Thiel on work

Q. What’s your concept of what it will mean to have lived your life well?
 

A. People always say you should live every day as though it's your last. I sort of have taken the opposite tack, where I think you should live every day as though it's going to go on forever. You should treat people like you're going to see them again in the future. You should start working on projects that may take a long time. And so I want to live every day as though it's going to go on forever.
 

From an interview with Peter Thiel on work.

Reminds me a bit of Bezos, who always thought that one advantage that Amazon had over competitors was the patience and endurance for a longer game. Think of the fable of the tortoise and the hare not as being about slow and steady wins the race but that if your competitor wants to run a mile, you should choose to run a marathon, and if they decide to run the marathon, you should make the race an ultra marathon. It helps, of course, if you control enough of the company that the stock market or Board can't shorten the distance on you (one of Twitter's chief challenges now is that they need to put some long-term plans in action, but the stock market may be tightening the leash). When I say distance, of course I largely mean time.

Thief often says not to over-rotate on status but instead on substance. Seems highly intertwined with a longer-term time orientation, perhaps it should be thought of largely as a supporting clause, status typically being short-lived and substance presumably being more durable.

The marriage squeeze is hitting China and India

Fascinating read on how the marriage squeeze, already established in countries like Japan and South Korea, has finally hit a third of the world's population, namely that of China and India. It's not just that sex selection at birth has led to a large gender imbalance in the population. Other factors exacerbate the problem.

Countries with normal sex ratios can experience a marriage squeeze if their fertility rates are falling fast. Fertility is important, because men tend to marry women a few years younger than themselves. In India the average age of marriage for men is 26; for women, it is 22. This means that when a country’s fertility is falling, the cohort of women in their early 20s will be slightly smaller (or will be rising more slowly) than the cohort of men they are most likely to marry—those in their late 20s (this is because a few years will have gone by and the falling fertility rate will have reduced the numbers of those born later). This may not sound like a big deal. But in fact between 2000 and 2010 the number of Indian men aged 25-29 rose by 9.2m. The number of Indian women aged 20-24 (their most likely partners) rose by only 7.6m.
 

Even if India’s sex ratio at birth were to return to normal and stay there, by 2050 the country would still have 30% more single men hoping to marry than single women. This is explained by a rapid decline in India’s fertility rate. But in China, where fertility has been low for years, the more gradual decline in fertility still means there will be 30% more single men than women in 2055, though the distortion declines after that. A decline in fertility usually benefits developing countries by providing a “demographic dividend” (a bulge of working-age adults compared with the numbers of dependent children or grandparents). But it does have the drawback of amplifying the marriage squeeze.
 

The problem is further accentuated by a so-called “queuing effect”. The length of a queue is determined by how many people join it, how many leave, and how long queuers are prepared to wait. In the same way, marriage numbers are a result of how many people reach marriageable age (the joiners); how many get married (the leavers) and how long people are willing to wait. In India and China, marriage remains the norm, so men keep trying to tie the knot for years.
 

Hence, a marriage queue in India and China builds up. At stage one, a cohort of women reaches marriageable age (say, 20-24); they marry among the cohort of men aged 25-29. But there are slightly more men than women, so some members of the male cohort remain on the shelf. Later, two new cohorts reach marriageable age. This time, the men left over from the previous round (who are now in their early thirties) are still looking for wives and compete with the cohort of younger men. The women choose husbands from among this larger group. So after the second round even more men are left on the shelf. And so on. A backlog of unmarried men starts to pile up. Just as you need only a small imbalance between the number of people joining a queue and the number leaving it to produce a long, slow-moving line, so in marriage, a small difference in the adult sex ratio can produce huge numbers of bachelors.
 

One can't help but conclude that India and China must prepare for an end to universal marriage. Is that so bad? Could both countries start to shift their policies to prepare for a post-universal-marriage society? Are there any countries with economic policies that can cope with declining birth rates?

Perhaps, but it's difficult to imagine a world in which the consequences are anything but a net negative.

There may be positive side effects: a shortage of brides in India is causing dowry prices to fall in some areas, for instance. Overall, though, the impact is likely to be negative. A study by Lena Edlund of Columbia University and others found that in 1988-2004, a one-point rise in the sex ratio in China raised rates of violent crime and theft by six to seven points. The abduction of women for sale as brides is becoming more common. The imbalance is fuelling demand for prostitution.

Minority Report for trolls

A new paper suggests that it might be possible to identify potential trolls before they do their worst. Researchers at Stanford and Cornell have pulled out patterns of behaviour exhibited by the approximately one in 40 users of three news sites—CNN, Breitbart and IGN—who were subsequently banned for abuse. These include trolls’ unwillingness to mould their conversation to the slang of an online community; their propensity to swear; and the volume of contributions they make to a debate. Making an algorithm of these patterns, the researchers believe they can be 80% confident of identifying those likely to cause trouble within five posts online.
 

From The Economist. I wonder what percentage of online trolls are men. It must be a majority. Men are terrible.

Now we just need Tom Cruise and a team of soldiers crashing in through people's windows before they even turn into trolls: “Sir, we're arresting you for the future abusive tweet directed at Sarah Marks that was to take place later this evening at 11:09pm.”

I need me some precogs to help me pre-block people on Twitter before they troll me.

Altruistic punishment

Steve Randy Waldman on the rioting in Baltimore.

Politically motivated riots are a form of altruistic punishment. Look it up. Altruistic punishment is a “puzzle” to the sort of economist who thinks of homo economicus maximizing her utility, and a no-brainer to the game theorist who understands humans could never have survived if we actually were the kind of creature who succumbed to every prisoners’ dilemma. Altruistic punishment is behavior that imposes costs on third parties with no benefit to the punisher, often even at great cost to the punisher. To the idiot economist, it is a lose/lose situation, such a puzzle. For the record, I’m a fan of the phenomenon.
 

