#1, Eh?

Photo of the Day

My brother was recently admitted to the Vancouver Film School, so he’s moving to Canada. I never realized how highly the city is regarded. It’s been ranked the #1 most liveable city by The Economist for five years in a row:

For the fifth straight year, Vancouver, British Columbia, Canada, bested 139 other cities worldwide in the ratings of “relative comfort,” based on five broad categories: infrastructure, education, safety, culture and environment and health care.

Sadly, not a single U.S. city made the top 10. Anyways, I’m excited to have a good excuse to go visit.

Tyler Cowen and The Great Stagnation

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I’ve long been a fan of Tyler Cowen’s blog, Marginal Revolution. It’s interesting, off-beat, and is a great source of lesser publicized news stories and research findings, with plenty of thoughtful commentary thrown in. I had been meaning to read Tyler’s recent book, ‘The Great Stagnation’, for a while now. Then the other day, while sitting in an airport, I caught this Business Week article about Tyler, titled ‘Tyler Cowen, America’s Hottest Economist.’ It’s a fascinating article about what makes him one of the more quirky and unique economists, and made me much more eager to read some of his published work.

‘The Great Stagnation’ is about why our economic growth trend has all but come to a standstill, and why that won’t change without some significant disruptive technological breakthroughs. It turns out that it was released exclusively as an e-book (although as a result of its success, a paperback copy is set to be released this Summer). From the Business Week article:

Cowen thought it was too long for a magazine article and too short for a book, so he suggested that the publisher offer it only as an e-book. The work is priced on Amazon.com (AMZN) at $3.99 for 15,000 words. Cowen gets the sense that Dutton humored him, both on the format and the content.

I have to admit, I’ve been hesitant to make the jump to e-books. I like reading real books. I’m not sure why. Probably just habit, and maybe a little stubbornness. So I don’t have a Kindle or iPad. But this release has been wildly successful, and being short and only $3.99, it seemed like a reasonable e-book to begin with. So I borrowed my Dad’s iPad, and gave it a shot. And it was a great reading experience. I’m thinking it might be time for me to ditch my old hard-copy book habits.

But much more importantly, ‘The Great Stagnation’ is a very thought provoking book. It’s clear, concise, and is built on very simple arguments supported by lots of data presented from many perspectives. At 15,000 words, it’s a small time investment, and I strongly recommend reading it. But here’s a brief synopsis of Tyler’s thesis:

  • On Economic Growth: Our economic growth from the Industrial Revolution through the early 1970s was fueled by a combination of significant technological breakthroughs and what Tyler calls the “low hanging fruit” of economic growth. This “low hanging fruit” includes unsettled frontier land, opportunities to raise education standards so that smart kids have the tools and resources to invent new things, and the dissemination of new types of technology into our daily lives. He argues that the majority of this “low hanging fruit” is gone, and that regardless of what our politicians do, slow economic growth is all but certain until there are new breakthroughs that can fuel new growth. This is why real income growth has been essentially stagnant since the 1970s. He also writes at length about why our GDP growth statistics are likely distorted, and why it’s very likely that our overall economy has been growing more slowly than we previously thought.
  • On the Financial Crisis: Tyler’s quick to point out that there’s no use in trying to focus the blame for the recent financial crisis on bad policies, unethical behavior, or belligerent risk tasking. We all thought the economy was growing faster than it was, we all planned as though the long-term trend was going to continue, and then it didn’t. Bad decisions were made, policies could have been better, but as long as the majority of society was acting as through we could expect GDP growth of 3% per year, a bubble was inevitable.
  • On Politics: Tyler quickly dismisses both Democratic and Republican policy makers, arguing that neither side has any solutions for economic recovery that should be taken seriously. Tax cuts with not stimulate growth. Marginal government spending will not stimulate growth. New breakthrough technologies will stimulate growth, and the best thing our politicians can do is facilitate the creation of an environment where this can happen more easily. And the best thing everyone else can do is to help make science a more prestigious career.
  • On the Internet: The internet is the one new technology that has changed the way we live our lives and conduct business since the 1970s. But it’s fundamentally different from prior innovations in that it hasn’t generated a significant amount of new revenue sources to fuel meaningful economic growth. Sure quite a bit of business is now done online, but this was much more a shift of business than a generation of new business. There are certainly exceptions, and there are economic winners and losers as a result of the internet, but the fact of the matter is that inventions such as the car created new industries that employed millions of people and put significant new resources to work. The same can’t be said for the internet. This doesn’t make the internet less important, but its benefits, such as access to information and inexpensive entertainment, are just realized in a different way. A way that isn’t well captured by our standard economic indicators.

On that last point, the book doesn’t once mention utility*, and I think it could have been useful to frame some of the positive benefits of the internet and related technologies in that context. Maybe real income growth isn’t as important if we have real utility growth. I realize I’m on shaky ground here, in that utility is nearly impossible to measure, and as a result it could never serve as a meaningful and objective economic metric. But that doesn’t make it unimportant.

All in all, the book was full of fresh ideas and new perspectives. Again, it’s worth a read.

Kelly Evans of the Wall Street Journal writes, “in terms of framing the dialogue Tyler Cowen may very well turn out to be this decade’s Thomas Friedman.” I would have to agree.

*Since it’s an e-book, I was able to double check by searching. The book does contain the phrase “low hanging fruit” fifty five times. Trying to coin a new phrase that sticks by repeating it over and over again in your own published work is very Tom Friedmanesque.

