MUST OF THE MUSTS:
Weekend Reading: Mark Twain's Huckleberry Finn Wrestles with the American Christian Church for His Soul, and Wins and Saves It https://www.bradford-delong.com/2019/12/weekend-reading-mark-twains-huckleberry-finn-wrestles-with-the-american-christian-church-for-his-soul-and-wins-and-saves-i.html: 'I about made up my mind to pray; and see if I couldn’t try to quit being the kind of a boy I was, and be better. So I kneeled down. But the words wouldn’t come. Why wouldn’t they? It warn’t no use to try and hide it from Him. Nor from me, neither. I knowed very well why they wouldn’t come. It was because my heart warn’t right; it was because I warn’t square; it was because I was playing double...
I have been quite surprised to discovery that the 2019 Economics Nobel Laureates have not received enough praise since the announcement. So go read this: Oriana Bandiera: Alleviating Poverty with Experimental Research: The 2019 Nobel Laureates https://voxeu.org/article/alleviating-poverty-experimental-research-2019-nobel-laureates: 'Abhijit Banerjee, Esther Duflo, and Michael Kremer “for their experimental approach to alleviating global poverty”.... Development economics had no PhD courses, no group at the NBER or CEPR, and hardly any publications in top journals until the early 2000s. What this year’s Nobel laureates did was to build the infrastructure to make fieldwork widely accessible and the methods to make the analysis credible. What they did, and what they were awarded for, is to put development economics back on centre stage.... What is unusual and relevant is that the nomination explicitly mentions that the winners lead a group effort: “The Laureates’ research findings–and those of the researchers following in their footsteps” (Royal Swedish Academy of Sciences 2019). What is even more unusual and extremely relevant is that the nomination emphasises the practical applications of their methods, which “have dramatically improved our ability to fight poverty in practice”. This is a monumental change, and one that the profession should welcome for the obvious reason that making the world a better place is a desirable goal. To be clear, each of them could have easily won the prize the ‘usual’ way – that is, by doing research of the highest quality, which has had lasting influence both in theoretical and applied economics. The economist (still) on the street might notice that of the top three cited papers for each of the three laureates, only two are randomised controlled trials (RCTs).... The need for policy to fix market failures generates the need for tools to evaluate policy. RCTs were developed to achieve this in a systematic way. They and other experimental methods had been widely used in the natural sciences and to a lesser extent in economics well before Abhijit Banerjee, Esther Duflo, and Michael Kremer began their work. Their contribution was to make them accessible to a large number of researchers, creating a research ‘firm’ which, like those in Banerjee and Newman (1993) and Kremer (1993), combines the talent of many to produce more than the sum of its individual components...
Which Political Party's Policies Boost Investment in America, Again? https://www.bradford-delong.com/2019/12/which-political-partys-policies-boost-investment-in-america-again.html: 'Suppose you were a stranger to humanity, and looked at this graph of trends in the investment share of output under various administrations. Would you then credit the claim that the red-presidents political party was dedicated to boosting investment in America, and that the blue-presidents political party was dedicated to sacrificing investment and growth to achieve egalitarian redistributional social goals? No...
Marx's Capital: Part VII: The Accumulation of Capital https://www.bradford-delong.com/2019/12/marxs-capital-part-vii-the-accumulation-of-capital.html: 4.3) Part VII: The Accumulation of Capital: 4.3.1. The Bourgeoisie Is the Ruling Class: This is where the book starts to sing (to me, at least). The first important thing I get out of Part VII is that, to quote from the Communist Manifesto, “the executive of the modern state is a committee for managing the affairs of the _business class”. Wealth speaks loudly, and influences the government to arrange things for the convenience of wealth—to keep wages low, and workers available... https://www.icloud.com/pages/0howtV7CndvjkSCCLmtjmq_SA...
Lecture Notes: Smith, Marx, Keynes: Thanksgiving 2019 DRAFT https://www.bradford-delong.com/2019/12/lecture-notes-smith-marx-keynes-thanksgiving-2019-draft.html: I have finished (a draft of) my "Smith, Marx, Keynes" lecture notes—well, I have not written 7.6 and 8.2. For 7.6, I have simply dumped in (much of) Paul Krugman's Mr. Keynes and the Moderns. 8.2 I have not written anything on. But what it is, it is... https://www.icloud.com/pages/0howtV7CndvjkSCCLmtjmq_SA And the course slides: https://www.icloud.com/keynote/0osOOsPvSrTaiK4__D5MghPVA...
Let me, for one, say that I am very skeptical of Spartan generalship if Gylippos the Mothrax—the victor of Syrakusa—is unable to think through the game tree to understand that there is probably, somewhere, an accounting check on his actions. "Not knowing there was a writing in [each] stack indicating the sum it held" is not a boss move here: Plutarch: Life of Lysander http://penelope.uchicago.edu/Thayer/E/Roman/Texts/Plutarch/Lives/Lysander*.html: 'Lysander, after settling these matters, sailed for Thrace himself, but what remained of the public moneys, together with all the gifts and crowns which he had himself received,—many people, as was natural, offering presents to a man who had the greatest power, and who was, in a manner, master of Hellas,—he sent off to Lacedaemon by Gylippus, who had held command in Sicily. But Gylippus, as it is said, ripped open the sacks at the bottom, and after taking a large amount of silver from each, sewed them up again, not knowing that there was a writing in each indicating the sum it held. And when he came to Sparta, he hid what he had stolen under the tiles of his house, but delivered the sacks to the ephors, and showed the seals upon them. When, however, the ephors opened the sacks and counted the money, its amount did not agree with the written lists, and the thing perplexed them, until a servant of Gylippus made the truth known to them by his riddle of many owls sleeping under the tiling. For most of the coinage of the time, as it seems, bore the forgery of an owl, owing to the supremacy of Athens. Gylippus, then, after adding a deed so disgraceful and ignoble as this to his previous great and brilliant achievements, removed himself from Lacedaemon...
