Category: Equitablog

Should-Read: Noah Smith: Harvey Won’t Hold Back Housto: “If economic geography dictates that a city be located in a certain spot, there will be a city there—period… https://www.bloomberg.com/view/articles/2017-08-31/harvey-won-t-hold-back-houston

…The clearest—and most grisly—demonstration of this principle comes from the atomic bombings of Hiroshima and Nagasaki in Japan. Within 10 years after that horrific destruction, Nagasaki, a key port city and manufacturing center, had returned to its previous population growth trend line. It took Hiroshima about 30 years, but it’s now the eighth largest city in Japan, a thriving industrial and commercial center. In the long run, even nuclear bombs couldn’t overcome the power of economics….

Houston… has… been growing strongly…. According to Krugman’s theory, growth like that is a sign that a city hasn’t yet achieved its full economic potential—the node it occupies in the system of cities still needs more people. That means there will be no exodus of people or investment dollars from Houston. This is in contrast to New Orleans, whose population had been declining for decades before Katrina hit…. A second theory of why cities exist has to do with knowledge industries. Smart people living in close proximity form a deep pool of workers for companies to choose from, and employees moving from company to company cause ideas to spread…. Houston is a tech cluster… energy… has gone increasingly high-tech…. The same pool of skilled employees that sustains Houston’s energy industry makes it appealing to other knowledge-based sectors as well—machinery manufacturing, chemicals, business and financial services, even information technology…. The city will emerge from Harvey’s devastation stronger than before.

But because Houston is destined to rebound, it’s even more important… to invest in measures to prevent future floods from wreaking havoc…

Should-Read: I don’t understand this:

If it is a personnel issue and not a program issue, you fire the person.

If it is a program issue and not a personnel issue, you spin out the group, wish them best wishes in their future endeavors, and direct funders their way.

But this seems to me to fit neither case. Sending young rising stars “many of whom… [you] have mentored” out into the wilderness with a boss who you believe “repeatedly violated the standards of honesty and good faith” is not doing them a favor:

Anne-Marie Slaughter: When The Truth is Messy and Hard: “I have racked my brain… as to what I… could or should have done differently about the departure of Barry Lynn and Open Markets from New America…. https://medium.com/@slaughteram/when-the-truth-is-messy-and-hard-1655a36e313f

…This was a personnel issue that I knew others would see as a program issue…. I… could keep an employee who had repeatedly violated the standards of honesty and good faith…. I could fire him outright and try to find a leader for his program, which would force both his funders and his program staff, many of whom were young rising stars who both Barry and I have mentored, to choose between us and him. Or I could try to work with Barry to negotiate a cooperative spinning out of the Open Markets…. I chose the third option, one that was much better for Barry than an outright firing would have been….

This was no “expulsion” of his team; quite the contrary, our biggest concern was precisely that these were New America employees to whom we had real obligations and regretted losing. Moreover, we had prepared a statement announcing the spin-out that emphasized our respect for Open Markets’ work…. Work that has included plenty of attacks on corporations that have funded other parts of New America. We were having productive conversations with Barry as recently as Monday…. James Fallows… was our first board chair… had become friends with Eric Schmidt when Eric was still at Novell and recruited him onto our board…. He has been very generous to New America and we are proud of our association with him…. At the same time, we have bragged from the beginning, using various adjectives, that we are an independent, heterodox, iconoclastic place. Barry Lynn and Michael Lind have long argued about economic concentration; a year ago we held a debate between Barry and Michael for our staff on Hamiltonian versus Jeffersonian views of the economy. In the coming months, one of our programs is hosting several events about the dangers of monopolies. I am no stranger to situations in which a fellow or a program staff member writes something that directly contradicts the views of another program in ways that has upset a funder….

In the academy… donors know that academic independence is sacrosanct…. As a nonpartisan think tank, one that prides itself on not being politically predictable, we uphold the same standards of intellectual independence. But we do not pay our researchers’ salaries. Grants do…. We tell all of our donors that they cannot control the results of what they fund…. But we also develop and maintain relationships with our donors…. So there’s the tension. In practice, with an employee who had already surprised his colleagues unpleasantly—and many would say dishonestly—in the past, it meant that I wanted to see a press release before it went out. That is the reason that the Open Markets statement went up and then was taken down. It was posted before I had a chance to give it a final review….

