Malthus was right, but it is real estate, not food, that is limiting?

by philg

From my 2008 post about A Farewell to Alms:

[economics professor Gregory] Clark starts with a defense of Malthus. In most societies at most times in human history, Malthus was right. The population expanded until everyone was living at a subsistence level. Given an improvement in technology or health care the long-term result was not that people on average had an improved standard of living, but rather a population of increased size living at an even lower material standard. You had to be robust in filthy Europe to survive infections, but even an underfed weakling was relatively safe from disease in hygienic Japan and China. The consequence was that China and Japan were more densely populated and strikingly poor by European standards right up to the Industrial Revolution.

Population growth combined with personal income growth is an anomaly, according to Malthus and Clark. The U.S. population has been growing steadily in recent years and our average inhabitant is no better educated than before. Politicians stand up and angrily ask why average personal income hasn’t grown. The real question is why average personal income hasn’t shrunk.

The past 100 years hasn’t fit Malthus well, perhaps due to the Green Revolution and tapping into fossil fuels on an industrial scale for the first time. But maybe Malthus is being proved right by the real estate market?

As noted previously here, a friend said that his daughter was “making a ton of money” at Goldman. It then transpired that the young woman couldn’t afford an apartment on her own, even spending half of her after-tax income. The “ton of money” was entirely captured by Manhattan landlords, reducing the young lady to the same standard of living as an entry-level office worker in Manhattan circa 1960.

“Affordable Housing Crisis Spreads Throughout World” (WSJ, April 2, 2019):

Across 32 major cities around the world, real home prices on average grew 24% over the last five years, while average real income grew by only 8% over the same period, according to Knight Frank, a London-based real-estate consulting firm. Economists say it is striking that affordability has worsened even during a period of global prosperity over the last six years. But income growth has been unable to keep pace with a rapid run-up in home prices.

Americans often blame local policies, e.g., zoning regulations, for the inability of today’s median-income urban residents (among a population of 330 million) to afford what would have been considered a normal-sized apartment back in 1970 (U.S. population 205 million). But the WSJ article shows that the trend is consistent almost everywhere in the world. Tokyo is a notable exception, which the authors attribute to a free market in housing (why not to the lack of Malthusian population growth? Japan has roughly the same number people today compared to 30 years ago).

Readers: What do you think? In 1910, Haber and Bosch came up with a clever trick for a dramatic boost in agricultural production. So it looked like Malthus was wrong. But there haven’t been any clever tricks for boosting the production of housing, so we’ll have 8 well-fed urbanites sharing a 2BR apartment originally built to accommodate 1-2 people. Can we rely on robots to get us out of this? Human population can expand exponentially while maintaining a high standard of living because solar-powered robots will be able to build residential skyscrapers at ridiculously low prices?

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It is madness to want to leave the E.U., but it doesn’t make sense to join

by philg

“The United Kingdom Has Gone Mad; The problem with holding out for a perfect Brexit plan is that you can’t fix stupid.” (nytimes) is by Thomas Friedman, a guy whom nobody can accuse of being stupid (he married the daughter of a billionaire and lives (large) in Maryland, an awesome jurisdiction for divorce litigants who can claim to be the less wealthy spouse).

What I can’t figure out how it is logically consistent for Americans to criticize the Brits for wanting to be independent and fully sovereign. We spend way more money on our military than would be necessary to prevent an invasion from Canada or Mexico. Why are we spending that money if not to preserve full sovereignty and not have to listen to anyone else in the world?

From a strictly dollars and cents point of view, if being part of the E.U. is so great,why doesn’t the U.S. seek to join? In our age of telecommunications, container shipping, and air travel (preferably by Airbus!), geography should not be a barrier.

If we want to say that anyone in the UK who opposes EU membership is “stupid”, as the giant brains of the NY Times have concluded, shouldn’t we also be trying to become part of the EU ourselves?

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Party of Science scores lower than Party of Stupid

by philg

“What Americans Know About Science” (Pew Research) is subtitled “Science knowledge levels remain strongly tied to education; Republicans and Democrats are about equally knowledgeable,” but it turns out that “equal” translates to “Republicans know more”:

Republicans and independents who lean to the Republican Party average seven correct answers, while Democrats and independents who lean to the Democratic Party average 6.6.

