Afternoon roundup

The tabs do pile up. A few days out at the NZAE meetings, a couple days leave, and then digging out from under the pile...

• If the government forbids asylum seekers to work, it ought to be providing them income support. Instead it bans them from working and requires them to live off of any savings they might have, and charity. It really is a kind of administrative evil. 
• Anton Howes with some fun history of freight infrastructure
• Paul Walker with some fun history of the firm
• “You’ve got this cool thing that will get you the youth market and make you look innovative. But if there’s even the tiniest chance it will lead to a big fraud investigation or AML problems, you have really stuffed up. And you can never prove something 100 percent won’t go wrong.”
• Christchurch is pretending that its sun is different from the sun elsewhere as an end-run around MDRS rules. It'll be a test of how government responds to these kinds of shenanigans. 
• Industrial and process heat is covered by the ETS. Nevertheless, central government requires councils to consider climate change when consenting industrial process heat. An ETS means councils shouldn't have to think about this. 
• National has proposed a third medical school. But it won't do a lot of good without expanding the number of supervised practice positions at hospitals. Right now, there are international doctors who could practice here, in a desperate doctor shortage, but there aren't enough of those slots, and those slots are mandatory. Some catch, that catch-22.
• There has now been an increase in clinical practice positions so that we can get more nurses. Three years into the pandemic, but better late than never. 
• The great thing about carbon prices is that people really don't have to understand what actions are associated with reducing global warming. Prices give them all the guidance they need. Good thing, because a survey of Kiwis had 'rallying behind recycling' as doing the most good for the climate. Recycling has negligible effects on GHG. But it doesn't matter, because waste is in the covered sector... 
• StatsNZ isn't likely to hit census response rate targets.
• "Since when are monopolies for private companies a good thing?" Well, they can be. But they're less likely to be when granted by statute, as they are here...
• The pharmacy guild advances implausible arguments for maintaining guild restrictions on pharmacy ownership. 
• Me, in Newsroom, with a reminder about Alchian's shipping the good apples out. 
• Police response-time targets have been curved...
• Willie Jackson wants to have a big nationalistic fight with Big Bad International Platforms to take to the election. Only sensible way of reading this. 
• Tech to reduce nitrogen runoff from fertilizer. Neat. 

Quarantine costs

Guess the century:

However, as Newman shows, such harsh [quarantine] measures led to “a sense of inequity and penalization” among the middle class. These were mostly small business owners like “coachmakers, grocers, fishmongers, tailors, and innholders” who “lacked the resources to endure long periods of expenditure without income.” The middle class faced a unique threat to their status and livelihood. Not being poor enough to receive much government assistance, they also weren’t wealthy enough to flee the city—a burden not felt by more affluent Londoners. Wealthy individuals who chose to remain in the city were less affected. While they could afford to quarantine without work for forty days, they were also able to hide evidence of sickness within their spacious homes, effectively avoiding quarantine altogether.

From something I didn't know existed: the Daily JSTOR. 

Unions, bagels, and the mob

It all started out as a set of bakers with secret knowledge of how to make bagels properly. It became a union, ensuring that the holders of the secret knowledge were the ones to profit from it - almost more like an old craft guild but with pickets. 

And then the mob came in. 

A fantastic story over at Grub Street. Strongly recommended; superb storytelling around a story that was great to begin with.

A snippet:

The excessive hours mandated in such environments were so brutal that in the late 1920s, bagel bakers, primarily immigrants from Eastern Europe, banded together in protest. The result — Union Local 338, under the umbrella of the Bakery and Confectionery Workers (B&C) International — offered a measure of professional leverage. Beginning in the 1930s, if one wanted to run a bagel shop in Manhattan, one had no choice but to employ union bakers. They were, after all, virtually the only men in town capable of making a proper bagel, not to mention exceedingly judicious when it came to imparting their wisdom. So comprehensive was this mandate that bakery owners were prohibited from manning their own ovens at the risk of costly and relentless picket lines outside their shops. (Picketing was the official response to virtually all major labor disputes. The union prevailed every time.)

