The Ambrosini Critique

Senator Barbara Boxer sent this email to me today:

Dear Friend:

The United States Geological Survey (USGS) is America’s earthquake science agency, charged with providing reliable information about where and when earthquakes may occur. The USGS has issued a new report that should be of interest to Californians. The report relates the prediction that California has more than a 99 percent chance of having a magnitude 6.7 or larger earthquake within the next 30 years. Importantly, it also provides clues as to regions more likely to experience a major quake.

The new USGS report on California earthquake probabilities is the result of a model that comprehensively combines a variety of seismic and earth science tools. I invite you to view the summary of the report and the full report, with comprehensive maps.

News about earthquakes should give all of us a greater incentive to be prepared. If you have not created an earthquake preparedness program for your home and work, I encourage you to follow the tips provided by the Federal Emergency Management Agency.

Most Californians accept earthquakes as a part of living in our beautiful state. But knowing more about where they may occur and what to do to prepare should also be a part of living here. I hope this information is helpful to you.

Sincerely,

Barbara Boxer
United States Senator

I scoured the email for a catch — a call to support some silly pet cause, some swipe at political opponents — and couldn’t find one. I’m dumbfounded.

Recently I ran regressions of wages and labor force composition on the density of Walmarts in States. Walmart — the largest private employer in the U.S. with sales of over $350B or about 3% of GDP — has had zero effect on wages and labor force composition in aggregate. This was much to my disappointment because zero results don’t get published.

This (non-)result suggests that the largest corporation on the planet has little effect on the macro economy. How does one square this fact with the narrative of the omnipotently evil multinational corporation? Does it make sense to compare GDPs to sales (or profits) of corporations? If not, what is a good way to compare the power of corporations to the power of nations?

A video of my brown bag:

(h/t Two folks also stuck somewhere in the Death Star)

Fully 2/3rds of growth in inequality over the last decade can be attributed to different rates of inflation experienced by the rich and poor. MR has the scoop.

It is better to know than to believe. It is better to understand why rather than just accept the what. Much of the time (though certainly not all the time), the things that we think are obviously and clearly “reality” are actually not. Even when our intuitions are right, we gain much from understanding why they are right. So curious thoughts about why our assumptions are right — and whether they are right — are indeed precisely what people (especially professors) should be thinking and expressing.

— Prof. Volokh

So, I had a brown bag on Monday. Still recovering.

Meanwhile, if Tyler Cowen’s remark the other day “Phillips doesn’t seem to think that finance is much of a productive economic sector” confused you, here’s a finance guy describing what he does. I think they “pick winners” or something.

By the way, if you are curious, I have never even touched a gun.

— TC at MR

How is it possible that I share a language and much of a culture with this guy?

… what the hell?

(h/t Roger Bourland)

Peri’s at it again. Now, he and co-author Ottaviano look at immigration’s impact in Germany in the 90’s (pdf). Germany is an interesting case because much of the immigrants were more highly educated than in the U.S. case. Their results:

[W]e find that the substantial immigration of the 1990’s had no adverse effects on native wages and employment levels. It had instead adverse employment and wage effects on previous waves of immigrants. This stems from the fact that, after controlling for education and experience levels, native and migrant workers appear to be imperfect substitutes whereas new and old immigrants exhibit perfect substitutability. Our analysis suggests that if the German labour market were as `flexible’ as the UK labour market, it would be more efficient in dealing with the effects of immigration.

The last sentence is an implication of the following story: if a labor market was perfectly flexible, wages there would adjust immediately following a supply shock (e.g. a large flow of immigration) and displaced workers would immediately find employment (or they would take lower wages). In other words, there would be no employment effects from labor supply shocks, only wage effects.

Peri and crew run the following thought experiment: eliminate employment effects by changing wages (down for substitute groups like other immigrants and up for compliment groups like natives). To eliminate employment effects (and thus simulating a flexible labor market) wages would have to be about 260 million euros lower in a particular year. In that same year, unemployment benefits for the workers displaced by immigration cost the German state 310 million euros. In other words, the German labor market inefficiency (cushy unemployment insurance) cost the Germans about 50 million euros.

This is a small effect because immigration has a small effect on the labor market. New immigrants really only displace old immigrants, not natives, and even so only one old immigrant becomes unemployed for every 10 new immigrants that become employed.

It should be pointed out, though, 50 million euros is about 15% of these expenditures in the unemployment insurance program. This does seem like significant waste relative the size of the expenditures.

Some people use the term “webbed” to mean “put something on the web” as if providing a link doesn’t convey that information. Stop that!

Nobody says they “papered” a report they just wrote before handing it to their boss. Nobody says they “CDed” a music recording or they “skinned” their tattoo.

Besides being awkward, media-”ed” just doesn’t convey any interesting information. If you made your creation available in some weird format¹, then great, I want to hear about it as I might prefer that medium. Otherwise, not.

1. I don’t know; microwave transmissions to Mars or something [↩]