Here, in 1865, we find Karl Marx anxious to not quite say that commodity prices are equal on average to their values but only that they are regulated by their labor values. What are commodity prices equal to on average? What, that is, determines what earlier economists would have called the value of a commodity—its average or natural price? Marx does not say. But he does, I think, realize that it would be rhetorically bad for him to flat-out say that he is not using the word "value" to mean "average or natural price". But if average prices are not labor values then what happens to Marx's entire surplus-value analysis? Average profits are then equal to value minus labor value plus surplus-value, and is there anything in the system to make the deviations of value from labor value cancel out so that you can say that at least in aggregate profits are surplus value? No. It is not clear to me how much Marx knew of how deep the trouble went: Karl Marx (1865): Value, Price, and Profit https://delong.typepad.com/files/marx-vpp.pdf: 'At the moment when supply and demand equilibrate each other, and therefore cease to act, the market price of a commodity coincides with its real value, with the standard price round which its market prices oscillate. In inquiring into the nature of that VALUE, we have therefore nothing at all to do with the temporary effects on market prices of supply and demand. The same holds true of wages and of the prices of all other commodities.... Normal and average profits are made by selling commodities not above, but at their real values.... Deduct from the value of a commodity the value replacing the value of the raw materials and other means of production used upon it, that is to say, deduct the value representing the past labour contained in it, and the remainder of its value will resolve into the quantity of labour added by the working man last employed.... The values of commodities, which must ultimately regulate their market prices, are exclusively determined by the total quantities of labour fixed in them.... Capitalistic production moves through certain periodical cycles... [with] the market prices of commodities, and the market rates of profit, follow these phases, now sinking below their averages, now rising above them. Considering the whole cycle, you will find that one deviation of the market price is being compensated by the other, and that, taking the average of the cycle, the market prices of commodities are regulated by their values...
Andrei Shleifer: Implementation Cycles https://scholar.harvard.edu/files/shleifer/files/implement_cycles.pdf: "An artificial economy in which firms in different industries make inventions at different timers but innovate simultaneously to take advantage of high aggregate demand. In return, high aggregate demand results from simultaneous innovation in many sectors. The economy exhibits multiple cyclical equilibria, with entrepreneurs' expectations determining which equilibrium obtains. These equilibria are Pareto ranked, and the most profitable equilibrium need not be the most efficient. While an informed stabilization policy can sometimes raise welfare, if large booms are necessary to cover sized costs of innovation, stabilization policy can stop all technological progress...
Yes, the Medicaid expansion part of the ACA had a very high benefit-cost ratio. And those states that have blocked it have seen their poor suffer and die in not insignificant numbers for no comprehensible reason. Why do you ask?: Sarah Miller, Sean Altekruse, Norman Johnson, and Laura R. Wherry: Medicaid and Mortality: New Evidence from Linked Survey and Administrative Data: "Changes in mortality for near-elderly adults in states with and without Affordable Care Act Medicaid expansions. We identify adults most likely to benefit using survey information on socioeconomic and citizenship status, and public program participation. We find a 0.13 percentage point decline in annual mortality, a 9.3 percent reduction over the sample mean, associated with Medicaid expansion for this population. The effect is driven by a reduction in disease-related deaths and grows over time. We find no evidence of differential pre-treatment trends in outcomes and no effects among placebo groups...
I have been quite surprised to discovery that the 2019 Economics Nobel Laureates have not received enough praise since the announcement. So go read this: Oriana Bandiera: Alleviating Poverty with Experimental Research: The 2019 Nobel Laureates https://voxeu.org/article/alleviating-poverty-experimental-research-2019-nobel-laureates: 'Abhijit Banerjee, Esther Duflo, and Michael Kremer “for their experimental approach to alleviating global poverty”.... Development economics had no PhD courses, no group at the NBER or CEPR, and hardly any publications in top journals until the early 2000s. What this year’s Nobel laureates did was to build the infrastructure to make fieldwork widely accessible and the methods to make the analysis credible. What they did, and what they were awarded for, is to put development economics back on centre stage.... What is unusual and relevant is that the nomination explicitly mentions that the winners lead a group effort: “The Laureates’ research findings–and those of the researchers following in their footsteps” (Royal Swedish Academy of Sciences 2019). What is even more unusual and extremely relevant is that the nomination emphasises the practical applications of their methods, which “have dramatically improved our ability to fight poverty in practice”. This is a monumental change, and one that the profession should welcome for the obvious reason that making the world a better place is a desirable goal. To be clear, each of them could have easily won the prize the ‘usual’ way – that is, by doing research of the highest quality, which has had lasting influence both in theoretical and applied economics. The economist (still) on the street might notice that of the top three cited papers for each of the three laureates, only two are randomised controlled trials (RCTs).... The need for policy to fix market failures generates the need for tools to evaluate policy. RCTs were developed to achieve this in a systematic way. They and other experimental methods had been widely used in the natural sciences and to a lesser extent in economics well before Abhijit Banerjee, Esther Duflo, and Michael Kremer began their work. Their contribution was to make them accessible to a large number of researchers, creating a research ‘firm’ which, like those in Banerjee and Newman (1993) and Kremer (1993), combines the talent of many to produce more than the sum of its individual components...
