The $2500 fine (read it and weep)
At first I thought this was Twitter b.s., but no I have been referred to the PayPal website update:
You may not use the PayPal service for activities that…involve the sending, posting, or publication of any messages, content, or materials that, in PayPal’s sole discretion, (a) are harmful, obscene, harassing, or objectionable, (b) depict or appear to depict nudity, sexual or other intimate activities, (c) depict or promote illegal drug use, (d) depict or promote violence, criminal activity, cruelty, or self-harm (e) depict, promote, or incite hatred or discrimination of protected groups or of individuals or groups based on protected characteristics (e.g. race, religion, gender or gender identity, sexual orientation, etc.) (f) present a risk to user safety or wellbeing, (g) are fraudulent, promote misinformation, or are unlawful, (h) infringe the privacy, intellectual property rights, or other proprietary rights of any party, or (i) are otherwise unfit for publication.
You can’t buy Traveler’s Checks (with PayPal) either! For each offense, at the discretion of PayPal: “Violation of this Acceptable Use Policy constitutes a violation of the PayPal User Agreement and may subject you to damages, including liquidated damages of $2,500.00 U.S. dollars per violation, which may be debited directly from your PayPal account(s) as outlined in the User Agreement…”
Update: The policy partially has been walked back, I don’t yet know the full details. And note that in 2018 PayPal was supporting net neutrality!
The Invisible Hand Increases Trust, Cooperation, and Universal Moral Action
Montesquieu famously noted that
Commerce is a cure for the most destructive prejudices; for it is almost a general rule, that wherever we find agreeable manners, there commerce flourishes; and that wherever there is commerce, there we meet with agreeable manners.
and Voltaire said of the London Stock Exchange:
Go into the London Stock Exchange – a more respectable place than many a court – and you will see representatives from all nations gathered together for the utility of men. Here Jew, Mohammedan and Christian deal with each other as though they were all of the same faith, and only apply the word infidel to people who go bankrupt. Here the Presbyterian trusts the Anabaptist and the Anglican accepts a promise from the Quaker. On leaving these peaceful and free assemblies some go to the Synagogue and others for a drink, this one goes to be baptized in a great bath in the name of Father, Son and Holy Ghost, that one has his son’s foreskin cut and has some Hebrew words he doesn’t understand mumbled over the child, others go to heir church and await the inspiration of God with their hats on, and everybody is happy.
Commerce makes people traders and by and large traders must be benevolent, agreeable and willing to bargain and compromise with people of different sects, religions and beliefs. Contrary to what one naively might expect, people with more exposure to markets behave more cooperatively and in less nakedly self-interested ways. Similarly, in a letter-return experiment in Italy, Baldassarri finds that market integration increases pro-social behavior towards in and outgroups:
In areas where market exchange is dominant, letter-return rates are high. Moreover, prosocial behavior toward ingroup and outgroup members moves hand in hand, thus suggesting that norms of solidarity extend beyond group boundaries.
Also, contrary to what you may have read about the mythical Wall Street game versus Community game, priming people in the lab with phrases evocative of markets and trade, increases trust.
In a new paper, Gustav Agneman and Esther Chevrot-Bianco test the idea that markets generate more universal behavior. They run their tests in villages in Greenland where some people buy and sell in markets for their primary living while others in the same village still rely for a substantial part of their subsistence on hunting, fishing and personal exchange. They use a dice game in which players report the number of a roll with higher numbers being better for the player. Only the player knows their true roll and there is no way to detect cheaters on an individual basis. In some variants, other people (in-group or out-group) benefit when players report lower numbers. The upshot is that people exposed to market institutions are honest while traditional people cheat. Cheating is only ameliorated in the traditional group when cheating comes at the expense of an in-group (fellow-villager) but not when it comes at the expense of an out-grou member. More generally the authors summarize:
…We conduct rule-breaking experiments in 13 villages across Greenland (N=543), where stark contrasts in market participation within villages allow us to examine the relationship between market participation and moral decision-making holding village-level factors constant. First, we document a robust positive association between market participation and moral behaviour towards anonymous others. Second, market-integrated participants display universalism in moral decision-making, whereas non-market participants make more moral decisions towards co-villagers. A battery of robustness tests confirms that the behavioural differences between market and non-market participants are not driven by socioeconomic variables, childhood background, cultural identities, kinship structure, global connectedness, and exposure to religious and political institutions.
Markets and trade increase trust, cooperation and universal moral action–it is hard to think of a more important finding for the world today.
Hat tip: The still excellent Kevin Lewis.
