I have been working the last two weeks on a revise and resubmit for a journal article regarding the provision of lighthouses in antebellum America (1790-1860). This is in relation with other works I am doing or have already done (see here, here, here, and here) with respect to the provision of public goods by states or markets (i.e., remember that lighthouses were/are a frequent textbook example of public goods). In the process of doing the revisions, I assembled data on all expenditures by the Lighthouse Establishment and Lighthouse Board to 1860. This includes appropriations for new constructions, salaries of keepers, provisions for operation and maintenance expenditures. I divided these expenditures by GDP to yield the graph below.

There is not a ton to say about this here on this blog except the following three interrelated comments. First notice that the scale means that lighthouse spending to GDP is always less than 0.05% of GDP. That is small. Second, notice that the trend is up over time. It goes from 0.01% to a bit than 0.05% in peak years. These first two comments matter because you would expect the small share to grow smaller over time. Why? Remember the definition of public goods — non-rivalrous and non-excludable. The first part of that definition implies that you take the sum of marginal benefits at any quantity for everyone in a society to arrive at the societal benefit of an extra unit of public goods. If the marginal cost of providing the public good is zero, is constant or is only increasing at a slow pace, this means that adding an extra person would add more to the benefits than the cost. Phrased differently, this means that we should expect lighthouse spending to fall or stay constant as a share of GDP. This is because GDP goes up when more people are added (and the benefits of the public good scale up with extra people) while costs do not increase as much. Ergo, the trend in the graph below should fall.

Figure 1: Lighthouse Spending in America Divided by GDP, 1791 to 1860

Inflammatory Political Campaigns and Racial Bias in Policiing

Simple, clever, poignant. I wish I’d thought of it.

Congressmen earn disproportionate returns in the stock market

File under: duh, but that doesn’t mean someone shouldn’t reinvestigate this every 12 months.

Pounds that Kill: The External Costs of Vehicle Weight

This is the kind of thing that basic economic theory combined with Force = Mass X Acceleration will get you all the way to the conclusion, but that doesn’t have a chance at affecting policy until someone credibly estimates the costs. These estimates are credible and they should effect policy. I’ll give you my takeway though: this matters more as we transition to electric vehicles. As the cost incentives of gasoline become a weaker constraint on vehicle size, we will need to introduce new ways to internalize the external costs. Obvious policy solution: tax vehicles by the pound.

Monopsony in the US Labor Market

I’m working on monopsony in the paper I’m presenting at Geoerge Mason University next week. This is the final published version of the paper that presents the bleeding edge of the research in question. You should come to my talk if you’re in town.

I am a big fan of Bjørn Lomborg but not for the reasons you think. Most Lomborg fans highlight the Skeptical Environmentalist as their preferred work. I admire How to Spend $50 Billion to Make the World a Better Place. The logic in that book is elegantly simple for an economist as it argues for dealing with the world’s problems using cost-benefit analysis. After all, you cannot deal with every problem and priorities must be set according to which priority is most likely to generate massive benefits.

Obviously, some nuances can be made. For example, I am inclined to think that a sizable share (but not the majority) of the cost of climate change can be dealt with by encouraging economic development. As Richard Tol argued in this Review of Environmental Economics and Policy article, “poverty reduction complements greenhouse gas emissions reductions”. However, this criticism is one that alters the ranking of priorities only.

There is a deeper criticism that has been lurking in my mind since 2010. I never formulated it directly in link with Lomborg’s work even though I did include elements of this criticism in this published article of mine (see here in the Review of Austrian Economics). The criticism amounts to a simple point: can governments actually achieve the proposals in the book. Do they have the ability to intelligently invest $50 billion to fight communicable diseases? Would they be able to invest $50 billion to improve educational access? The answer may very well be “yes”, but no one has considered the risk of government failure in trying to organize the ranking of priorities to deal with. Essentially, this is the “public choice” criticism of Lomborg’s work (which does not require a stand on the climate change portion which has been the object of so many debates). This is not a trivial criticism as it could be that the ranking is all wrong or that the solutions are simply not politically accessible.