A difference of 0.4 doesn’t sound huge, right? But the difference between Americans with postgraduate degrees and bachelor’s degrees was only 0.6. Being a Republican was worth about the same as two years of graduate school.

Considering that Democrats have branded themselves the “Party of Science” while decrying the purported anti-science idiocy of Republicans, these data are interesting.

Even more interesting is why we continue to have faith in our unique capacity to solve the world’s science and engineering problems. When a politician proposes a reduction in the growth of government spending on grants to science labs (not an actual cut, of course, though a lower growth rate will be characterized by “scientists” as a “cut”), the reaction includes statements that this will mean the end of scientific progress. This necessarily assumes that scientific discoveries can be made only in the U.S.

Global warming? Only Americans can help! This has the same logical basis as Tom Cruise explaining that a car accident calls for a Scientologist. It won’t be Chinese and German engineers who come up with improved solar cells, wind turbines, batteries, and CO2 vacuums. (After all, the fundamentals were all developed in the U.S. It was American Edmond Becquerel, working in a Paris, Texas lab, who discovered the photovoltaic effect; American Albert Einstein later explained the photoelectric effect while working in Zurich, Kansas.)

Who are these Americans ready to help solve the world’s toughest problems? Fully 39 percent of us know that a “base” is the opposite of an “acid”. Plainly we are going to be experts on the carbon cycle and atmospheric CO2 washing out into carbonic acid. Americans can do even better when adjusting for the sun’s influence on climate, since 63 percent of us know that the tilt of the Earth is responsible for the seasons (survey methodology).

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Fatherhood of a child born after divorce in Massachusetts

by philg

A friend’s son got a call the other day from the woman who’d divorced him a year earlier (wedding planning and uncontested divorce legal proceedings combined lasted far longer than the marriage itself). She had found a higher-income sex partner at some point during the brief marriage and it seems that she’d given birth to a child 13 months after a divorce agreement was approved by a judge (this kind of divorce-by-agreement rather than actual litigation happens about 17 percent of time in the county that we sampled within Massachusetts (statistical study for Middlesex)).

The divorce didn’t become final until 120 days following the approval by the judge and Massachusetts presumes that a child born within 300 days of the technical end of a marriage is the responsibility of the ex-husband. A birth certificate application with the new husband’s name on it as the father had been rejected (tough to believe that all of these town and county record-keeping systems are linked!).

The new mom wanted her discarded former husband to sign an Affidavit of Nonpaternity. The situation turns out to be sufficiently common that there is a standard form.

(It wouldn’t have made great financial sense for her to try to collect 23 years of child support from this guy given his low-ish income and the fact that a DNA test might get him off the hook, but marrying the lover/biological father and collecting from the ex-husband can work; see “Post-Divorce Litigation” for a link to a NY Times article about an example situation:

“I pay child support to a biologically intact family,” Mike told me, his voice cracking with incredulity. “A father and mother, married, who live with their own child. And I pay support for that child. How ridiculous is that?”

)

Related:

  • Q&A on this topic with answer from lawyer: “You, as the bio-dad, have no rights if legally the child has another father. … If his rights are not terminated, you can file for child support and he must pay it.”
  • discussion forum thread, in which a responder asks the new sex partner of the divorce plaintiff: “Just to toss this out there; are you 100% [sure] this is your child?” (also provides some insight into how long it may take to litigate a no-fault divorce in Massachusetts: “My GF and myself have been together for 4 years, and now have a baby together. However she is in the process of getting Divorced but its not final yet.”)
  • relevant statute

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Green New Deal will not cost as much as feared

by philg

It turns out that a powerful Vestas wind turbine can be purchased for $199 on Amazon.com.

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Should lottery winners be exempt from wealth tax?

by philg

“Elizabeth Warren to propose new ‘wealth tax’ on very rich Americans, economist says” (Washington Post):

Sen. Elizabeth Warren (D-Mass.) will propose a new annual “wealth tax” on Americans with more than $50 million in assets, according to an economist advising her on the plan, as Democratic leaders vie for increasingly aggressive solutions to the nation’s soaring wealth inequality.