David Glasner does the Lord's work in pointing out that David Graeber—well, it's hard to know what David Graeber does. It certainly does not include things I would call "doing one's homework", "thinking clearly", or "writing coherently". : David Glasner: Graeber Against Economics https://uneasymoney.com/2019/12/01/graeber-against-economics/: 'Graeber describe how he thinks that economists think about how banks create money, correctly observing that there is a debate.... "Only a minority—mostly heterodox economists, post-Keynesians, and modern money theorists—uphold... that... deposits themselves were the result of loans. The one thing it never seemed to occur to anyone to do was to get a job at a bank...". But since James Tobin’s classic essay “Commercial banks as creators of money” was published in 1963, most economists who have thought carefully about banking have concluded that... deposits created by banks corresponds to the quantity of deposits that the public... chooses to hold.... Graeber... acknowledges that the weight of professional opinion... says that loans create deposits. He... triumphantly cites a report by Bank of England economists.... "Before long, the Bank of England... rolled out an elaborate official report called 'Money Creation in the Modern Economy', replete with videos and animations, making the same point: existing economics textbooks, and particularly the reigning monetarist orthodoxy, are wrong. The heterodox economists are right. Private banks create money. Central banks like the Bank of England create money as well, but monetarists are entirely wrong to insist that their proper function is to control the money supply..." Graeber, I regret to say, is simply exposing the inadequacy of his knowledge of the history of economics. Adam Smith in The Wealth of Nations explained that banks create money.... Subsequent economists from David Ricardo through Henry Thornton, J. S. Mill and R. G. Hawtrey were perfectly aware...
King Solomon (-1000): First Occurrence of "OK, Boomer https://www.biblegateway.com/passage/?search=Ecclesiastes+7&version=KJV: 'Say not thou, "What is the cause that the former days were better than these?" for thou dost not enquire wisely concerning this...
John Maynard Keynes (1919): The Economic Consequences of the Peace: "After 1870 there was developed on a large scale an unprecedented situation, and the economic condition of Europe became during the next fifty years unstable and peculiar. The pressure of population on food, which had already been balanced by the accessibility of supplies from America, became for the first time in recorded history definitely reversed. As numbers increased, food was actually easier to secure. Larger proportional returns from an increasing scale of production became true of agriculture as well as industry. With the growth of the European population there were more emigrants on the one hand to till the soil of the new countries, and, on the other, more workmen were available in Europe to prepare the industrial products and capital goods which were to maintain the emigrant populations in their new homes, and to build the railways and ships which were to make accessible to Europe food and raw products from distant sources. Up to about 1900 a unit of labor applied to industry yielded year by year a purchasing power over an increasing quantity of food. It is possible that about the year 1900 this process began to be reversed, and a diminishing yield of Nature to man's effort was beginning to reassert itself. But the tendency of cereals to rise in real cost was balanced by other improvements; and—one of many novelties—the resources of tropical Africa then for the first time came into large employ, and a great traffic in oil-seeds began to bring to the table of Europe in a new and cheaper form one of the essential foodstuffs of mankind. In this economic Eldorado, in this economic Utopia, as the earlier economists would have deemed it, most of us were brought up. That happy age lost sight of a view of the world which filled with deep-seated melancholy the founders of our Political Economy. Before the eighteenth century mankind entertained no false hopes. To lay the illusions which grew popular at that age's latter end, Malthus disclosed a Devil. For half a century all serious economical writings held that Devil in clear prospect. For the next half century he was chained up and out of sight. Now perhaps we have loosed him again...
Eric R. Sims and Jing Cynthia Wu: The Four Equation New Keynesian Model: "This paper develops a New Keynesian model featuring financial intermediation, short and long term bonds, credit shocks, and scope for unconventional monetary policy. The log-linearized model reduces to four key equations–a Phillips curve, an IS equation, and policy rules for the short term nominal interest rate and the central bank's long bond portfolio (QE). The four equation model collapses to the standard three equation New Keynesian model under a simple parameter restriction. Credit shocks and QE appear in both the IS and Phillips curves. Optimal monetary policy entails adjusting the short term interest rate to offset natural rate shocks, but using QE to offset credit market disruptions. The ability of the central bank to engage in QE significantly mitigates the costs of a binding zero lower bound...
Henry Fielding (1749): The History of Tom Jones, a Foundling https://www.gutenberg.org/files/6593/6593-h/6593-h.htm#link2HCH0174: 'Lest many of my readers should censure his folly for thus troubling himself with the affairs of others, and lest some few should think he acted more disinterestedly than indeed he did, we think proper to assure our reader, that he was so far from being unconcerned in this matter, that he had indeed a very considerable interest in bringing it to that final consummation. To explain this seeming paradox at once, he was one who could truly say with him in Terence, Homo sum: humani nihil a me alienum puto. He was never an indifferent spectator of the misery or happiness of any one; and he felt either the one or the other in great proportion as he himself contributed to either. He could not, therefore, be the instrument of raising a whole family from the lowest state of wretchedness to the highest pitch of joy without conveying great felicity to himself; more perhaps than worldly men often purchase to themselves by undergoing the most severe labour, and often by wading through the deepest iniquity. Those readers who are of the same complexion with him will perhaps think this short chapter contains abundance of matter; while others may probably wish, short as it is, that it had been totally spared as impertinent to the main design, which I suppose they conclude is to bring Mr Jones to the gallows, or, if possible, to a more deplorable catastrophe...
