The Professor Watchlist has been posted and I see that a brilliant co-author of mine is on the list.  While he would "shoot from the hip" and say witty but controversial things, I have always viewed him to be an open minded debater and I always enjoyed speaking to him.  

While I'm uncomfortable with webpages "naming names", I do believe that the nation's best universities have swung too far in minimizing student exposure to conservative/libertarian thinking.  Today, there is widespread "group think" taking place at our universities.   How many conservative intellectuals teach at the University of California?   Jerry Brown would be too comfortable there if he were to go back to school. Is that a good thing?  At UCLA's public policy school, I was routinely amazed by the politicization of the students and their closed minds with regards to basic neo-classical economics ideas.

Yet, ambitious students continue to seek out elite university slots.   Take a look at this list of the top 20 Conservative Universities. With the exception of BYU, I don't know if the others are producing much research.  Is there an opening for a new rigorous university to rise in the rankings that features a social science division with a positivist research agenda?

 

Six years ago, I published Climatopolis: How Our Cities Will Thrive in Our Hotter Future.  I'm on record arguing that urbanization will allow us (especially those who live in richer cities) to adapt to climate change.  Cities will compete to be resilient and footloose people will vote with their feet to achieve their own conception of the good life.  The net result of this competition will be a resilient population.

With this in mind, I recently read this nice UCLA blurb.   I remembered a prediction in my book. In the Los Angeles chapter, I argue that climate change will cause people to ride the LA subway.   Since my LA Times Book Reviewer didn't understand my point, let me unpack this for you.

Los Angeles features a climate gradient such that it is much cooler in West LA than more inland. One way to adapt to climate change (as I explain in the book) is to build high rise towers closer to the cool ocean.  The UCLA blurb returns to this point.  As shown by NYC, when people live at high density they use public transit.  Thus, the effort to adapt will lead to a more successful subway (when it is finished a few decades from now) relative to what ridership would have been in the absence of climate change.  Thus, this is the basis of my claim that climate change will cause the LA subway to be a success.   I explain in my book that local government politics currently inhibits this adaptation because high rise buildings are not allowed in most of Santa Monica and Brentwood and other West side areas.  Local urban politics matters and economists need to study this issue more.

This post represents a sequel to this recent popular post.    In that post, I argue that an unintended consequence of stringent local zoning in the progressive states of California, Oregon and Washington is that these states created a near vertical housing supply curve and priced out middle class people who moved to Texas instead.  This dispersal of the population cost Hilary Clinton dozens of electoral votes.  Now some data.  Go to this IRS state to state migration gross flows data. Download the 2014-2015 data and you will learn the following facts.

For U.S residents who move to California; their most likely origin in order from first to last is;  Texas, New York, Arizona, Washington, Florida and Nevada

For California residents who leave the state (perhaps due to high housing prices), their most likely destination in order from first to last is;  Texas, Nevada, Arizona, Washington

For U.S residents who move to the state of Washington, their origins in order are;  California, Oregon, Texas, Arizona, and Idaho.

For Washington residents who leave the state (perhaps due to high housing prices), their most likely destinations in order are; California, Oregon, Texas, Arizona, and Idaho.

For U.S residents who move to Oregon, their origins in order are;  California, Washington, Arizona, Texas, Idaho and Colorado.

For Washington residents who leave the state (perhaps due to high housing prices), their most likely destinations in order are; California, Oregon, Texas, Arizona, and Idaho.


If these state to state migration flows play out every year, what this might add up to?

While speculative, I would guess that Texas (which appears many times above) would have 24 electoral votes rather than 38.  Arizona would have 6 electoral votes rather than 11 and Idaho would have 2 electoral votes rather than 4.   (Dave King has taught me that Idaho can't have fewer than 3 electoral votes).

If this Red State to Blue State migration swings 21 electoral votes to the progressive states of CA, WA and OR then Mr. Trump has 270 electoral votes.

I view this to be a lower bound because I have ignored Florida and Ohio and Rust Belt migration to these progressive states.

To read my  two papers that are the basis for my core claim, click here  or here. 

To summarize this post, my critics must answer the counter-factual of; what would be the population of Texas if it were easy to build in progressive coastal states?  My answer is a 40% reduction in the state's population.

As I read this NY Times piece,  I had a premonition.   President-Elect Trump will play the following strategy in his attempt to make America Great Again. He will withdraw from the  COP 21 Carbon Mitigation treaty and intentionally enrage the rest of the world. These nations will respond by enacting the carbon tariff that the NY Times piece discusses.  