Since announcing her presidential bid, Warren has pitched herself a champion of the working class against elites, arguing “billionaires and big corporations” have rigged the political and economic system to their advantage.

One billionaire who has been in the news lately is anonymous. She is the winner of $1.5 billion (pre-tax) in a government-run lottery (i.e., the same government that says it wants to fix the “problem” of wealth inequality will periodically create billionaires at random).

Should she have to pay Sachem Warren’s new wealth tax? It was a government-run lottery that made her rich. How is it reasonable to complain about her being richer than neighbors and impose a new tax to further trim her winnings?

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Gillette versus Dorco Shaving Test 4

by philg

After four weeks of shaving alternating sides of face with a Gillette Fusion 5 ProShield with FlexBall and a Dorco Pace 7, the Dorco was plainly doing a better job and also holding its edge better.

Blind test data: I told friends in Manhattan about my experiment, two days after a mixed Gillette/Dorco shave, and both husband and wife identified the right side of my face as cleaner. It was the Dorco side.

At roughly the two-week point, we conducted the following test:

  • back of neck, unshaven for three weeks
  • Gillette Fusion 5 ProShield with FlexBall on left side
  • Dorco Pace 7 on right side
  • neutral operator (she had never seen the Gillette ad)

Result: “The Dorco is much better. It gets all of the hair in one swipe. But maybe that is because it is new and the Gillette blade is old?”

In other words, the performance of the Dorco was so much better that she imagined it to be a test of a brand-new Dorco versus a weeks-old Gillette. (As noted above, the blades were of identical age and had performed an identical number of shaves, each on half of my face.)

Loosely related: Opinion from a Harry’s subscriber: The Dorco 6 (not 7) Korean blades and Harry’s Germany steel were comparable in shave quality.

From a man with a light beard (maybe an ancestor was a cousin to Elizabeth Warren’s great-grandparents?): The almost-free Dorco 4-blade system is far superior to the older Gillette system (pre-Fusion) that he had been loyally using.

From a woman: The unfortunately named Dorco Shai 3+3 (why not “bold” rather than “shai”?) system is far better than the Gillette Venus she had been using. The cartridge is truly massive! (Dorco makes some more conventional razors for women as well.)

Next project: Dorco Pace 6 Plus versus Dorco Pace 7 (Preliminary results: The trimmer blade on the Pace 6 Plus surprisingly does not result in more precision under the nose; the Pace 7 seems to feel and work better (I doubt my own sanity as I write this).)

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Mediocre U.S. average income makes it tough to reduce health care spending?

by philg

One thing that I learned during a month at Harvard Medical School is that health care spending is inversely correlated with income. The poorer people are, in other words, the more they cost for an insurance company (or the “plan sponsor”, such as an employer, behind the insurance company).

In some cases, of course the causation may go in the other direction, i.e., a person who has a chronic health problem can’t work as hard or as effectively and therefore earns less. But the consensus within the public health and insurance industry seems to be “lower income, therefore higher cost.”

Singapore is notable for low health care spending as a percentage of GDP (only 4.5 percent; compare to 18 percent for the U.S.) while simultaneously enjoying better outcomes, e.g., longer life expectancy. How much of that, though, could be attributed to Singapore simply having a higher-income population? The CIA shows that per-capita GDP, adjusted for purchasing power, in Singapore is $93,900 per person, 58 percent higher than the $59,500 for the U.S. (Singapore and the U.S. are close to each other in rankings of countries by income equality/inequality, so the median incomes should be similarly related).

Plainly this cannot explain most of our off-the-charts spending on health care. Canada and the big European countries spend much less, as a percentage of GDP, despite having lower per-capita income. But if we assume constant waste due to our more-or-less constant system design (fee-for-service, half government, patient doesn’t pay directly), the stagnant U.S. median income (FRED data) could perhaps explain some of why it is so tough for us to achieve incremental improvements.