John Maynard Keynes (1937): The General Theory of Employment https://delong.typepad.com/files/keynes-1937.pdf: 'I am more attached to the comparatively simple fundamental ideas which underlie my theory than to the particular forms in which I have embodied them.... I would... prefer... to reëxpress some of these ideas.... By "uncertain"... I... mean... the price of copper and the rate of interest twenty years hence, or the obsolescence of a new invention, or the position of private wealth-owners in the social system in 1970. About these matters there is no scientific basis on which to form any calculable probability whatever. We simply do not know. Nevertheless, the necessity for action and for decision compels us as practical men to do our best to overlook this awkward fact and to behave exactly as we should if we had behind us a good Benthamite calculation of a series of prospective advantages and disadvantages, each multiplied by its appropriate probability, waiting to be summed. How do we manage in such circumstances to behave[?]... We assume that the present is a... serviceable guide to the future.... We assume that the existing state of opinion as expressed in prices and the character of existing output is... correct.... We endeavor to conform with the behavior of the... average.... Now a practical theory of the future based on these three principles... based on so flimsy a foundation... is subject to sudden [p.215] and violent changes.... Our desire to hold Money as a store of wealth is a barometer of the degree of our distrust of our own calculations and conventions concerning the future.... It is not surprising that the volume of investment, thus determined, should fluctuate widely from time to time. For it depends on two sets of judgments about the future, neither of which rests on an adequate or secure foundation-on the propensity to hoard and on opinions of the future yield of capital-assets. Nor is there any reason to suppose that the fluctuations in one of these factors will tend to offset the fluctuations in the other.... The amount of consumption-goods which it will pay entrepreneurs to produce depends on the amount of investment-goods which they are producing.... Given the psychology of the public, the level of output and employment as a whole depends on the amount of investment.... This that I offer is, therefore, a theory of why output and employment are so liable to fluctuation...
John Maynard Keynes: The General Theory of Employment, Interest and Money https://www.marxists.org/reference/subject/economics/keynes/general-theory/ch21.htm: 'It is a great fault of symbolic pseudo-mathematical methods of formalising a system of economic analysis, such as we shall set down in section vi of this chapter, that they expressly assume strict independence between the factors involved and lose all their cogency and authority if this hypothesis is disallowed; whereas, in ordinary discourse, where we are not blindly manipulating but know all the time what we are doing and what the words mean, we can keep “at the back of our heads” the necessary reserves and qualifications and the adjustments which we shall have to make later on, in a way in which we cannot keep complicated partial differentials “at the back” of several pages of algebra which assume that they all vanish. Too large a proportion of recent “mathematical” economics are mere concoctions, as imprecise as the initial assumptions they rest on, which allow the author to lose sight of the complexities and interdependencies of the real world in a maze of pretentious and unhelpful symbols...
Steve M.: There Won't Be a Battle for the Gop's Soul, and If There Is One, Reformicons Will Be Noncombatants https://nomoremister.blogspot.com/2019/12/there-wont-be-battle-for-gops-soul-and.html: 'Resistance to government social programs means that Republican politicians run on an economic philosophy that's counter to what most Americans want, including their own voters. But their voters don't mind, because GOP pols distract them with talk about how much Democrats like open borders and Drag Queen Story Hour and gun confiscation. That plus gerrymandering and Democratic vote suppression is still working for Republicans, and may work again in 2020. Rubio is only 48, and he surely believes that Republicans will need a message more positive than "Suck it, libtards!" one of these days—though that moment of reckoning never seems to come.... But he likes to think he's a good man doing the Lord's work—or at least he's trying to position himself as a good man, because he believes that's a promising market niche in politics. There's no battle for the soul of the Republican Party.... The party consists of corporatists who are unabashed about it and corporatists who occasionally pretend that's not what they are. The only question is whether increasing numbers of Republican politicians in the foreseeable future will be pretenders. Trump was one in 2016, and it worked, because he still sounded like a liberal-hating tough guy. Rubio is one now, and it probably won't be to his benefit, because he sounds almost like a liberal. GOP voters want the economy to work better for them, but they want liberal tears more...
That Uber is so exercised about being treated as an employer suggests that a substantial part of its hopes for profitability hinge on its successfully running a let's-make-someone-else-pay-for-our-workers'-social-insurance game: Bloomberg Daily Labor Report5: Uber Hit With $650 Million Employment Tax Bill in New Jersey https://news.bloomberglaw.com/daily-labor-report/uber-hit-with-650-million-employment-tax-bill-in-new-jersey: 'Uber Technologies Inc. owes New Jersey about $650 million in unemployment and disability insurance taxes because the rideshare company has been misclassifying drivers as independent contractors, the state’s labor department said. Uber and subsidiary Rasier LLC were assessed $523 million in past-due taxes over the last four years, the state Department of Labor and Workforce Development said in a pair of letters to the companies. The rideshare businesses also are on the hook for as much as $119 million in interest and penalties on the unpaid amounts, according to other internal department documents.... Uber extended declines on news of New Jersey’s efforts, falling as much as 3.9%. Ridehailing competitor Lyft Inc. also dropped. The state’s determination is limited to unemployment and disability insurance, but it could also mean that Uber is required to pay drivers minimum wages and overtime under state law...