Union Local 338 never grew much past 300 bakers, but the power it held was enduring. Membership was intentionally exclusive, based on the lineage-driven, old-world tradition of passing down a generationally honed craft from father to son. On this basis, acceptance was limited to the sons of existing 338 members (with the rare son-in-law and occasional nephew sliding quietly under the rope), a structure that retained an exclusively Jewish identity. Until American-born offspring began to turn over No. 338’s roster in the 1950s, the local communicated primarily in Yiddish, its correspondence and record-keeping entirely indecipherable to outsiders. The newspaper of record, the one read by bakers during their breaks, was the Yiddish-language daily Forverts — the Forward — which today publishes online in both English and Yiddish.

Under the union, bakers’ hours were soon strictly controlled, with wages rising to match those of high-end plumbers and electricians, plus paid vacations, life insurance, and pension plans. With a direct line between union members and their fathers who worked the benches before them, it was impossible to take such gains for granted. It also made concessions nearly impossible when it came to negotiating contracts.

Ultimately, it barely mattered to shop owners. In a thriving industry that by the mid-1960s was pumping out more than 2 million bagels per week to a market only just beginning to reach beyond New York City, they could afford it. With their industry grossing some $20 million per year, these men purchased homes on Long Island, drove fancy cars, and sent their children to prestigious colleges. It was a copacetic ecosystem, working out favorably for all involved.

Naturally, the Mafia wanted in.

Flattery is a Prisoners Dilemma game

If you're not already reading Xavier Marquez's Abandoned Footnotes, you should be. N is low and quality is very high. His latest post works through status, inequality, and flattery in the Roman empire.

Augustus pretended humility and kept a lid on excess flattery to allow the Senate to pretend that it continued to have status equal to the Emperor.

The Republic was built on norms that rejected kingship and competitively allocated relatively “equal” high social status among the senatorial class, so that any credible signals of an intention to re-establish kingship seem to have greatly lowered the coordination costs of dissatisfied senators for conspiring against the emperor.

Caligula wanted to move toward Kingship, so fuelled flattery inflation:

Strategically speaking, the point of this seems to have been to lessen his dependence on the senatorial aristocracy and to move the regime towards a Hellenistic model. (Winterling discusses some suggestive evidence that Caligula might have been planning to move to Alexandria, an obviously symbolic move to the historic capital of Hellenistic dynasts). Runaway flattery inflation not only makes it exceedingly difficult for conspirators to succeed (even the most innocuous comment can be used against you when flattery inflation is in full swing) but also succeeds in completely humiliating the flatterers (in this case the senatorial aristocracy) and lowering their collective social status vis a vis the ruler. If flattery hyperinflation is not stopped, the end result is that the ruler no longer has to use "ambiguous" language to manage his relationship to the selectorate. He can just order them to do things, without worrying about slighting their status.

Individual Senators could do no better than flatter, though it debased the Senate.

I think one can extract a more general model of flattery inflation from all this. When material resources are more much more unequally distributed than status, and status is competitively allocated, flattery inflation can result. But rulers (or those who control material resources) will usually try to dampen or manage this kind of inflation, since flattery has obvious disadvantages from their perspective. Yet there seem to be circumstances under which they will try to encourage flattery hyperinflation, e.g., when the costs of coordination for challengers are relatively low and the maintenance of "low inflation" requires extensive communication management.

I would be so poorly cut out for that kind of world.

On the other hand, if you flip the word Senate for Faculty and Emperor for... ah, well, never mind. It's an exercise best left for the reader.

Early Prediction Markets

I’ve been rewatching Showtime’s The Tudors, which led me to do some googling to check how much of the portrayal of George Boleyn is based on fact. In the process I came across this gem from Wikipedia:

Everyone who witnessed George's trial, including the Imperial Ambassador Eustace Chapuys, confirmed that he put up a magnificent defence and many thought he would be acquitted. Chapuys confirmed that those watching were betting 10 to 1 that he would be acquitted and the court chronicler Charles Wriothesley said that his evidence was a marvel to hear….

…Yet whatever Jane Rochford may or may not have said, it seems that the majority of the courtiers believed in his innocence, as can be seen from the wagers they were making in favour of acquittal.