Inflation and attention
One of the dangers of high inflation is that it can cause firms and households to pay close attention to it. This internalization of inflation can lead to an accelerationist regime, making inflation harder to control. We empirically assess the relationship between attention and the level of inflation for 37 countries. Our measures of attention are constructed either from internet search behavior or the popularity of inflation mentions on Twitter. We find evidence that attention thresholds do exist for the majority of countries in our sample. We also find interesting variability across countries.
Here is the full paper, by Oleg Korenok, David Munro, and Jiayi Chen, via John Chilton.
*Conversations with Goethe*
By Johann Peter Eckermann, imagine transcripts of podcasts from the 1820s, albeit edited. This book is described on the back jacket as “In 1823 he [Goethe] became friend and mentor to the young writer Johann Eckermann, who, for the last nine years of Goethe’s life, recorded their wide-ranging conversations on art, literature, science and philosophy.”
I find this book gripping throughout, though many parts are tough going if you are not up on the details of not only Friedrich Schiller, but also say Ludwig Tieck and Christoph Martin Wieland. If nothing else, it helps you realize how funny virtually all of today’s podcasts will sound (and read) someday.
You can order it here. Upon my reread, one striking feature of the dialogues is how much Goethe was obsessed with discussing and evaluating talent:
“Byron’s lofty status as an English peer was very damaging to him. Every talent struggles with the outside world — and it is harder still for someone of high birth and great wealth. A middling sort of condition is far more congenial to talent — which is why our great artists and poets come from the middle classes. Byron’s fondness for excess would have been far less dangerous to him if he had been o lower birth and humbler means. As it was, he had it in his power to fulfill his every whim, and that landed him in endless trouble. And besides, how could he, coming from the upper class himself, be impressed or inhibited by social rank of any kind? He said whatever was on his mind, and that brought him into ceaseless conflict with the world.
You will find talent discussions every few pages or more frequently yet.
The new translation is by Allan Blunden and is A+, noting that Goethe usually is impossible to meaningfully translate into English. This is amazingly the first new English translation in 150 years and it is the best sense we have of Goethe as a human being.
The text also has been an influence on my own Conversations with Tyler. The book is now quite oddly contemporary once again.
Effective Altruism and the Repugnant Conclusion
Here is an excellent essay by Peter McLaughlin, here is one excerpt:
So, the problem is this. Effective Altruism wants to be able to say that things other than utility matter—not just in the sense that they have some moral weight, but in the sense that they can actually be relevant to deciding what to do, not just swamped by utility calculations. Cowen makes the condition more precise, identifying it as the denial of the following claim: given two options, no matter how other morally-relevant factors are distributed between the options, you can always find a distribution of utility such that the option with the larger amount of utility is better. The hope that you can have ‘utilitarianism minus the controversial bits’ relies on denying precisely this claim.
This condition doesn’t aim to make utility irrelevant, such that utilitarian considerations should never change your mind or shift your perspective: it just requires that they can be restrained, with utility co-existing with other valuable ends. It guarantees that utility won’t automatically swamp other factors, like partiality towards family and friends, or personal values, or self-interest, or respect for rights, or even suffering (as in the Very Repugnant Conclusion). This would allow us to respect our intuitions when they conflict with utility, which is just what it means to be able to get off the train to crazy town.
Now, at the same time, Effective Altruists also want to emphasise the relevance of scale to moral decision-making. The central insight of early Effective Altruists was to resist scope insensitivity and to begin systematically examining the numbers involved in various issues. ‘Longtermist’ Effective Altruists are deeply motivated by the idea that ‘the future is vast’: the huge numbers of future people that could potentially exist gives us a lot of reason to try to make the future better. The fact that some interventions produce so much more utility—do so much more good—than others is one of the main grounds for prioritising them. So while it would technically be a solution to our problem to declare (e.g.) that considerations of utility become effectively irrelevant once the numbers get too big, that would be unacceptable to Effective Altruists. Scale matters in Effective Altruism (rightly so, I would say!), and it doesn’t just stop mattering after some point.
There is much more to the argument, recommended.
Friday assorted links
Will Europe choose an energy crisis or a fiscal crisis?
That is the topic of my latest Bloomberg column, here is one excerpt:
Estimates of the size of the energy price shock vary, but one plausible assessment runs in the range of 6% to 8% of GDP for Europe. One response to this shock would be to let energy prices rise and allow the private sector to adjust. This would mean higher costs for manufacturing, higher home heating bills, and lower disposable income to spend on other goods and services. In broad terms, it would be like the energy price shock of 1979 and the following recession…
That sounds grim, but it is important to realize that there is a different yet equally grim path: Governments could take this energy price shock and turn it into a fiscal shock instead…
If a government picked up the entire extra energy cost, it would cost something in the range of 6% to 8% of GDP — and that cost would need to be incurred every year that energy prices stayed high. That would require more government borrowing, higher taxes, more money printing, or some mix of those options.