UC Hastings Professor, Academic Leaders Call for Support of AB5: "A letter calling on the U.S. Senate to support AB5, a law that would force the gig economy giants like Uber and Lyft to classify its workers as employees instead of independent contractors.... 'We write as academics (including law professors, labor economists, political scientists, sociologists, and historians) from across the country who have studied the intersections of law, regulation, misclassification, the platform economy, and/or precarious work. As a legal matter, we unequivocally support the California Supreme Court’s decision in Dynamex v. Superior Court of Los Angeles (2018) and AB5, the legislative effort to make employee-status the default under state law and to codify the ABC test…We oppose attempts to carve gig workers out', the letter reads...
I confess that I have never understood why Bayesian statisticians would ever report just a single set of "results". One of the key insights of the Reverend Thomas Bayes was that the data gives you a map between what you thought before and what you should think now. Thus I would think that the Bayesian tradition would be to report this map—not just what the posterior mean is for one set of prior beliefs, but other things as well, like how different your prior beliefs would have to have been in order to support a posterior mean that hits some target for economic significance, and so forth. But they do not: Andrew Gelman: Here’s an Idea for Not Getting Tripped Up with Default Priors: "Here’s an idea for not getting tripped up with default priors: For each parameter (or other qoi), compare the posterior sd to the prior sd. If the posterior sd for any parameter (or qoi) is more than 0.1 times the prior sd, then print out a note: “The prior distribution for this parameter is informative.” Then the user can go back and check that the default prior makes sense for this particular example...
Why invite people onto the TV just so that they can tell lies? I do not understand American journalism today: Zachary Basu: Trump Trade Adviser Peter Navarro: Tariffs Aren't Hurting Anyone in the U.S.: "White House trade adviser Peter Navarro said on CNN's 'State of the Union' Sunday that tariffs on Chinese goods are not hurting consumers in the United States, despite reports to the contrary from researchers at Harvard, the University of Chicago, the International Monetary Fund, the Federal Reserve of Boston and more...
Liz Hipple: Public Policy Implications of the Millennial Wealth Gap https://equitablegrowth.org/public-policy-implications-of-the-millennial-wealth-gap/: 'Wealth may shape the behavioral choices of the next generation, thereby shaping opportunity by providing some with a soft cushion for a slip down the economic ladder and others with no cushion at all.... The ability to live with one’s parents allows young people to search longer for jobs that have better prospects for future earnings growth, increasing their chances of upward mobility and of successfully beginning to build wealth of their own. Another roadblock to Millennials’ ability to fully deploy their human potential is the structural changes in the labor market over the past 30 years, which have depressed wages and thereby delayed wealth building. For example, young adults who replicate their parents’ educational and occupational backgrounds and end up in the same type of work and in the same relative place in the economic distribution earn less in inflation-adjusted terms than their parents did a generation ago...
Joseph Stiglitz, Martine Durand, and Jean-Paul Fitoussi: Who Are You Going to Believe, Me or the Evidence of Your Own Eyes?: "We need to develop datasets and tools to examine the factors that determine what matters for people and the places in which they live. Having the right set of indicators, and anchoring them in policy, will help close the gap between experts and ordinary people that are at the root of today’s political crisis.... The Stiglitz-Sen-Fitoussi Commission... final report was published in 2009.... The production of goods and services in the market economy–something which GDP does try to capture–is of course a major influence, but even in the limited domain of the market, GDP doesn’t reflect much that is important. The most used economic indicators concentrate on averages, and give little or no information on well-being at a more detailed level, for instance how income is distributed.... Economic insecurity today is only one of the risks individuals face.... The Group considered how to better measure the resources needed to ensure economic, environmental and social sustainability...
There are many proposals to revamp education in economics, and to get economists to their right place in the public sphere—whatever that "right place" might turn out to be. The highly estimable Martin Wolf is here on the side of those who think that economics ought to focus on basic principles, arresting stories, and big data as a way of figuring out which store are in fact representative of broader trends. He is critic of over-mathematization and, more so, of over-theorization—I, at least, am reminded of Larry Meyer's take on Robert Lucas's brand of economics: "In our firm, we always thanked Robert Lucas for giving us a virtual monopoly. Because of Lucas and others, for two decades no graduate students are trained who were capable of competing with us by building econometric models that had a hope of explaining short-run output and price dynamics. [Academic economics Ph.D. programs] educated a lot of macroeconomists who were trained to do only two things--teach macroeconomics to graduate students, and publish in the journals...": Martin Wolf: Expertise](https://www.ineteconomics.org/perspectives/blog/why-economists-failed-as-experts-and-how-to-make-them-matter-again): "Michael Gove was wrong, in my view, about expertise applied in the Brexit debate. But he was not altogether wrong about the expertise of economists. If we were more humble and more honest, we might be better recognized as experts able to contribute to public debate.... At bottom, economics is a field of inquiry and a way of thinking. Among its valuable core concepts are: opportunity cost, marginal cost, rent, sunk costs, externalities, and effective demand. Economics also allows people to make at least some sense of debates on growth, taxation, monetary policy, economic development, inequality, and so forth. It is unnecessary to possess a vast technical apparatus to understand these ideas. Indeed the technical apparatus can get in the way.... The teaching of economics to undergraduates must focus on core ideas, essential questions, and actual realities. Such a curriculum might not be the best way to produce candidates for PhD programs. So be it. The study of economics at university must not be seen through so narrow a lens. Its purpose is to produce people with a broad economic enlightenment. That is what the public debate needs. It is what education has to provide...