I wanted to give the funder a heads up that it was coming and send it over ourselves. That seems like a defensible minimum courtesy that an institution can offer its funders: we’re about to do something you are really not going to like, but at least we are telling you about it…. I had to make a tough call. I still believe I made the right one consistent with our history and institutional values…. [But] we were not in fact negotiating a cooperative spin-out with Barry Lynn but were in fact on the other end of a carefully prepared campaign, one that was already generating thousands of tweets and emails. In an effort to express New America’s position quickly in 140 characters, I said that Ken Vogel’s New York Times story was false…. Many of the story’s facts and selective quotations were presented in a way that gave the strong impression that we told Open Markets it had to leave because of pressure from Google. Again, this is simply not true. Still, the blanket claim that the entire story was “false” contributes to the kind of degradation of our national discourse that I often publicly lament…. I regret my tweet….

Barry’s new organization and campaign against Google is the opening salvo of one group of Democrats versus another group of Democrats in the run-up to the 2020 election, at a time when I personally think the country faces far greater challenges of racism, violence, a broken political system, and geographic and partisan divisions so great that we are losing any common sense of what we stand and strive for as a country…. For us, organizations like us, and the media who cover us, let’s start by speaking truth, even when it’s complicated and messy and hard.

Must-Read: Best thing I have seen so far on Google, Open Markets, and the New America Foundation:

Ben Thompson: Google and The New America Foundation, Google’s Monopoly, Google’s Stupidity: “From the New York Times… https://stratechery.com/2017/google-and-the-new-america-foundation-googles-monopoly-googles-stupidity/

…The New America Foundation has received more than $21 million from Google; its parent company’s executive chairman, Eric Schmidt; and his family’s foundation… helped to establish New America as an elite voice in policy debates on the American left and helped Google shape those debates. But not long after one of New America’s scholars posted a statement on the think tank’s website praising the European Union’s penalty against Google, Mr. Schmidt, who had been chairman of New America until 2016, communicated his displeasure with the statement to the group’s president, Anne-Marie Slaughter, according to the scholar.

The statement disappeared from New America’s website, only to be reposted without explanation a few hours later. But word of Mr. Schmidt’s displeasure rippled through New America, which employs more than 200 people, including dozens of researchers, writers and scholars, most of whom work in sleek Washington offices where the main conference room is called the “Eric Schmidt Ideas Lab.” The episode left some people concerned that Google intended to discontinue funding, while others worried whether the think tank could truly be independent if it had to worry about offending its donors.

Those worries seemed to be substantiated a couple of days later, when Ms. Slaughter summoned the scholar who wrote the critical statement, Barry Lynn, to her office. He ran a New America initiative called Open Markets that has led a growing chorus of liberal criticism of the market dominance of telecom and tech giants, including Google, which is now part of a larger corporate entity known as Alphabet, for which Mr. Schmidt serves as executive chairman. Ms. Slaughter told Mr. Lynn that “the time has come for Open Markets and New America to part ways,” according to an email from Ms. Slaughter to Mr. Lynn. The email suggested that the entire Open Markets team—nearly 10 full-time employees and unpaid fellows—would be exiled from New America. While she asserted in the email, which was reviewed by The New York Times, that the decision was “in no way based on the content of your work,” Ms. Slaughter accused Mr. Lynn of “imperiling the institution as a whole”…

Slaughter, as part of her statement denying—and I quote, because in cases like this, specific words matter:

that Google lobbied New America to expel the Open Markets program because of this press release”, released three emails sent to Lynn. Slaughter claimed this was in the interest of transparency, but the emails refer to other correspondence that was not released. Not that it matters: the emails are damning, and make clear why Slaughter’s denial was so specifically worded: it seems highly likely the New York Times report is broadly correct…

There is a reason why, as far as I know, I have never quoted a think tank report on Stratechery. It’s not that they don’t do good work, it’s that it is often difficult to know who is paying the bills, and what that entails…. I am very intrigued to see how Open Markets is funded going forward; the obvious route is to find other corporate donors that oppose Google—there are a lot of them!—but for now Open Markets is raising money directly (I will not be contributing for the same conflict of interest reasons that I will not speak at Google). It seems past time for such a group to pursue an individually funded model like this: the Internet has drastically reduced transaction costs, and some percentage of the populace feels strongly about policy outcomes. It will be very interesting to see how this turns out.

All that said, it’s worth noting that nothing Google did here is illegal—nor should it be. It was merely stupid.