Since 2010, I have not seen any “public choice” criticism of Lomborg. Today, while writing this blog post, I spent a good hour trying to find a criticism in either peer-reviewed journals such as Public Choice, Journal of Public Finance and Public Choice and Constitutional Political Economy. None had such criticisms. Similarly, I tried looking at think tanks and newspaper. Again, I came up empty-handed.

If someone knows a piece that makes this case, send it my way. If you are a graduate student looking for an article to write, this might be a good idea!

I was happy to see the Wall Street Journal write a staff editorial about my recent paper with Patrick Warren, “Firearms and Lynching“.

I was made aware of the editorial on Saturday and I’ll admit I was a little nervous when I first clicked, only to be relieved to find an accurate summary of the research and a relatively restrained commentary.

But why was I nervous, you may ask. Isn’t media attention something scholars want? Yes. Earlier in my career, that was an unqualified “yes”, but I’ve been doing this long enough now that I appreciate just how little control a scholar has over the conversation that can happen around their work. I’ve had a couple papers get non-trivial media attention over the years and each time it’s a reminder that the research itself is not just the subject of a conversation, it’s a prop that gives people an opportunity to have the conversation they already wanted to have. The findings of the research in question can prove quite immaterial to that conversation.

When I posted a thread about the paper two weeks ago, I was happy to see enough retweets to pass the paper around and get it some attention.

Main result: greater access to firearms in the Black community reduced the rate of lynching in the Jim Crow South. In a context where you are excluded from the institutions of governance and public safety, where terrorism against you is condoned, the tools of self-defense matter

— Mike Makowsky is here to violently equivocate (@mikemakowsky) September 7, 2022

What was less fun was the predictably over-reductive quote tweets and comments excitedly parading the paper as evidence of “guns are good.” Not unlike people excited to reduce a paper to “minimum wages are good” (or “this paper is bad because minimum wages are bad”), it can be frustrating to try to make a nuanced contribution towards understanding a complex context, only to see it reduced to a television debate chyron.

The key to surviving this process is accepting that a scholar, even those of tremendous standing inside and outside of the academy, has little to no control over the narrative that emerges around their work. Holding strong preferences over the surrounding narrative is folly varying only in consequences. You can try to fight the narrative, which typically results in the world either ignoring you or, worse, joyfully inviting you to wrestle in the mud. [Good rule of political discourse: never wrestle with a pig. You can’t win, you end up covered in mud, and the pig loves it.] Some scholars, though not as many as the more skeptical fear, prefer to shape the research to serve a narrative from the outset. This, of course, is no longer research, it’s advocacy masquerading as science. Don’t do this. And lastly, some create great research, only to apologetically bear the burden of the unintended narrative that emerges around their work. If you recognize yourself in this description, my only advice is a) don’t apologize and b) go easy on the sauce.

For what it’s worth, my view of “Firearms and Lynching”, in the context of the broader literature on firearms and public safety, is that things have to be horrifyingly bad before greater availability of firearms make for a safer public. Foreign invasions, institutionalized segregation, pogroms, lynch mobs, these are all contexts where an armed population can make for a better outcome. Probably not a happy ending, but maybe a less tragic one. The Jim Crow South was such a context. That’s how bad it was. That’s the takeaway.

If you want to translate this piece of historical research as evidence that a greater saturation of firearms in modern American society will make for better and safer lives, then I’ll admit that I think you are too pessimistic about the current state of the world. You’ve spent too much time reading about burning cities that actually aren’t burning. If you think that a greater taking up of arms by Black Americans will make their lives safer and better, then I’ll admit I still think that is probably wrong, but maybe less wrong. Black Americans have brought their reality to the eyes of broader America and that reality questions whether or not the police serve their communities or threaten them. It is certainly a legitimate question whether they can rely on police protection to secure their homes and their communities.

It doesn’t take a lot of imagination to make the next logical leap here. If police can’t be counted on, we’ll protect ourselves, and firearms are a tool to do that. That sort of thinking, however, is exactly why making leaps from history to contemporary contexts is so fraught. As bad as things are today, even in the most violent districts with the most contemptable police departments, it’s not the Jim Crow South. Lynch mobs are not roaming the streets and selling photos of their victims as postcards. Groups of young white men are not wandering into homes and stealing from them without fear of retribution. Firearms are tools of death, and their presence bring benefits and costs. To exceed the costs of broadly deadlier conflict throughout your community, the benefits to other dimensions of public safety have to be significant.

