. It requires throwing away most of what we think because most of our thoughts don’t deserve to be read by others. Most of our thoughts are distractions—emotional sleights of the mind that trick us into thinking we care about something that we really don’t—or that we understand something that we really don’t.

I could write a lot more on this topic, as I am endlessly fascinated by the many dimensions of my thought, the thoughts of others, and the mysteries of the world around us, but I’ll leave it there. 

My one-handed conclusion is that everyone needs time and space to expose themselves to doubt, wonder and exchange. Do you have enough time to ponder your thoughts, your actions and your world?

* CC happens to have the same initials as my friend Connie Cahlil, who died a few years ago of cancer. Connie was not only a dear friend, but a smart woman who confronted her illness with wisdom that she shared with the world as she slowly faded. If you want to read her stuff, then start here. (In fact, you’ll have to end there, as her blog is no longer online. The internet will remember you only for as long as you pay your content provider.)

** Don’t get me wrong, I think agendas can be very helpful, but not if they dominate your life, 24/365! Everyone’s mind needs free time to unwind and build new connections.