The good news is that turning an energy crisis into a fiscal crisis doesn’t spread high energy costs through the entire economy. The bad news is twofold: First, keeping energy prices low does nothing to encourage conservation. Second, and more important, a fiscal crisis is still a crisis. Even if a government eschews extra borrowing, how much room is there to raise taxes, given economic and political constraints?
Recommended, and with a nod to Arnold Kling.
Markets in everything — sleep tourism
Going on a vacation might seem like a rather unconventional way to try to improve your sleep habits. But sleep tourism has been growing in popularity for a number of years, with an increasing amount of sleep-focused stays popping up in hotels and resorts across the world.
Interest has skyrocketed since the pandemic, with a number of high profile establishments focusing their attention on those suffering from sleep-deprivation.
Over the Over the past 12 months, Park Hyatt New York has opened the Bryte Restorative Sleep Suite, a 900-square-foot suite filled with sleep-enhancing amenities, while Rosewood Hotels & Resorts recently launched a collection of retreats called the Alchemy of Sleep, which are designed to “promote rest.”
Zedwell, London’s first sleep-centric hotel, which features rooms equipped with innovative soundproofing, opened in early 2020, and Swedish bed manufacturer Hastens established the world’s first Hästens Sleep Spa Hotel, a 15-room boutique hotel, in the Portuguese city of Coimbra a year later.
Here is the full story, via Mike Doherty.
Redux of my Bloomberg April nuclear weapons column
Here it is, read it and weep.
The wisdom of Daniel Gross
Now in 2017, a bunch of people, each of which now has their own company, the new PayPal Mafia is the Transformer Mafia, wrote this paper called Attention is All You Need, which at the time was mostly ignored by the rest of the world, and they came up with a way to effectively parallelize this training, and enable us to create models that are much larger, and as a byproduct are able to store more context tokens over and over, but effectively more words and effectively be able to predict more words to you.
The paper was mostly ignored when it came out — I thought it was neat, I don’t know that I made much of it. Google at the time had developed this pretty large model based on the paper that it didn’t release for various reasons we can touch on. Then OpenAI really productized that paper with GPT-2 and 3, general purpose transformer, that transformer is from that paper from Attention is All You Need. They were able to build these successively larger and larger models because they were able to parallelize training. These models now, GPT-3, is considered state-of-the-art, although I think our grandchildren will look at that the same way as we look at tube television.
That is from the new Ben Thompson interview with Daniel and Nat Friedman, and yes I do subscribe to Ben and pay for it.
Thursday assorted links
Is there a neglect of low-probability gains?
Seven preregistered studies (N = 2,890, adult participants) conducted in the field, in the lab, and online documented opportunity neglect: a tendency to reject opportunities with low probability of success even when they come with little or no objective cost (e.g., time, money, reputation). Participants rejected a low-probability opportunity in an everyday context (Study 1). Participants also rejected incentive-compatible gambles with positive expected value—for both goods (Study 2) and money (Studies 3–7)—even with no possibility of monetary loss and nontrivial rewards (e.g., a 1% chance at $99). Participants rejected low-probability opportunities more frequently than high-probability opportunities with equal expected value (Study 3). Although taking some real-life opportunities comes with costs, we show that people are even willing to incur costs to opt out of low-probability opportunities (Study 4). Opportunity neglect can be mitigated by highlighting that rejecting an opportunity is equivalent to choosing a zero probability of success (Studies 6–7).
That is from new research by Emily Prinsloo, Kate Barasz, and Michael I. Norton, via the excellent Kevin Lewis.
My Conversation with the excellent Walter Russell Mead
Here is the audio and transcript, here is the summary:
He joined Tyler to discuss how the decline of American religiosity has influenced US foreign policy, which American presidents best and least understood the Middle East, the shrewd reasons Stalin supported Israel, the Saudi secret to political stability, the fate of Pakistan, the most likely scenario for China moving on Taiwan, the gun pointed at the head of German business, the US’s “murderous fetishization of ideology over reality” in Sub-Saharan Africa, the inherent weakness in having a foreign policy establishment dominated by academics, what he learned from attending the Groton School, and much more.
Here is one excerpt:
COWEN: How would you change or improve the training that goes into America’s foreign policy elite?