And we’ve haven’t even confronted the additional reality that an armed Black man in the United States should probably not feel safe in the presence of a police officer, no matter if that firearm is licensed, registered, and transparently revealed to the officer. In a land of no-knock raids, where police are bursting into homes under cover of night with fingers on triggers, I’m not sure a more heavility armed Black America leads to fewer men and women being killed by police.

I’m sorry, did you think that I was going to close out this post with a solution to modern violence and policing in America? With an answer? The world is complex and difficult, policy for it doubly so. My colleague and I wrote a paper that tried to answer the question of whether a minority living under an indifferent regime that condoned terrorism could better live their lives armed. That’s the question we made a contribution towards answering, and our results point towards “Yes”. If you want me to make big claims about what that means today, well, get used to disappointment.

Corrosion is estimated to cost about $250 billion per year in the U.S. alone, so it is economically significant. The impact of corrosion hit home for me when I noticed that near the bottom of the right rear wheel well of my little 2007 sedan, a 2-3” hole had rusted right through the metal, exposing some inner chambers to water and salt and sand thrown from the wheel. The rust does not look like it has compromised the vehicle’s mechanical integrity (a real concern, since today’s cars rely on the body sheet metal for strength), but if it keeps on going it could turn my chariot into a junker.

I called an honest local body shop, and the guy told me it would probably cost more than the car is worth to fix it properly (replace the rocker panels, etc.), and  it might run $1700 just to do a patch job.

Being a (retired) chemical engineer, I decided to read up on ways to deal with rusting metal. Especially, how to arrest the progress of rust. The most serious way is to do major surgery with cutting tools, and cut out all the rust, and weld good metal back in, and paint it all well. That is out of my league. So I looked for coatings that could stop the rusting progress.

I have written an article on a different blog describing the various classes of coatings and rust converters that are available. For my project, I chose to use Rust Bullet, ordered from Amazon.

This can be painted directly on rusty metal surfaced, after scraping away all the loose rust. This stuff chemically reacts with the remaining surface rust to make it more inert, and also forms an impermeable seal over the surface, to block further water and oxygen from reaching the metal. It sticks to rusty and non-rusty surfaces. It seems to get good reviews.

One peculiarity of Rust Bullet is that if many hours have elapsed after application its surface gets so smooth that that that the next layer of Rust Bullet or top coat paint will not stick unless you sandpaper the smooth, hard, silvery surface. It’s easiest, therefore, to leave only 2 hours or so between coats of paint, to avoid the bother of sandpapering.

After two coats of Rust Bullet, I applied a top coat of Rustoleum enamel paint (white on the outside of the car, black on interior surfaces).

Some rust had started on surfaces of the inner chambers of sheet metal that had been exposed by the rusted-out hole. I could not readily reach them with a paint brush to apply Rust Bullet. I wanted to spray something that would form a coating that would inhibit further rusting. I settled on Cosmoline RP-342, ordered from the manufacturer.

This stuff sprays on like a thick oily liquid, that should soak into any rust. After maybe 2 hours, it hardens up to a very impermeable, fairly tough waxy coating. It will keep water off surfaces, though I don’t know about oxygen. Anyway, I sprayed the Cosmoline into the available openings, to try to coat the surfaces of the inner chamber parts. (If I had known about it in time, I might have chosen Eastwood Internal Frame Coating instead of Cosmoline for this step.) I was able to coat most, though not all, of the vulnerable surfaces. This was all with me lying on my side, beside/under the car, without great ergonomic access.

I then used several layers of aluminum foil duct tape (learned this trick from YouTube) to seal up the holes in the car body, then added a final coat of white or black Rustoleum. This has pretty well protected the car body there from further exposure to water/sand/sand. It should give me a couple more years of use, all for two days of picky handwork plus the cost of materials.

