Urban Elite Capture and US Growth

Hsieh and Moretti have a new working paper identifying how land market rigidities and NIMBYist rent seeking (in both housing and labor markets...) have retarded growth:

The increase in spatial wage dispersion is driven at least in part by cities like New York, San Francisco and San Jose, which experienced some of the strongest growth in labor productivity over the last five decades (Moretti (2012)). These cities also adopted land use restrictions that significantly constrained the amount of new housing that can be built. As described by Glaeser (2014), since the 1960s coastal U.S. cities have gone through a property rights revolution which has significantly reduced the elasticity of housing supply: “In the 1960s, developers found it easy to do business in much of the country. In the past 25 years, construction has come to face enormous challenges from any local opposition. In some areas it feels as if every neighbor has veto rights over every project.” 

Misallocation arises because the constraints on housing supply in the most productive US cities effectively limit the number of workers who have access to such high productivity. Instead of increasing local employment, productivity growth in housing-constrained cities primarily pushes up housing prices and nominal wages. The resulting misallocation of workers lowers aggregate output and welfare of workers in all US cities. 

... 

We use data from 220 metropolitan areas in the US from 1964 to 2009 to perform two calculations. First, we quantify the effect of spatial misallocation. We find that most of the increased spatial dispersion in the marginal product of labor is due to the growing spatial dispersion in housing prices. In turn, the growing spatial dispersion of housing prices is largely driven by strict zoning laws in cities such as New York and the San Francisco Bay Area with strong productivity growth. We find that the increased spatial misallocation of labor due to housing supply constraints in cities with high productivity growth rates lowered aggregate growth by almost 50% between 1964 and 2009.

One of my favorite ways of summarizing what it's like to live in the Bay is that LinkedIn says there are 127,000 open jobs and Zillow says there 11,000 open units.

Weekend Links

1) Round up of recent causal evidence linking lead poisoning to violent crime (above figure shows Kevin Drum's rework of Billings and Schnepel Fig. 5; see here for more background)

2) 4000+ years of art from 40,000+ years ago.

3) "They say it’s highly likely that Chinese officials manipulated how deaths were reported in order to stay beneath the [fatality] ceilings."

4) John Coltrane and dynamic geometry.

5) Calling BS in the age of BD (a syllabus).

6) "Given the pace of technological advances, it is inevitable that realistic robots specifically designed for people’s sexual gratification will be developed in the not-too-distant future."

7)  “omg, we can now compute the Hermitian form on any irreducible representation, lol.”

8) The importance of school principals as middle managers.

9) "A liberal education that does not cause moments of acute discomfort is a failure."

10) Some species-level updating of priors, courtesy of Tyler Cowen.

11) "I'd like to close the chapter of my life that involves complaining about macroeconomics."

12) Kayfabe and the emotional construal of political reality.

13) "Homotopy type theory is a ~new branch of mathematics that combines aspects of several different fields in a surprising way."

14) Cryptocurrency bubbles and value as myth

The Lost Returns to Diversity Suppressed

How much have oppressive norms been hurting US growth?

In 1960, 94 percent of doctors and lawyers were white men. By 2010, the fraction was just 62 percent. Similar changes in other highly-skilled occupations have occurred throughout the U.S. economy during the last fifty years. Given that innate talent for these professions is unlikely to differ across groups, the occupational distribution in 1960 suggests that a substantial pool of innately talented black men, black women, and white women were not pursuing their comparative advantage. We examine the effect on aggregate productivity of the remarkable convergence in the occupational distribution between 1960 and 2010 through the prism of a Roy model. About one-quarter of growth in aggregate output per person over this period can be explained by the improved allocation of talent.

The paper is "The Allocation of Talent and U.S. Economic Growth" by Chang-Tai Hsieh and coauthors. 