Does that mean I’m a fan of these riots, that I condone the burning of my own hometown? Fuck you and your tendentious entrapment games and Manichean choices, your my-team “ridiculing” of people you can claim support destruction. Altruistic punishment is essential to human affairs but it is hard. It is mixed, it is complicated, it is shades of gray. It is punishment first and foremost, and punishment hurts people, that’s its point. Altruistic punishment hurts the punisher too, that’s why it’s “altruistic”. It can’t be evaluated from the perspective of winners or losers within a direct and local context. It is a form of prosocial sacrifice, like fighting and dying in a war. If you write to say “they are hurting their own communities more than anyone” you are missing the point. Altruistic punishment is not a pissing match over who loses most. The punisher disclaims personal gain, accepts loss, sometimes great loss, in the name of a perceived good or in wrathful condemnation of a perceived evil.
 

So you want to evaluate riots, then, as tactic. Surely these rioters can’t imagine that this — this — will reduce the severity of policing, bring jobs to the inner city, diminish the carceral state. By the way, have I told you, fuck you? Altruistic punishment is generally not tactical. Altruistic punishment is emotional. The altruism in altruistic punishment is not pure, not saintly. The soldier takes pleasure even as he takes wounds exacting revenge for a fallen comrade on another human who was not, as an individual, his friend’s killer. The looter takes a pair of shoes, because why the fuck not? If you perceive the essence of the riots in the shoes you are an idiot. Altrustic punishment is not tactical, it is emotional, and it is sometimes but not always functional. It functions, sometimes, to change expectations about what is possible or desirable or acceptable. In economist words, people’s propensity for altruistic punishment changes the expected payoffs associated with nonaltruistic behavior by those punished directly and, more importantly, by third parties who observe the unpleasantness. Changes in expected payoffs change the equilibria that ultimately prevail, in ways which may be beneficial for some groups or for “society as a whole”, however you define the welfare of that entity. Of course, there are no guarantees. Changes in expected payoffs can alter equilibria in undesirable directions as well. Drones anybody? This is a risky business.
 

Economists, game theorists, and psychologists come up with some of the most elegant names for various phenomena. I'd never heard of altruistic punishment, but I'll never forget it now. That is, sometimes when you bear the costs of the world unjustly, it can feel like the only way to set things right is to force a more even distribution of the costs across the population.

Housing and wealth inequality

In the last 50 years, the two societies have become even more unequal. Although a relatively small black middle class has been permitted to integrate itself into mainstream America, those left behind are more segregated now than they were in 1968.
 

When the Kerner Commission blamed “white society” and “white institutions,” it employed euphemisms to avoid naming the culprits everyone knew at the time. It was not a vague white society that created ghettos but government—federal, state, and local—that employed explicitly racial laws, policies, and regulations to ensure that black Americans would live impoverished, and separately from whites. Baltimore’s ghetto was not created by private discrimination, income differences, personal preferences, or demographic trends, but by purposeful action of government in violation of the Fifth, Thirteenth, and Fourteenth Amendments. These constitutional violations have never been remedied, and we are paying the price in the violence we saw this week.
 

...
 

Nationwide, black family incomes are now about 60 percent of white family incomes, but black household wealth is only about 5 percent of white household wealth. In Baltimore and elsewhere, the distressed condition of African American working- and lower-middle-class families is almost entirely attributable to federal policy that prohibited black families from accumulating housing equity during the suburban boom that moved white families into single-family homes from the mid-1930s to the mid-1960s—and thus from bequeathing that wealth to their children and grandchildren, as white suburbanites have done.
 

A must read on all the policies that have entrenched and amplified segregation in Baltimore. If we learned nothing from The Wire we should have learned that the forces aligned against the black population in Baltimore was structural, built in to our institutions, and not just the work of a few pernicious people. The whole environment is hostile, toxic.

Baltimore, not at all uniquely, has experienced a century of public policy designed, consciously so, to segregate and impoverish its black population. A legacy of these policies is the rioting we have seen in Baltimore. Whether after the 1967 wave of riots that led to the Kerner Commission report, after the 1992 Los Angeles riot that followed the acquittal of police officers who beat Rodney King, or after the recent wave of confrontations and vandalism following police killings of black men, community leaders typically say, properly, that violence isn’t the answer and that after peace is restored, we can deal with the underlying problems. We never do so.
 

Certainly, African American citizens of Baltimore were provoked by aggressive, hostile, even murderous policing, but Spiro Agnew had it right. Without suburban integration, something barely on today’s public policy agenda, ghetto conditions will persist, giving rise to aggressive policing and the riots that inevitably ensue. Like Ferguson before it, Baltimore will not be the last such conflagration the nation needlessly experiences.
 

This ties closely with a 2014 paper (PDF) from MIT grad student Matthew Rognlie that argues that what's responsible for the rise in wealth inequality is not, as Piketty argues, r - g, but instead the ability for the wealthy to capture outsized returns on housing and to pass that wealth on to future generations through that real estate. ¹

1. Rognlie's paper, fascinatingly, began as a comment on economics blog Marginal Revolution on a post about Krugman's review of Piketty (search for “Rognlie” on that post to see his two comments that launched, if not a revolution, at least an intellectual salvo). Here is a great profile of Rognlie and the story of how his comment turned into a paper that was the talk of the economics world. ↩

At the heart of Rognlie and Piketty's debate is how easy it will be for capital to substitute for labor in the future. Today it is still difficult, and thus Rognlie's prediction that the marginal returns to capital is still sound. Until robots can replace humans in more tasks, that should hold. In that environment, our best bet to decrease wealth inequality is to fight NIMBY-ism, loosen development codes, and build more housing.