Five years ago our steering committee member here at Equitable Growth Janet Yellen gave a very good talk on building blocks of opportunity in America: Janet Yellen: Perspectives on Inequality and Opportunity from the Survey of Consumer Finances https://www.federalreserve.gov/newsevents/speech/yellen20141017a.htm: "[I] identify and discuss four sources of economic opportunity in America--think of them as "building blocks" for the gains in income and wealth that most Americans hope are within reach of those who strive for them. The first two are widely recognized as important sources of opportunity: resources available for children and affordable higher education. The second two may come as more of a surprise: business ownership and inheritances. Like most sources of wealth, family ownership of businesses and inheritances are concentrated among households at the top of the distribution. But both of these are less concentrated and more broadly distributed than other forms of wealth, and there is some basis for thinking that they may also play a role in providing economic opportunities to a considerable number of families below the top...
Court Historian of David: Saul and the Witch of Endor (1 Samuel 28) https://www.biblegateway.com/passage/?search=1+Samuel+28&version=NET;KJV: 'And it came to pass in those days, that the Philistines gathered their armies together for warfare, to fight with Israel. And Achish said unto David, "Know thou assuredly, that thou shalt go out with me to battle, thou and thy men". And David said to Achish, "Surely thou shalt know what thy servant can do". And Achish said to David, "Therefore will I make thee keeper of mine head for ever". Now Samuel was dead, and all Israel had lamented him, and buried him in Ramah, even in his own city. And Saul had put away those that had familiar spirits, and the wizards, out of the land. And the Philistines gathered themselves together, and came and pitched in Shunem: and Saul gathered all Israel together, and they pitched in Gilboa. And when Saul saw the host of the Philistines, he was afraid, and his heart greatly trembled...
I have not yet gotten to Gabriel Zucman and Emmanuel Saez's The Triumph of Injustice, but Equitable Growth's Kate Bahn has: Kate Bahn: "'The Triumph of Injustice'... shows that the average tax rate is 28%, but for the very very rich, the tax rate is effectively 23%. https://twitter.com/LipstickEcon/status/1184477242765774848 This is due to the incomes of the richest not being subject to individual income taxes...
Plutarch: Life of Lysander http://penelope.uchicago.edu/Thayer/E/Roman/Texts/Plutarch/Lives/Lysander*.html: 'So then, after the Athenians had yielded in all points, Lysander sent for many flute-girls from the city, and assembled all those who were already in the camp, and then tore down the walls, and burned up the triremes, to the sound of the flute, while the allies crowned themselves with garlands and made merry together, counting that day as the beginning of their freedom. Then, without delay, he also made changes in the form of government, establishing thirty rulers in the city and ten in Piraeus. Further, he put a garrison into the acropolis, and made Callibius, a Spartan, its harmost. He it was who once lifted his staff to smite Autolycus, the athlete, whom Xenophon makes the chief character in his "Symposium"; and when Autolycus seized him by the legs and threw him down, Lysander did not side with Callibius in his vexation, but actually joined in censuring him, saying that he did not understand how to govern freemen. But the Thirty, to gratify Callibius, soon afterwards put Autolycus to death...
This is absolutely fascinating. The rich in the American South are much poorer a generation after the Civil War then they had been before: sharecropping and Jim Crow are less effective at extracting wealth from African-Americans. But Phil Ager and company find no signs that those fractions of the elite who were direct slaveholders lost more than those members of the elite who were indirect slaveholders. I am going to have to think very hard about this: Philipp Ager, Leah Platt Boustan, and Katherine Eriksson: The Intergenerational Effects of a Large Wealth Shock: White Southerners After the Civil War: "The nullification of slave-based wealth after the US Civil War (1861-65) was one of the largest episodes of wealth compression in history. We document that white southern households with more slave assets lost substantially more wealth by 1870 relative to households with otherwise similar pre-War wealth levels. Yet, the sons of these slaveholders recovered in income and wealth proxies by 1880, in part by shifting into white collar positions and marrying into higher status families. Their pattern of recovery is most consistent with the importance of social networks in facilitating employment opportunities and access to credit...
Robert Barro appears unhappy that the economy possesses multiple expectational equilibria, and seeks for a model of inflation that does have this property. This is, frankly, a weird thing to do: models are supposed to represent the salient features of the world, not ignore them. And that economies often have multiple expectational equilibria and sometimes shift rapidly from one to another has been a live position now for... nearly two centuries, since John Stuart Mill and Jean-Baptiste Say analyzed the British financial crisis of 1825. And it was made hegemonic by... John Maynard Keynes more than 80 years ago in his General Theory. But unhappiness with a theory is not a reason to reject it: Robert J. Barro: Mysteries of Monetary Policy: "The puzzle is how the Fed can keep inflation steady at 1.5‑2% per year by relying on a policy tool that seems to have only weak and delayed effects.... [Perhaps] the credible threat of extreme responses from the Fed has meant that it does not actually have to repeat the Volcker-era policy.... Frankly, I am unhappy with this explanation. It is like saying that the inflation rate is subdued because it just is.... This suggests that the monetary policy behind today’s low and stable actual and expected inflation will keep working until, suddenly, it doesn’t. This makes me wish that I had a better understanding of monetary policy and inflation. It also makes me wish that the people responsible for monetary policy had a better understanding than I have. Many readers, no doubt, would say that my second wish has already been granted...