As this tariff goes up, President Trump will respond by raising U.S tariffs.   International companies that export to the United States and that are energy intensive will have two incentives to relocate to the U.S.  They would jump over the tariff wall and they would avoid the carbon tax in their current nation.  U.S employment for low skill guys will rise.  These new factories will locate in depressed areas of the nation where land prices are low and energy prices and wages are low.  Erin Mansur and I study this point in our 2013 paper.        A slightly funny point is that as the physical distance between U.S supply chains narrows (as input suppliers come home) that the transportation component of carbon emissions will decline.

Who will lose if this dynamic plays out?  U.S consumers will face higher prices and the U.S carbon emissions will actually rise.   U.S exporters will face a cost increase for their products and they will redirect their sales to the U.S market.    Will China keep its carbon tariffs in place if it is costing it export sales to the U.S?

This blog post will pick up on my post from yesterday.  I have now read Matthew Yglesias' recent Vox piece and his case study of Pepsi and Trump.  Recall the game of Telephone. One person whispers a message to the next person in the chain who then whispers it to the next member of the chain. There is a last member of the chain who reveals the message. The message has mutated into something else and everyone laughs as the first message is compared to the original message.  In this "innocent game", there isn't much strategic behavior unless a person wants to trick the end of the chain into saying something dirty.

Contrast this game with Facebook in which the Zuck amplifies any one message.  Individual policy entrepreneurs have their own agenda and use a selected subset of links to make the case for their point.

The Zuck faces a fundamental tradeoff.  He wants people to spend 24 hours a day on Facebook and he wants to make the world a better place.  Are both goals mutually compatible?     Will diverse interests "converge" to the truth if they have the freedom to choose what they read and what they share and what they comment on?  

If FB wants to make the world "a better place",  should it pay conservatives to read liberal articles and vice-versa?

Should FB introduce some randomness such that people are exposed to a variety of news but then are free to ignore them?

While FB will continue to be "free", should it force all of its users to sample some news from a diverse set of perspectives?   What is FB's civic responsibility?

Skimming this NY Times graphics, I had the following thought.  A new group of "Move To Opportunity" scholars should approach recent graduates of UC Berkeley and other progressive schools and randomly assign large numbers of them to live in Red States and neighborhoods (areas where Trump carried the vote).   There would also be a randomly assigned control group who would live in progressive areas.  As time passes, I would be interested in the following outcome measures;

A.  Do the progressives who live in Conservative areas make local friends?
B.  Do the new neighbors talk about their differences?
C.  Do the progressives "convert" their Conservative neighbors or vice-versa?  Or do they "agree to disagree"?

While I'm half kidding here, there is an interesting spatial externality.  As the nation Tiebout sorts along ideological dimensions are there too few cross-group social interactions?  While the left and right scream at each other and talk past each other, do they ever speak to each other from a position of mutual respect?  Do the youngsters from UC Berkeley and UCLA have any first hand knowledge of what life is like in the rest of the nation? Who is "out of touch"?  How do we use the field experiment design to see if there are relatively low cost nudges towards building up a nation with common experiences rather than a quilt of heterogeneous interests who have little in common except for a border and a common military and language?

In the name of symmetry, a second field experiment could send people from West Virginia to go live in Berkeley. How would they be received in their host community?  Would tolerance prevail?

Prof. Wang Feng of UC Irvine has written an important piece about demographics and China's medium term economic growth.  He argues that Taiwan's recent history provides a preview of China's likely future dynamics.  He stresses that Taiwan's urbanites choose to be consumers rather than savers.

Permit me to approach Prof. Feng's core question from the standpoint of economics.  First, here is a recent NBER paper using state level data arguing that aging lowers economic growth.

Consider an alternative narrative.  Population aging has a predictable component and thus this creates investment opportunities.  Chinese factories that anticipate that labor will grow more expensive as the effective labor supply in the nation contracts will have an incentive to substitute to robots and mechanization. This labor to capital transition could facilitate investment and modernization and accelerate growth.

China is wrestling with the challenge of what jobs there are for its low skilled population. Home service sector nurses will be in huge demand to take care of the aging population.  