I want to write about the economics of the Wrexam football club. They have docu-series currently airing on FX weeking until late October. They have two celebrity owners whose level of wealth falls squarely within the range of optimum dramatic tension i.e. rich enough to buy and improve a tiny Welsh football club, but so rich that they can buy their way out of every problem without utterly ruining themselves and their families.

I want to write about it, but I won’t. I’ll be patient and wait until the first season is over. Instead, I want to encourage you to watch all or part of the season with an eye towards the drama and risk there is to be found in solving such a complex economic problem. Pay attention, there will be a quiz in two months:

1. How do you optimize your committment to an investment whose financial payoff is gaining access to a higher revenue stream via a process as unpredictable as finishing at or near the top in a 24 team football league? How do you cope with that much noise in a system with such poor underlying odds?
2. How do you optimize your committment to an investment whose payoff has an enormous non-pecuniary element (i.e. joy from the success of the team) and that non-pecuniary element is a true local public good (non-excludable and non-rival) that represents a significant portion of total utility in local households?
3. How should local stake holders treat their relationship to the team? The supporters group has significant voting power when transitioning ownership. What should they be maximizing when they cast their votes? On what observables should they base their decisions?
4. In what ways are the owners failing to optimally allocate resources within the team?
5. In what ways is the manager and coaching staff failing to optimally manage the player resources they have?
6. Are incentives aligned top to bottom in the organization? Within the team?
7. How do you measure success and failure with a sports club? Should these metrics, or the relative weights on these metrics, change with the scale of the club, it’s resources, and its fan base?

When the season is over we will revisit these questions and more. Running a sports team is an incredibly complex problem to solve. Most previous inside looks have been pure PR projects for the very biggest clubs, worth billions of dollars. These clubs/teams are enormous enterprises, with vast hierarchies and narrowly divided tasks. They are in many ways simply too big to fit into frame for an intimate documentary. If that’s what you’re interested in, fiction is the better channel because it can abstract away from all the field maintence and beer pricing, and just show you Brad Pitt cutting deals over the phone while stuffing food into his beautiful face.

To really understand this business from the inside, you gotta go small. To places where a small number of individuals are making an inefficiently vast range of decisions. Welcome to Wrexam so far looks to be one of the very best views into that world. I can’t wait to see more.

I just hope they find someone to update their zonal marking system on set pieces. I don’t know, maybe much some YouTube videos or something. Yikes.

Alaska had it’s first election with a new voting rule and Tom Cotton is pissed.

Ranked-choice voting is a scam to rig elections.

— Tom Cotton (@TomCottonAR) September 1, 2022

I want very badly to be snarky here and make fun of the Senator for being so nakedly Trumpian in an effort to discredit any democratic institution the instant it doesn’t produce exactly the result he prefers. Fun aside, snark at Senator’s expense misses the bigger and more important mechanisms that are in play. I think the current instantiation of the Republican party is afraid of ranked choice voting. The Senator, in his angry little tweet, only lends greater credence to the theory. More broadly, its often worth unpacking when incumbents get upset about legitimate institutions, particularly when that anger is asymmetric across parties and coalitions.

What is ranked choice voting?

Quickly, ranked choice voting is any system where voters are asked to rank some number of candidates, n, from 1st to nth. Those rankings are then used to implement a runoff system, where a winner isn’t declared until a candidate he or she has a majority of the top choice votes. If someone has 50% of the first place votes, they win and it is effectively no different that a standard plurality system (i.e the standard system in most US elections). If no one has >50% of the first place votes, then the candidate with the fewest first place votes is eliminated and all of their votes are then divvied up amongst the candidates based on those voters’ 2nd choices. The process then iterates, tallying up the votes, eliminating the last place candidates, and allocating votes from the eliminated candidates based on their 2nd, 3rd, etc choice preferences. The election isn’t called until someone has greater than 50% of the counted votes.