John Holbo: The Steelwool Scrub–A Fallacy http://crookedtimber.org/2019/05/07/the-steelwool-scrub-a-fallacy/: 'There’s a common "religious liberty" trope... an invalid variant on a Steelman-style argument.... The Steelwool Scrub is quite bad.... Take same-sex marriage (more recently, trans issues): you can always rustle up some Ryan T. Anderson-type to spin up some Thomistic-ish natural law (Christian anthropology etc.) argument. Even if this is weak ‘steel’ (I would judge), belated scholasticism, wandering the modern world, looks ornamental–harmless, innocent, unassuming. At worst, a curious mooncalf; at best, considerably more academically polished than old-school fag-bashing. Now comes the bait-and-switch (indulgence-by-proxy, steelman-to-absolve-all-sins.) If anyone now says ‘opposition to LGBTQ rights is bigotry and irrational animus’–the response comes quick. ‘Unfair! Will no one think of poor Ryan T. Anderson! Of his elaborate, perhaps failed yet earnestly-exposited, to-all-appearances sincere arguments! Is the world so unable to tolerate a little [insert squirrel gaze GIF] DIFFERENCE? Can all this be dismissed as mere, base homophobia! Mindless bigotry! Surely not! Surely, then, it is those who call it ‘bigotry’ who must be [squirrel GIF again] the REAL BIGOTS!’... Descriptively–sociologically–it’s absurd to steelman a socio-cultural order-or-group by conflating its practices and norms with unrepresentative, intellectual outliers. If you think the reason trans people struggle for respect, recognition, rights is that they are surrounded by well-meaning, rationally-convicted neo-Thomists, you’re nuts. Trans people struggle and suffer because they are members of a despised, oppressed minority group. SSM was a fight because gays face irrational animus, not a thicket of para-Aristotelian arguments. Spinning actually-existing bigotry as, ideally, the better angel of some natural law argument, is just a weird way to excuse what’s right there in front of you...
John Holbo: Vavilovian Philosophical Mimicry http://crookedtimber.org/2019/12/03/vavilovian-philosophical-mimicry/: 'Today I propose a new term in political theory. Vavilovian philosophical mimicry! It denotes a type of relation between ideal and non-ideal theories. It posits that the former evolves as protective concealment for the latter.... Weeds evolve, under selective pressure, to resemble crops.... Let’s take the white supremacy-libertarianism case.... You are proposing doing something that would keep African-Americans down. Why are you doing that? Because that’s what you want. But you can’t say that. But: you can plausibly pretend it’s a (merely temporarily uncomfortable) stage on the way to some sort of ideal libertarian night watchman end-state. The advantage of ideal theory is that it’s–well, not real. Yet. So it’s low commitment, in practical terms. Nominal commitment to some distant, ideally liberal end-state covers a variety of present, anti-liberal sins. So philosophical conservatism should be theorized in terms of the following four factors: 1) an element of aristocratic anti-liberalism (animus against the agency of the subordinate classes.) Cf. Robin. 2) an element of Vavilovian, pseudo-liberal mimicry. Anti-liberalisms that survive in a liberal environment will tend to look like each other because they are all, as it were, trying to look enough like liberalism to not get weeded out as too anti-liberal. But these resemblances, because they are protective mimicry, are actually misleading. At least superficial. 3) considerable liberal democratic DNA. It’s rare to run into a real, dyed-in-the-wool Joseph de Maistre-type. 4) 2 may result in 3, over time, via ‘fake it until you make it’, if you see what I mean...
John Holbo: Ersatz Better Angels? http://crookedtimber.org/2019/12/04/ersatz-better-angels/: 'We tend to think of the relationship between ideal and non-ideal theory as aspirational and/or clarificatory. Ideal theory represents either 1) a distant point towards which you ought to move; 2) a pristine expression of your real values, unblemished by extraneous, pragmatic considerations. You could sort of roll 1) and 2) up together and say: ideal theory should be a polestar. A clear, fixed point by which you can steer somewhere better than where you are. But, in these Vavilovian/Steelwool cases... the point of dragging in ideal theory is, in effect, to footdrag, extenuate and obfuscate.... You are bad (see above), so pretending to be GOOD-good is hard. But you might be able to pull off semi-not-bad, from a middle-distance. So you invent a semi-not-bad aspirational self. Angel of my less-bad nature! But, really, this aspirational self is just there to provide plausible deniability. This ersatz angel lets you stay bad, rather than making you have to be even a little better...
Benoît de Courson and Nicolas Baumard: Quantifying the Scientitic Revolution https://drive.google.com/file/d/14XXlDjyru9i05_SN3ybp-FGmbsZDhm5U/view: 'We leverage large datasets of individual biographies to build national estimates of scientific production during the early modern period.... Per capita estimates reveal striking differences across countries, with the two richest countries of the time (England and the United Provinces)... much more scientifically productive than the rest of Europe.... Scientific creativity is associated with other kinds of creative activities in philosophy, literature, music and the arts, suggesting a common underlying factor. Our results also challenge long-held hypotheses regarding the role of religion, universities, demography, and the printing press, and support the idea that economic development and rising living standards are key to explaining the rise of modern science...