GOOGLE’S MONOPOLY: The bigger issue at play goes back to what, in my opinion, is one of the more important articles I’ve written on Stratechery—2016’s Antitrust and Aggregation…. One of the motivations behind Facebook and the Cost of Monopoly was to try to tease out a framework through which these aggregator monopolies might be deemed problematic…. In the U.S. antitrust is very much a political question; the current consumer and price-centric view of antitrust, which completely immunizes “free” services like Facebook and Google, is a relatively recent invention, coming to prominence under President Ronald Reagan in the 1980s. It follows, then, that any meaningful antitrust action against Google or Facebook or other aggregators depends on a significant shift in public opinion such that the foundation of current antitrust law is shifted. That is why this move by Google was so profoundly stupid. Some random press release was far less consequential than the press cycle of the last 24 hours…

Should-Read: Charlie Stross: Houston: what are the long-term consequences?: “I’m interested in chewing over… the effect of losing a major city… to a weather event that is already the worst in 800 years… http://www.antipope.org/charlie/blog-static/2017/08/houston-what-are-the-long-term.html

…(with, potentially, worse to come) and flooding due to rainfall that will almost certainly exceed 100 centimetres in a week. What happens next? Lessons in flood defenses and disaster mitigation? Changes to urban planning regimes? A major economic crisis…. Houston’s economy [has] a[n annual] GDP on the order of $450Bn). Mass homelessness and destitution is a no-brainer: is this also going to destabilize the secondary insurance markets? What are the global consequences, outside the USA? Tell me what happens next. Let’s compare notes.

dpb: In the short term I expect a very well funded (dis)information campaign to ensure that everyone knows that summer storms have ABSOLUTLY NOTHING to do with increasing temperatures. There are no ice caps in Texas etc. Longer term we have had New Orleans, now Houston. Traditionally it takes a third event for people to take note…

Should-Read: Noah Smith: There’s Something the Matter With Ohio Too: “Like Kansas, the state seems to be making economic and cultural choices that are holding it back… https://www.bloomberg.com/view/articles/2017-08-29/there-s-something-the-matter-with-ohio-too

…Virginia… Tyler Cowen wrote an excellent piece about how the state is a multicultural success story. Economically thriving… a large number of immigrants from all over the world. Those who attack that success are putting themselves on the wrong side of history. Virginia, of course, benefits from being close to Washington. Other states, such as New York, California, Texas and Illinois, have succeeded economically because of the wealth of huge, diverse cities like New York City, Chicago and Houston. And many sparsely populated states such as North Dakota are prospering mainly because of large endowments of natural resources. Meanwhile, states with none of these natural advantages, such as North Carolina and Minnesota, are making progress by leveraging higher education and technology clusters.

But a few states continue to flounder…. Exhibit #1 is Ohio…. The state has created jobs at a slower pace than the nation as a whole. Worse, Ohioans are getting paid less for the work they do…. The Buckeye State is… suffering a long, grinding slide into the lower ranks of U.S. states… at the center of the national opioid epidemic.

Why is this happening?… First, Ohio is part of the Rust Belt…. As University of California-Berkeley economist Enrico Moretti has shown, places that rely on old-line manufacturing have suffered economically and socially in recent decades, while centers of the knowledge-based economy—big cities, tech hubs and college towns—have thrived. Ohio Governor John Kasich… declaring his intent to remake the state as part of the “Knowledge Belt”… hard to do without getting more actual knowledge…. Ohio ranks 37th in terms of the percent of residents with bachelor’s degrees, and 30th in terms of advanced degrees. The state has no flagship public university system to rival the University of Michigan, University of Illinois or University of Wisconsin systems. The state provides comparatively little funding for poor residents to attend college…. Nor is Ohio getting sufficient talent from overseas….

In terms of diversity, too, Ohio stands out for resisting recent demographic trends…. A state that has difficulty accepting diversity limits its chances of becoming more prosperous…. If the state doesn’t do more to appeal to immigrants, fails to adapt to diversity, and allows higher education to lag, the state will never climb out of the doldrums it sank into during the days of the Rust Belt….

There are, however, some glimmers of hope…. Columbus, a relatively diverse city that is home to Ohio State University, is bucking statewide trends with booming employment, increasing population and rising wages. Ohio… can wallow in angry visions of the past, or it can try to follow the Columbus model and lift itself into the ranks of American success stories. The choice should be obvious.