It’s not a point system, like a Borda count, so it doesn’t grant a specific weight to being a 2nd or 3rd choice, so the balance of outcomes is still heavily tilted towards a voter’s top choice candidate. It’s not explicitly an approval system, though voters are under no obligation to rank all of the candidates i.e. if you only want to choose a 1st and 2nd choice out of 10 candidates, that is fine. What the system is explicitly designed to do is reduce the impact of large numbers of candidates splitting the electorate so thinly as to increase electoral noise while also reducing the impact of otherwise irrelevant candidates. It’s not a perfect system (nothing is), and it certainly doesn’t magically nullify the irrefutable math of Arrow’s impposibility theorem. It’s just another way of counting votes, and one that is in no way controversial or even especially complicated compared to the variety of voting rules used in established democracies around the world.

So why the fuss?

Political fragility

Overspecialization is an ecological trap, just ask the koala. Sure, it’s great if you can digest and subsist off of a food source that no one else can, that sounds like a swell way to avoice resource competition. But if you overspecialize in that food such that you can no longer live off anything else, well, then you aren’t likely to survive any meaningful shift in you environmental context. What someone like Nicolas Taleb extolls the virtues of anti-fragility, a lot of what he is talking about is akin to adaptability to and tolerance for unforecastable events.

At the moment, if we can put aside policy positions entirely for a moment, there is an argument to be made that the Republican party is looking incredibly fragile. A sequence of events, some slow progressions over the last 20 years, others shocking events of the last 20 months, have left the Republicans looking highly specialized. Senator Cotton’s response to the outcome in Alaska leads me to wonder if they are electorally specialized to succeed in a context that doesn’t exactly exist anymore.

When I think of the Republican coalition and electoral base, what stands out in sharpest relief is:

1. The urban-rural divide
2. Single-issue voters, predominantly regarding abortion and firearms
3. Trump

The urban-rural divide, specifically the overwhelming dominance of Republicans in rural settings, is the fulcrum upon which Republicans leverage their advantage through gerrymandered district maps. By cracking and packing districts, they’ve ceded a large number of landslide urban districts to Democrats for the express purpose of leaving them thinner elsewhere. The catch with gerrymandering as a minority party in the broader population, though, is that if you get greedy you can go grow accustomed to lots of predictable, but nonetheless narrow victories. Narrow victores, no matter how previously safe and easy to forecast, do not grant a lot of leeway for absorbing electoral shifts. Like, for example, significant numbers of educated urban voters moving to medium-sized cities in red and purple states.

Abolishing abortion has long been a rally cry to turn out voters, and seemingly a pretty good one at that. While pro-choice voters may be just as passionate, protecting the status quo has rarely the same draw as tearing down a cruel and unjust system. Voters may have remained the same, but the status quo has changed and, with it, the prospects for drawing voters to the polls.

Bizarre as it would have seemed to say this 10 years ago, Trump is a bonafide cult of personality. His people love him and he has as much influence with at least half the Republican party as anyone since Reagan, and probably more than even he did. I wouldn’t have said this 10 months ago, but there is a very real chance that he is going to prison. Even if he doesn’t, though, the investigation and trials are unlikely to put Republicans in a positive light with moderate and independent voters, and without the office of the presidency, Trump lacks the same power to shape the narrative that he previously enjoyed.

Actually, let’s revisit the Trump as Republican icon for a quick moment.

One of Seventeen

In the aftermath of Trump’s surprising win of the Republican presidential nomination in 2016, there was floated the possibility that Trump was a Condorcet loser. That is to say, in a head to head election he would have lost to every other major candidate. A retrospective analysis challenged this idea, suggesting that Trump had far broader support in the party than just a loyal and dedicated minority, but I’m not sure how much of that is a product of post hoc endogeneity.

What is not argued is that the 2016 Republican primary still had a lot of candidates late in the game. Seventeen candidates qualified for the first debate. By the fifth debate there were still 13 candidates sufficiently viable to claim a spot on stage. Even if we can’t perfectly adjudicate who Trump would or would not have beaten head to head, the outcome of the eventual election was highly sensitive to the voting rule given the sheer number of candidates. If the primary had been subject to anything other than standard plurality rule voting, it is highly possible, if not probable, that a different winner would have emerged.