Interesting that Henry Fielding uses the phrase "King of Prussia" in 1749 in Tom Jones: the Kings in Prussia were not to claim the title King of Prussia until 1772. Indeed, the point of the Crown Treaty of 1700 was that the Prince-Elector of Brandenburg and Duke of Prussia Friedrich III Hohenzollern sought recognition that he was by the Treaty of Bromberg sovereign—i.e., not a vassal of the King of Poland—over those parts of Prussia he controlled, and definitely not freed from vassalage for his German-Imperial to the Emperor Leopold I Habsburg. "King of Prussia" introduces some ambiguity there. And in 1749 either Henry Fielding or Aunt Western is unaware of this distinction between "in" and "of", which was important enough for Leopold I Habsburg to have made it a red line in his negotiations with Friedrich III Hohenzollern to get the Margravate of Brandenburg's troops on his side in the War of the Spanish Succession: Henry Fielding: The History of Tom Jones https://www.gutenberg.org/files/6593/6593-h/6593-h.htm#link2H_4_0003: '“Indeed, Miss Western,” cries the lady, “I shall not bear this usage; you have learnt of your father this manner of treating me; he hath taught you to give me the lie. He hath totally ruined you by this false system of education; and, please heaven, he shall have the comfort of its fruits; for once more I declare to you, that to-morrow morning I will carry you back. I will withdraw all my forces from the field, and remain henceforth, like the wise king of Prussia, in a state of perfect neutrality. You are both too wise to be regulated by my measures; so prepare yourself, for to-morrow morning you shall evacuate this house”...
Be sure to apply by January 26!: Equitable Growth: 2020 Request for Proposals https://equitablegrowth.org/research-paper/2020-request-for-proposals/: 'Equitable Growth considers proposals that investigate the link between economic inequality and individuals’ economic outcomes and well-being, poverty and mobility from poverty, the macroeconomy, and sustainability. We are particularly interested in dimensions of inequality, including race, ethnicity, gender, and place, as well as the ways in which public polices affect the relationship between inequality and growth...
A better-run IRS would devote much more in the way of resources to investigating "independent contractor" fraud and abuse: Corey Husak: How U.S. Companies Harm Workers By
Making ThemPretending That They Are Independent Contractors: "Being classified as either an employee or an independent contractor can determine whether workers in the United States have access to reliable pay, benefits, and protection from discrimination. Intense fights are cropping up across the country as companies try to argue that their workers are just “independent contractors” and do not qualify for many protections under U.S. labor law, while workers and some courts say the opposite, that some workers are actually employees. Many “gig economy” companies, such as Uber Technologies Inc., base their business models around misclassifying their workers as self-employed. Billions of dollars in worker pay is at stake...Income and wealth inequality corrupt politics in the interest of maintaining and expanding income and wealth inequality: Back in 1867, Karl Marx notes The Times of London protesting against manufacturing's cotton lords' pressure on British governance and legislation: Karl Marx (1867): Capital https://www.marxists.org/archive/marx/works/1867-c1/ch23.htm: 'The Times answered the cotton lord as follows: "Edmund Potter is so impressed with the exceptional and supreme importance of the cotton masters.... ‘Is it worth while keeping the machinery in order?’ again asks Mr. Potter.... By the ‘machinery’ Mr. Potter means the human machinery.... We must confess that we do not think it ‘worth while,’ or even possible, to keep the human machinery... shut... up and... oiled till it is wanted. Human machinery will rust under inaction, oil and rub it as you may. Moreover, the human machinery will, as we have just seen, get the steam up of its own accord, and burst or run amuck.... He says that it is very natural the workers should wish to emigrate; but he thinks that in spite of their desire, the nation ought to keep this half million of workers with their 700,000 dependents, shut up in the cotton districts; and as a necessary consequence, he must of course think that the nation ought to keep down their discontent by force.... The time is come when the great public opinion of these islands must operate to save this ‘working power’ from those who would deal with it as they would deal with iron, and coal, and cotton...
Beth Gutelius and Nik Theodore: The Future of Warehouse Work: Technological Change in the U.S. Logistics Industry http://laborcenter.berkeley.edu/future-of-warehouse-work/: 'Are “dark” warehouses, humming along without humans, just around the corner? Predictions of dramatic job loss due to technology adoption and automation often highlight warehousing as an industry on the brink of transformation.... We project that the industry likely won’t experience dramatic job loss over the next decade, though many workers may see the content and quality of their jobs shift as technologies are adopted for particular tasks. Employers may use technology in ways that decrease the skill requirements of jobs in order to reduce training times and turnover costs. This could create adverse effects on workers, such as wage stagnation and job insecurity. New technologies potentially can curtail monotonous or physically strenuous activities, but depending on how they are implemented, may present new challenges for worker health and safety, employee morale, and turnover. Additionally, electronically mediated forms of monitoring and micro-management threaten to constrain workers’ autonomy and introduce new rigidities into the workplace...
It's a waterfall: at each stage of the process by which the innovation workforce is built, being Black and being female is a powerful disadvantage at making it through the filter and proceeding to the next stage: Lisa Cook and Jan Gerso: The Implications of U.S. Gender and Racial Disparities in Income and Wealth Inequality at Each Stage of the Innovation Process: "Gender and racial disparities exist at each stage of the innovation process, from education to training, and from the practice of invention to the commercialization of invention, and can be costly to the U.S. economy. These disparities can also lead to increased income and wealth inequalities at each stage for those who would otherwise participate in the innovation economy. Let’s look at each stage to assess this problem in further detail...
The psychological makeup of the American conservative media pundit is very strange indeed: Paul Krugman (2014): Phosphate Memories https://krugman.blogs.nytimes.com/2014/08/05/phosphate-memories/: "Does anyone remember this, from Erick Erickson of Red State? 'Washington State has turned its residents into a group of drug runners—crossing state lines to buy dish washer detergent with phosphate. At what point do the people tell
This post first appeared on Bradford-delong.com: Grasping Reality With The Invisible Hand..., please read the originial post: here