Flying Lessons from Mr. Fallows

I like James Fallows because he teaches me interesting things about China, beer, flying, and politics. Things I probably wouldn’t learn otherwise. Today Jim* wrote a fascinating post about what we’ve learned about the Air France crash from the recent black box recovery, what new questions it raises, and why most people have no clue what “stalling” means in the context of flying. Here’s an excerpt about what it means when a plane “stalls”:

3) The plane “stalled,” but not in the way you think. The great impediment to accurate coverage of many airplane crashes involves the world “stall.” Its normal meaning, to 99 percent of the reading public, is that an engine has stopped or failed. Engines do sometimes fail on airplanes, and in some cases can even stall in the normal sense. But the “stalls” and “stall warning” signals mentioned in the blackbox report mean something entirely different.

An “aerodynamic stall,” which maybe is the term we should always use, involves the angle of a wing as it moves through the air. The term of art here is “angle of attack,” and it measures how sharply the wing’s edge is angled up into the oncoming wind. Bear with me for some illustrations, from this excellent explanatory site. This one shows what angle of attack means.

airFlow.jpg

The next sequence shows what a “stall” means, in aerodynamic terms. In the top illustration, the wing is almost horizontal to the oncoming wind, with a very low angle of attack. Let’s say it’s zero degrees. It produces no lift.

In the middle drawing, the angle of attack is higher — let’s call it eight degrees. At this angle, wind flows over and under the wing in a way that produces more lift than at a lower angle.

But then look at the third illustration:
angleOfAttack.jpg

There the angle of attack is higher still — let’s say, 15 degrees. But instead of producing more lift, it produces much less. The angle the wind would have to follow across the wing is too steep. Instead the airflow is disrupted and the wing (not the engine) “stalls.”

The transition from a high angle of attack, to a too-high angle, can be fairly abrupt. You pull back on the controls, raising the nose of the plane and increasing the angle of attack. You get more lift, and more lift — and then suddenly you get dramatically less. The wings start to shudder, as they are approaching a stall and losing lift; and then, in a fully developed stall, there’s a “break” as the plane stops flying and the nose drops to point straight down to the ground. There are lots of variations involving type of plane, whether you’re in a turn, and other factors. But the main point is, an airplane “stalls” not because its engines fail but because the pilots have increased the wings’ angle of attack too much. This also means that the plane’s airspeed is too low.

So when you read frequent references in the Air France report to “stall warnings” etc, they don’t mean that there was an engine problem of any sort.* They mean that, for whatever reason, all three members of a professional flight crew responded to warnings that the plane was flying too slowly/had too high an angle of attack — by deciding to pull back on the controls. Which leads to:

4) This report raises a new question. The new info from the black box concerns, among other things, the “control inputs” the pilots were applying during the last stages of the flight. What they were doing with the throttle to control power, with the ailerons (to roll right or left), with the rudder (to yaw the nose from side to side), and with the elevator (to pitch the nose up or down). Without the black box there would be no way to know those things for sure.

And the main puzzle, as several of the initial stories point out, is why a team of experienced pilots would kept pulling back on the controls, to increase the nose-up pitch, when the stall warnings were going off. This is a puzzle because being trained to do exactly the opposite is practically the foundation of learn-to-fly courses. If a plane is losing speed and threatening to stall, you recover by pointing the nose sharply down and adding power (plus other things). This reduces the angle of attack, builds air speed, and allows the wings to start providing lift once again.

Every pilot has done this in practice time and again through his or her flying career. “Stall recovery” drills are part of every basic flying curriculum, every recurrent competency drill, every bit of familiarization with a new airplane. I had not flown an airplane for several months because of my recent stay in China. So when I went out this past weekend for a recurrent-training flight, the instructor put me through a series of stall-recovery drills — exactly as I expected him to do.

Why this didn’t happen in the Air France cockpit is the next stage of the mystery to explain. There is more to say about this tragedy at some point — including the role of the pitot tubes, what auto pilots can and can’t do, and similarities to other airline disasters — but that is what I have time for now. And, of course, sympathies to all affected by the tragedy.

I’ve been stereotypically misinterpreting this for years (by imagining engines stopping, followed by a drastic nose dive). Now I won’t.

*I refer to James as Jim because I once sent him an email, and he responded and signed it “Jim”. It’s extremely impressive to me that someone with tens of thousands of blog subscribers, who probably receives dozens of emails from strangers each day, took the time to personally respond to my email (which didn’t even contain a question). Jim’s a classy guy.

 

This Seems Sensible

Let’s make dead people pay for Medicare. Kevin Drum via Tyler Cowen:

So here’s an idea: why not reform Medicare by means testing it? Conservatives should love this idea.

Here’s how it works. Basically, we leave Medicare alone. Oh, we can still go ahead with some of the obvious reforms. Comparative effectiveness research is a no-brainer for anyone who’s not part of the Republican leadership.

….

Medicare stays roughly the same, but every time you receive medical care you also get a bill. You don’t have to pay it, though. It’s just there for accounting purposes. When you die, the bill gets paid out of your estate. If your estate is small or nonexistent, you’ve gotten lots of free medical care. If it’s large, you’ll pay for it all. If you’re somewhere in between, you’ll end up paying for part of the care you’ve received.

Obviously this gives people incentives to spend all their money before they die. That’s fine. I suspect they wouldn’t end up spending as much as you’d think. What it does mean, though, is that Medicare has first claim on their estate, not their kids. But that seems fair, doesn’t it?

Why not?