Given that the nation has good airports and bullet trains, China's  current "ghost cities" could be transitioned to serving senior citizens. These individuals do not work and thus do not need access to "productive places". They do want access to their friends, family and good health care. If the CCP could figure out how to deliver such services in the current "ghost cities" then the seniors could play a key role in stabilizing the housing market as they would sell their apartments in Shanghai to young productive workers and move to these "senior cities" (think of Miami as a retirement place for NYC residents).   Such migration of seniors to these cities, would reduce the worry that developers will declare bankruptcy and there will be a real estate based asset price collapse (and thus a collateral crisis) in China.

Has the NY Times made it impossible to cut and paste from its articles?  I wanted to grab a paragraph from Friedman's piece today but I'm not able to.  I ran a test and I can cut and paste from the NY Post (a close substitute).  In his piece, Friedman makes an interesting claim. He posits that President Trump will trigger a rebellion by the young in both the USA and Europe if he doesn't stick to vague terms of the COP 21 Carbon Mitigation treaty.  Is this true?  Will this issue be the "Vietnam" was for the Baby Boomers back in the late 1960s?

Years ago, I read a piece arguing that the Internet was slowing down progress in theoretical physics.  If young physicists didn't have access to the Internet, they wouldn't know what the leaders were working on.  Such "ignorance" would mean that the young would pursue their own independent thoughts and wouldn't herd.  The Internet allows easy diffusion of what the Nobel Laureates are working on. It is natural for young people to seek out the favor of the "Great Gods" of the discipline and thus the Internet reduces the number of "independent draws" that researchers take from the distribution of new ideas. This herding means that physicists may follow each other down the wrong dark alley and not make discoveries. If such individuals had been independently pursuing their own agendas, then a discovery would have been more likely to take place.

I tell this long story because I recalled it as I read this NY Times piece about the "dangers of Facebook".  While the author doesn't explicitly say it, she is implicitly saying that Facebook induces  a positive correlation between voters' "information sets".  A common piece of "new news" (a shock) can induce correlations in voting behavior.  Given the extent of Facebook's network (which we had viewed as a good thing), a false story can have large implications.

In the past, social network theorists have talked about the "dark side" of social capital and this includes the KKK and terrorist attacks and group loyalty.  Facebook introduces a new case in which it is very cheap per influenced person to spread a rumor (especially when people want to believe the rumor).  Does FB make the world a "better place" if its network can be used to accelerate false rumors through its system?    Can communication costs be too low in a democracy?

My Columbia Colleague Dan O'Flaherty argued that you should have to pay 1 penny to send an email. This would help with spam!

Will people start to boycott FB due to their concern?  Could a rival platform with less "mis-information" emerge?  What is "mis-information"?  Who will decide what is the truth? Will FB have a truth commission? Will it hire George Orwell's descendants to help it judge what is what?

Does the Zuck face a challenge of bad apples driving out "good apples" in this market?  Does a market designer have an incentive fix to solve this supply problem?  This is a supply problem because people are strategically supplying stories to Facebook anticipating that there is a demand for them.

Just as Microsoft's AI quickly learned to "talk dirty",  will there be a "race to the bottom"?  Will FB's stock price rise or fall due to this mis-information campaign?  What is the Zuck maximizing? If he is a profit maximizer, should he change anything?

As the Director of Undergraduate Studies at USC Econ, I am trying to get to know more of our students.  Last night, I took five smart young people to dinner.  The  group consisted of three first year students, a senior and a junior transfer.  It turns out that not all Economics majors are the same.  One is actively engaged with the rock climbing club while another enjoys yoga and a third is into ping pong while a fourth plays music and debates and the fifth plays tennis.  Each of them had some advice for me concerning what USC Econ can do to offer them an even better major.  They want more internship possibilities and more career planning advice. Some want more research experience.  We did have one spirited debate last night.  One student embraced Senator Sanders' agenda of raising the minimum wage and other well intended policies. I countered that this well intended agenda would transform our economy into a larger version of France and that it is important to "be careful what you wish for".   It interests me that this student (who has attended 4 years of USC Econ lectures on economics), could so firmly hold this worldview.

I argued at dinner that in our Internet world that the assumptions embedded in the perfect competition model of labor markets  now hold true more than at any time in history. Workers have close to complete information about what it is like to work at different firms and in all medium to large cities they have thousands of potential employers to work for.  There is an active labor market searching for skilled and/or dedicated people.

I would hope that any graduate of USC Economics knows at least three things;  1. the power of incentives in guiding human behavior,  2. the importance of allowing the price system to allocate scarce resources,  3. the skill to use statistics and econometrics to rigorously test hypotheses.    These three pieces of knowledge are likely to be both necessary and sufficient for later life success.