I love it: Historical accounts of this period are rife with speculation, since the statements made by people of the time have to be filtered through the lens of the political incentives motivating speech; the sincerity of a betting market, on the other hand provides hard evidence. Of course, we still need to trust that Chapuys was telling the truth when he reported on the betting markets…

Constructing history at the museum

Where new Chinese museums suppress recent failings [1/20], American ones almost require the visitor to wear sackcloth and ashes [2/20].

At the elaborately renovated National Museum of China in Tiananmen Square, visitors interested in the recent history of the world’s fastest rising power can gaze at the cowboy hat that Deng Xiaoping once wore when he visited the United States, or admire the bullhorn that President Hu Jintao used to exhort people to overcome hardship after the Sichuan earthquake in 2008.

But if their interests run to the Cultural Revolution that tore the country apart from 1966 to 1976 and resulted in millions of deaths, they will have to search a back corner of the two-million-square-foot museum, which will complete its opening this month, for a single photograph and three lines of text that are the only reference to that era.

...

Officials rejected proposals for a permanent historical exhibition that would have discussed the disasters of early Communist rule — especially the Great Leap Forward, a political campaign and resulting famine that killed more than 20 million. Some organizers also wanted a candid appraisal of the Cultural Revolution, a decade-long attack on traditional culture and learning, but that effort was squashed.

Instead, the authorities decided that the exhibition on contemporary China should focus, as did the museum before its extensive makeover, on the party’s triumphs.

Another permanent exhibit, on China’s ancient history, also presents an idealized version of the past. It tells the uplifting story of Chinese ethnic groups pulling together to create “brilliant achievements.”

Meanwhile, in Los Angeles:

Before you are submerged within the museum’s theatrically darkened central galleries, before you learn how the cafes and intellectual life of the Weimar Republic gradually gave way to the annihilationist racial fantasies Hitler outlined in “Mein Kampf” — before, that is, you experience a variation of the Holocaust narrative with its wrenching genocidal climax — there are other trials a visitor to the Museum of Tolerance here must pass through.

You must first choose a door. One is invitingly labeled “Unprejudiced”; the other, illuminated in red, screams “Prejudiced.” No contest. But one door doesn’t open; the other does. Here, evidently, we must admit we are all prejudiced, not just the guards at Auschwitz.
...
The Museum of Tolerance is not alone. Even a modest museum devoted to the Holocaust, like the one that opened in 2009 at Queensborough Community College, offers testimonials by students about how the Holocaust has taught them about tolerance and the evils of discrimination.
...
Though Yad Vashem in Israel and the United States Holocaust Memorial Museum in Washington have remained relatively immune to such sweeping moralizing, in most institutions and curriculums, the Holocaust’s lessons are clear: We should all get along, become politically active and be very considerate of our neighbors. If not, well, the differences between hate crimes and the Holocaust — between bullying and Buchenwald — are just a matter of degree.

In China, none were to blame for the Great Leap Forward's killing millions, and certainly not the Chinese Communist Party and Chairman Mao. In America, everyone's a little bit responsible for the Holocaust.

Globalization

It ain't new:

HYDERABAD: A Roman gold coin weighing 7.3 grams issued by the 7th Roman emperor Nerve Ceaser (96-98 AD) was unearthed at a Buddhist site in Phanigiri in Nalgonda district during the course of archaeological excavations recently.

Prof. P. Chenna Reddy, Director, Department of Archaeology and Museums, who inspected the site on Wednesday said so far 60 lead coins of the Satavahana and Ikshvaku dynasties have been recovered. The latest find of a gold coin was interesting as it indicated the fact that there was a brisk trade between the erstwhile Telugu country and Rome. It is also for the first time that a Roman gold coin is recovered from a Buddhist site in the State.