The thing about a polarizing candidate is that you are that much less likely to be anyone’s second choice. Under a plurality system you rely on the people who love you, attack the ones that hate you, and comfortably ignore the rest. But some voting rules increase the cost of those you ignore.

About that Alaska Primary

Did I mention that Alaska didn’t just change the voting system for the general election? They had an open primary (meaning candidates from any party competed to be one of the final four candidates). Through a simple plurality rule election, everyone voted for their favorite candidate and the top 4 advanced to the general election where the ranked choice rule was employed.

What would have happened if such a rule were applied in the Republican primary of 2016? What would happen if such a rule were applied across the country where

1. Roe vs Wade has been overturned
2. Trump may very well be going to prison.
3. A lot of people are moving from big blue cities to low housing costs and adequate amenties of medium size cities in purple states

A Democrat hadn’t won a statewide election in Alaska since 2008. Less than a week ago they did it in an election against a former Alaskan governor and Republican vice presidential nominee who’s been on Saturday Night Live. In the second round of vote counting, the eventual Democratic winner received 29% of the votes redistributed from the Republican who finished in 3rd place. There are, it seems, a lot of Republicans who preferred a Republican to a Democrat, but nonetheless preferred a Democrat to Sarah Palin.

Cotton is right. Republicans should be freaked out

I don’t expect ranked choice voting to sweep the nation (though I do think it is better than a standard plurality rule). But I think it is one more sign that Republicans have become overspecialized as a party and are not well-suited to adapt to changing political landscapes. Big things, like Roe being overturned, happen. The public can turn on any celebrity, including your party’s talisman. Rural voters might still mathematically individually be weighted more in the broad political calculus (cough Senate cough), but there’s still the problem that fewer voters live there, which means it only takes a small percent of the population moving to break your map. And what happens when the baby boomers don’t dominate electoral math anymore?

No, the Republican’s aren’t doomed to irrelevance. Yes, they will adapt and rebrand…eventually. But the reality is that there is no greater sign that a party is forecasting electoral difficulty for themselves than declarations that the system is rigged against them, regardless of whether they are railing against fictional corruption or actual institutions that really do work against them. In both cases, however, they are signaling the same thing: we’re in trouble. The Republican strategy of recent decades has been to terrify and pander to the base, attack and ignore the rest. And it’s worked. Ranked choice voting is a threat to that strategy because it increases the cost of attacking and ignoring voters outside of your base.

Maybe that alone is a sufficient argument for ranked choice voting – it increases the cost of attacking people outside of your political base. Given the evidence of political polarization and associated social fracturing, anything that shifts the balance of political incentives from outgroup antipathy to big-tent inclusion is proabably a good thing for all of us in the long run.

In no particular order:

Moonshot: Public R&D and Growth by Shawn Kantor and Alexander Whalley. Whether its going to the moon or vaccinating a country, government spending sure seems to have a much better impact when there is a big, bright, and highly-specific outcome target.

The Economic Consequences of Being Denied an Abortion by Sarah Miller, Laura Wherry, and Diana Greene Foster. Being denied an abortion leads to significant financial distress.

Preferences for Firearms and Their Implications for Regulation by Sarah Moshary, Bradley Shapiro, and Sara Drango. Different types of guns serve as strong substitutes for each other, which will likely temper any regulatory effects from limiting one or more specific strata of firearms. As with any regulation, narrowly identifying what it is you want and expect from the policy remains the key to making an evidence-based argument for it.

A panel-based proxy for gun prevalence in US and Mexico by Daniel Cerquiera, Danilo Coelho, John Donohue, Marcelo Fernandes, and Jony Pinto Junior. Using “percent of suicides committed with a firearm” remains a the best proxy for firearms. Regional variation across the US remains exactly what you’d expect in the US. Is the same true of Mexico?

BONUS PAPER. From twitter this morning:

How Much Should We Trust the Dictator’s GDP Growth Estimates? by Luis Martinez

I’d seen this before, but I think about all the time. We don’t give nearly enough time consideration ro the endogeneity of results to the incentives behind data creation/recording anywhere, let alone autocratic countries. I get why – it invites the dismissal of any data inconvenient to your status quo thinking, but ignoring it completely is foolish.