The “U.S. population” is a moving target, especially due to immigration. Immigrants have a lower income than native-born Americans (see data below), but they also change the median age of the population, which is a big determinant of health care costs (older people are more expensive): “Without immigration since 1965, the U.S. today would have a median age of 41, not 38.” (Pew). Our incompetence at delivering health care may be masked to some extent by immigration, which has reduced median age. Also complicating matters is that immigrants may be less likely than average to have some chronic medical issues. A morbidly obese person, for example, might have trouble making it over the border.

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Virtual reality and augmented reality: the technologies of the future

by philg

Part of our Austin experience was visiting the virtual/augmented reality lab at Capital Factory. Folks there have decided that the best current VR hardware is the HTC Vive. They aren’t in love with the much-hyped Oculus, but have it available to demo.

We did a 3D drawing game, browsed around in Google Earth, and played a first-person space-themed shooting game with the Vive. With Oculus, I played Angry Birds.

The good news is that we didn’t get sick, even flying around in Google Earth. On the other hand, I would rather have just covered the walls with more TVs for a more immersive experience.

I asked the folks running the lab for their theory on why VR hasn’t caught on. They cited the cost, noting that a complete HTC Vive rig is about $600. Yet that’s nothing compared to what hardcore gamers spend.

Readers: What do you think? Is it fair to say that “VR/AR is the technology of the future, and always will be”?

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Generation Wealth

by philg

The movie Generation Wealth is currently streaming on Amazon. I loved the director’s previous The Queen of Versailles, so decided to give this one a try.

The movie is a mishmash of the director’s family history (retired parents and teenage children get a fair amount of screen time), musing regarding modern-day materialism, and interviews with people whose lives have been affected by parental or personal earnings.

One interesting character is Florian Homm, a fugitive from U.S. justice due allegations of fraud while running a hedge fund, resulting in investor losses of up to $200 million. He is back in his native Germany, which supposedly refuses to extradite its citizens (would that be true for an accused murderer or is it that they won’t extradite for a financial crime?). The filmmaker interviews Homm’s adult son and the son’s girlfriend for an all-around perspective.

Another interesting subject is a New Yorker who works on Wall Street. She refuses to consider the idea of marrying a lower-income man (a prudent policy in light of New York State’s winner-take-all family law) and explains that the pool of available men is thus quite small. At around age 40 she does find an old rich guy to marry and goes through exotic fertility treatments and the hiring of a surrogate. He eventually leaves her for a younger woman (i.e., the 70-year-old found a 30-year-old sex partner).

Kacey Jordan was featured as someone who went from minimum wage to high-paid porn star and then back to minimum wage. There was plastic surgery during this journey, which is another theme of the movie. Lauren Greenfield, the director, follows a bus driver “single mom” to Brazil for a life-changing investment in plastic surgery.

One interesting aspect is that the born-in-1966 Greenfield follows her classmates from a rich kids’ private high school into their adult lives.

The movie takes some swipes at Donald Trump and his supporters (they’re exposed as crass idiots!) and also takes a variety of standard 21st century feminist positions. Yet the filmmaker’s own life story contradicts the feminist complaints. Her college boyfriend-turned-husband is the person cited for maximum encouragement and facilitation of her career. He urges her not to quit in the early days when she’s discouraged and he takes care of an infant child while she travels to Asia on an assignment.

The central thesis is poorly supported. The film shows people today saying things about money-obsessed Americans that the film also shows people saying in the 1990s. Do we know that people didn’t have similar things to say in the 1970s about young Arab royals or circa 1900 about the children of industrialists? The world is richer so maybe there are just more rich kids running around.

One idea that does seem worth exploring is whether people are now less likely to aspire to be like their richest neighbor. The film says that, due to increased availability of media, Americans aspire to be like the rich crazy spenders that they see through electronic media. I wonder if this can be true. As the population booms and jobs are concentrated in a handful of cities, the realistic trajectory for a young American is a 2BR apartment shared among 4 people. Do the occupants of that crammed apartment look at an 8,000-square-foot house in Beverly Hills as a realistic aspiration?

My big take-away from the movie is that sending kids to a fancy private school is risky. Teenagers with a lot of unearned money to spend are not the best role models.

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