HT: @MonteSolberg

Stalin trusted prices too much

Milt at No Minister has been doing some reading. And this bit from Suvorov's account of Soviet Second World War planning is very interesting. Milt highlights Golikov's (Chief of GRU, military intelligence) early warning signals that the Nazis might be gearing up to attack the Soviets:

p249:
One of the vital things Germany would need, if it were to be ready to fight such a war, was sheepskin coats - no fewer than six million of them. As soon as Hitler decided to attack the Soviet Union, his General Staff would have to order industry to begin producing millions of sheepskin coats. This would be reflected immediately on the European markets. In spite of the war, mutton prices would fall because of the simultaneous slaughter of millions of animals, while sheepskin prices would rise sharply.

Pretty reasonable, if we expected the Nazis to behave reasonably. They didn't count on Hitler's overoptimism about a quick victory in a summer invasion that wouldn't require winter preparations. And so the price of sheepskins didn't move, there was no evidence of Nazi battalions gearing up for winter combat, and the Soviets were surprised.

It's rather neat though that the Soviets understood the operation of prices well enough to watch them as military intelligence.

Had they reckoned Hitler to have even more foresight, they might have expected little change in mutton prices as the Nazis might reasonably have bought up excess mutton for freezing or canning to feed the armies.

Ship money

Acemoglu's latest paper, on institutions, tax revenue, and state capacity, has this bit on the history of England:

The British tax revenues increased by over three fold in the quarter of a century following the Glorious Revolution (while French revenues remained constant). Notably, these revenues were used very differently from how the marginal revenue was spent during the reign of the Stuarts before 1688: instead of financing the consumption or the retinue of the crown, they were spent to strengthen the Navy, which would then play an important role in defending the overseas interests of those in the Parliament (who in fact constituted the main checks against the power of the Hanoverian monarchs).

But wasn't the levying of ship-money one of the big complaints against Charles by Parliament just before the Long Parliament? If I remember my Hume correctly, Charles levied a tax (as prerogative rather than through Parliament) to kit out a first rate navy, and Parliament, who otherwise refused to grant him adequate supply for anything, got mighty ticked off about this imposition despite it being very well used indeed. Charles, seeing the writing on the wall, gave up ship money in the lead-up to the Long Parliament, but Hume suggests ship money nevertheless as one of the spurs for the Glorious Revolution: hardly an indication that the navy was neglected under all the Stuarts.

Or does Acemoglu count ship-money as inframarginal? The marginal dollar, I suppose, under Charles would have been used trying to defend against the incursions of crazy religious fanatics from Scotland: navy not much use there. Or is Acemoglu referring more to Charles' predecessors? If the latter, then does the comparison of revenues pre and post revolution make sense?

Hume's chapter on Charles is depressing.

None of this detracts from Acemoglu's overall point though:

This paper points out why this argument needs to be qualified and why caution is necessary before increasing the fiscal capacity of the state becomes a silver bullet policy recommendation. Because the availability of more efficient means of taxation increases the potential benefits of controlling state power, it also intensifies political conflict aimed at capturing the control of the state. This indirect effect counteracts the benefits from more efficient taxation and may dominate these direct benefits; as a consequence, the allocation of resources may deteriorate when the society and the state have access to additional fiscal instruments.

As Farrant and I have said before, the last thing you want is for Stalin to have more efficient means of taxation. And as I've said here before, I oppose Key making the NZ tax system more efficient (flattening out the income tax and imposing a land tax) because I don't trust Labour not to keep the land tax while re-implementing a 39% top marginal tax rate. The imposition of a new tax needs be accompanied by a commensurate increase in our ability to veto future growth in the overall size of the state. Acemoglu again:

The more general lesson is that while state capacity and states with sufficient economic strength to tax, regulate and provide public goods are essential for economic development, these benefits may not get realized by an autonomous increase in the strength of the state because this will also increase the value of controlling the state and thus induce increased political conflict and infighting. Therefore, the virtues of strong states emerge when the increase in the economic strength of the state is a consequence of, or at least happens simultaneously with, an increase in the political accountability of rulers and politicians. This underscores the need for future work investigating dynamic models of the endogenous emergence of state capacity and its relationship to political accountability.

Indeed. Couple the tax change with a requirement that any future tax increases be passed by supermajority referendum (or big structural decreases in the overall size of government), and I'm all for it.  Otherwise, not so much.