MEAD: Well, I would start by trying to draw people’s attention to that, over the last 40 years, there’s been an enormous increase in the number of PhD grads engaged in the formation of American foreign policy. There’s also been an extraordinary decline in the effectiveness of American foreign policy. We really ought to take that to heart.
COWEN: Do you think of it as an advantage that you don’t have a PhD?
MEAD: Huge advantage.
COWEN: How would you describe that advantage?
MEAD: I don’t really believe in disciplines. I see connections between things. I start from reality. I’m not trying to be anti-intellectual here. You need ideas to help you organize your perceptions of reality. But I think there’s a tendency in a lot of social science disciplines — you start from a bunch of really smart, engaged people who have been thinking about a set of questions and say, “We’ll do a lot better if we stop randomly thinking about everything that pops up and try, in some systematic way, to organize our thinking of this.”
I think you do get some gains from that, but you see, over time, the focus of the discipline has this tendency to shift. The discipline tends to become more inward navel-gazing. “What’s the history of our efforts to systematize our thinking about this?” The discipline becomes more and more, in a sense, ideological and internally focused and less pragmatic.
I think that some of the problem, though, is not so much in the intellectual weaknesses of a lot of conventional postgrad education, but simply almost the crime against humanity of having whole generations of smart people spend the first 30, 35 years of their lives in a total bubble, where they’re in this academic setting, and the rule . . . They become socialized into the academy, just as much as prisoners get socialized into the routines of a prison.
The American academy is actually a terrible place for coming to understand how world politics works. Recently, I had a conversation with an American official who was very proud of the way that the US had broken the mold by revealing intelligence about Russia’s plans to invade Ukraine, and pointed out how that had really helped build the NATO coalition against Russian aggression, and so on.
So far as he goes, it’s true. But I said, however, if you really look at the total message the US was projecting to Russia in those critical months, there were two messages. One is, “We’ve got great intelligence on you. We actually understand you much better than you think.” It was shocking. I think it shocked the Russians. But on the other hand, we’re saying, “We think you’re going to win quickly in Ukraine. We’re offering Zelenskyy a plane ride out of Kyiv. We’re pulling out all our diplomats and urging other countries to pull out their diplomats.”
The message, actually the totality of the message that we sent to Putin is, “You are going to win if you do this.”
And this, on what makes for talent in the foreign policy arena:
…you can’t know too much history. A hunger for travel. I think too many foreign policy types don’t actually get out into the field nearly as much as they should. Curiosity about other cultures. A strong grounding in a faith of your own, which can be a secular ideology, perhaps, in some cases, but more often is likely to be a great religious tradition of some kind.
A very good conversation. And I am happy to recommend Walter’s new book The Arc of a Covenant: The United States, Israel, and the Fate of the Jewish People.
Wednesday assorted links
India: The Revolution in Private Schooling
A whopping 50%+ of secondary school students in India are educated in private schools. Do private schools increase human capital or merely skim the best students? My paper, Private Education in India: A Novel Test of Cream Skimming made a simple but telling point:
…As the private share of school enrollment increases simple cream skimming becomes less plausible as the explanation for a higher rate of achievement in private schools. If the private schools cream skim when they are at 10% of public school enrollment how much cream can be left in the public school pool when the private schools account for 60% of total enrollment? Thus, if this simple form of cream skimming is the explanation for the higher achievement rate in private schools, we would expect the “private effect,” the difference between private and public scores, to be smaller in regions with a high
share of private schooling.
In fact, what I find is the private advantage, although larger in districts with smaller shares of private schooling (suggesting some skimming), stabilizes and doesn’t disappear even as the share of private schooling heads towards 100%. I also show that mean scores across all students, public and private, increase with the share of private schooling which is inconsistent with cream skimming (which predicts a constant mean). At right a picture showing that private scores continue to outpace public scores even in districts where private schools educate a majority or larger share of students.
In a new paper, Bagde, Epple and Taylor study 4 million students in thousands of villages in India during 2004-2014. In the early years of the study, none of the villages have private schools but entry starts to occur in 2007-2009 and the authors look at who switches to private schools. They find significant selection from higher income, higher caste, higher ability, and males towards private schools but no evidence that public school students are harmed.
The authors give a nod to the possibility that stratification could generate problems down the line if it increases inequality but they don’t mention the key point that, as with arguments for cream skimming, stratification concerns diminish the more students are in private schools and disappear altogether if 100% of students are in private schools.
More generally, India is pioneering private education on a grand scale and the entire world should pay attention to these innovations.
Addendum: See also my previous post on a key paper by Muralidharan and Sundararaman, Private Schooling In India: Results from a Randomized Trial.