Recent advances in entropies

The pace of advance in physics the past few decades has been staggering, and is often difficult to convey. This article in the Journal of Applied Physics by Bejan and Errera (ungated version here) does an excellent job of bridging the divide, and is a remarkable (...if sometimes a bit wild) translation of concepts from nonlinear and information physics into prose:

During the 20th century, statistical thermodynamics, quantum mechanics, information theory, and computer science have changed the scientific discourse on everything, from science itself to what life is. Instead of terms and images that did not require an advanced education, today it seems that legitimacy on this topic comes from speaking a language of disorder, uncertainty, scale, emergence, chaos, entropies of many types, and, above all, “information.” The fact that few seem to understand this kind of talk is going unnoticed, obviously, because the world does not speak jargon. 

This does not have to continue this way. In this article, we go against this movement and draw attention to a simple truth: words have meaning. We review the key words of the  discourse and start with the observation that information is not knowledge. 

“Every professor…one day discovers to his great surprise that the elements of his teaching which stay with his students are not the things which were “in the program” but those other things he has communicated unknowingly to his best students.

(Jean) Jaure`s said it well: One does not teach what one knows, but what one is. The computer knows many things, it can even know everything; but it is not. It is incapable of forming minds since it has no ends to offer them. But it is quite capable of reducing minds to an official conformity.” 

The computer “is not” because it is nothing more than an extension of the human who uses it to move (to live) more easily. It is one artifact among very many. On the other hand, you “are,” with or without that artifact. With what you are, you make decisions (purposeful choices and changes), and as a consequence you and your group move (live) more easily and with longer lasting power. 

Those whose mother language is not English have to learn English, and along the way they acquire the habit of checking the dictionary. We did this ourselves, as students and now while writing this article. 

~

Weekend Links

1) “You really start losing the startup feel when you have thousands of people doing physical labor.”

2) Human behavioral complexity peaks at age 25.

3) "I followed Duckpenisgate with particular trepidation, since I was one of the co-investigators on the maligned study."

4) Bayesian evidence on US government spending multipliers.

5) An anti-essentialist view of Silicon Valley.

6) Winners of NSF's 2017 Vizzies

7) FT on the other other Green Revolution

8) Interacted instruments have their own parallel trends problem.

9) Chris Blattman's summary slides from his Order and Violence class

10) Introducing the synestia, "a huge, spinning, donut-shaped mass of hot, vaporized rock, formed as planet-sized objects smash into each other."

11) On the optimal level of existential terror.

12) Sand scarcity rents continue to rise.

13) "Neoliberalism: Mend It, Don't End It"

14) Is truncating the y-axis dishonest?

Free energy sources in the very long run

Judson - 2017 - The energy expansions of evolution

The history of the life–Earth system can be divided into five ‘energetic’ epochs, each featuring the evolution of life forms that can exploit a new source of energy. These sources are: geochemical energy, sunlight, oxygen, flesh and fire. The first two were present at the start, but oxygen, flesh and fire are all consequences of evolutionary events. Since no category of energy source has disappeared, this has, over time, resulted in an expanding realm of the sources of energy available to living organisms and a concomitant increase in the diversity and complexity of ecosystems. These energy expansions have also mediated the transformation of key aspects of the planetary environment, which have in turn mediated the future course of evolutionary change. Using energy as a lens thus illuminates patterns in the entwined histories of life and Earth, and may also provide a framework for considering the potential trajectories of life–planet systems elsewhere. 

Free energy is a universal requirement for life. It drives mechanical motion and chemical reactions—which in biology can change a cell or an organism. Over the course of Earth history, the harnessing of free energy by organisms has had a dramatic impact on the planetary environment. Yet the variety of free-energy sources available to living organisms has expanded over time. These expansions are consequences of events in the evolution of life, and they have mediated the transformation of the planet from an anoxic world that could support only microbial life, to one that boasts the rich geology and diversity of life present today. Here, I review these energy expansions, discuss how they map onto the biological and geological development of Earth, and consider what this could mean for the trajectories of life–planet systems elsewhere.

Worth reading in its entirety for the log-timescale perspective on energy budgets alone, but also as a fantastic piece of science writing and communication. "Of all the planets and moons in the Solar System, Earth is the only one to have fire..."