David Beckworth serves up another very good blog post and directs us to this graph of nominal gdp; it seems aggregate demand has been recovering steadily:
Scott Sumner directs us to Marcus Nunes, but here is a quotation from Scott:
In 1937 real government purchases recoiled 4.2% and the economy tanked. In 2012 real government purchases were 4.8% below the 2010 level and the recovery is slow!
Surely something is going on that´s making comparable ‘fiscal austerity’ so much less damning in 2012 than in 1937.
And that ‘something’ is monetary policy.
Here are further remarks from Scott.
The market for methadone vomit in prison is lively, and the preferred recipe for this cocktail is one part puke (strained, please, bartender) to one part Tang.
Here is more, interesting on other points too, by Graeme Wood, mostly on the drug problem in the country of Georgia, and the pointer is from Wonkbook.
Remember Max, who wrote into MR asking for career advice? Max’s situation now has been turned into an NPR Planet Money segment, link here. There is audio at that link (very cleverly done) but here is part of their text:
The fact that Max and other young college graduates can even entertain this question — “What is my passion?” — is a new conundrum, and still a luxury not everybody enjoys. Yet, Tyler recently told me, it is “a central question of our time.”
So what’s the best, most rational answer for Max? It seems like economics could help; after all, it’s about costs and benefits and modeling complicated decisions.
But, Tyler says, “it was a truly difficult, tough question to make any progress on.”
Months passed. Tyler felt guilty. So he invited Max to lunch, and brought along two other economists — Bryan Caplan and Garett Jones — for backup. The economists posed questions to help Max frame the issue:
- How much are you willing to suffer in the short run to get a better future?
- Have you ever considered working in Asia?
- How important will it be to spend X number of hours with your kids? And what is that X?
- How well do you understand your own defects?
- What does 50-year-old Max want?
- Can your community be a cyber community, or do you need to have a face-to-face community?
In the end, the three economists did not advise Max to pursue some particular career path. They didn’t even give very specific advice. But they did all agree that Max’s lack of a passion could work to his advantage. Pursuing a passion — especially if it’s a popular passion — often doesn’t pay very well.
From Really Curious:
There is much that economists actually agree on. Why don’t we have PACs or other groups emerge that push political solutions which represent common sense agreement on a variety of issues.
There is a selection issue. There are plenty of issues where economists agree and those views are enacted into policy, in part because special interests do not mind, do not have enough power, or perhaps even on net agree. Non-agricultural free trade, or rather near-free trade, is one example, the general adoption of capitalism is another. In those cases the PAC is not really needed.
When economists are not listened to, that often means strong special interests and/or strong voter sentiment stand on the other side of the equation. The numerous special deductions in the tax code, most of which have no efficiency justification, are examples.
Given such formidable enemies, who would fund an economists’ PAC? Who would donate? Why not just donate to a single issue PAC which covers an economist-friendly issue? Here is a list of the biggest PACS, starting with realtors and beer wholesalers, not ideologues or for that matter sensible policy analysts. Honeywell is third. Or if the single issue approach doesn’t excite a potential donor, I would think that more people are drawn to broadly ideological PACs, or perhaps “super PACs,” which would not quite fit with “pro-economist.”
You may know that the original American Economics Association had rather explicit political origins, as well as some religious and arguably even some racist overtones. It did not evolve into a PAC, and over time it has become something much more professional and geared toward some rather practical, non-political ends.
I’ve seen this work bashed a number of times in the blogosphere over the last few years. It didn’t get everything right, but it remains an important and seminal work and at the time of its publication it was a revelatory work. Let’s turn the microphone over to Albert Hirschman, hardly a right-wing ideologue. This is from Jeremy Adelman’s very useful biography of Hirschman:
…when he [Hirschman] found a copy of Friedrich von Hayek’s recently published…The Road to Serfdom in a Rome bookstore, a nerve was struck: “Reading this book is very useful for someone like me who grew up in a ‘collectivist’ climate — it makes you rethink many things and has shown me in how many important points I have moved away from the beliefs I had when I was 18 years old. The experience of the army has also confirmed or rather demonstrated forcefully the advantages of a monetary society, anonymous, and where one preserves at least a sector of private initiative.”
…Even more than a reminder of his skepticism of statist planners, Hayek got at something Hirschman felt strongly: the need to acknowledge the basic limits to the “intelligibility” of our complex world. Leaders were wont to claim complete knowledge when they did not have it and thus to squash the individual’s ability to make adjustments “to changes who cause and nature he cannot understand.”
Hirschman was never convinced by Hayek’s desire to rely so heavily on the market, but in this appreciation of the book you will find more wisdom than in the recent attempted take downs. In essence, the critics are not grasping how backward was the intellectual climate when Hayek’s book came out and what a useful corrective it was.
By the way, here is a new and good Cass Sunstein review of the Adelman bio of Hirschman.
Addendum: From the comments, Ricardo points us to Sen’s nice words about the book.
“Seventy per cent of all global transfer pricing litigation is in India”…
Yet it is difficult for foreign companies to obtain legal clarification on these cases. Here is more, with the encompassing article by James Crabtree and Victor Mallet.
This is every bit as good as volume one. I now also know why he titled the whole thing what is in essence *Mein Kampf* (no, the author is not a Nazi, but rather he is rather savagely poking fun at modernity and the modern notion of struggle).
You can buy it here. It is better, by the way, to read volume one first, but if you picked this up blind, without having read the first part, you would do just fine with it.
Think about it: Carlsen, Knausgaard, and the world’s largest sovereign wealth fund. This has been some century (so far) for The Land of the Midnight Sun.
From Andrew Oswald, via the excellent Angus:, here is the opening bit:
If everyone likes your work, you can be certain that you haven’t done anything important. Conflict and pain go with the territory –
that of changing how a profession thinks and furthering what we know about our world. The pressures on young researchers are to conform, to accept fashionable ways of analyzing problems, and above all to please senior professors and their own peers. Unfortunately this is bad for scientific progress.
The main difference between world-class researchers and sound researchers is not intellect; it is energy, single-mindedness, more energy, and the ability to withstand what will sometimes feel like never-ending disappointment, tiredness and psychological pain. Tenacity is almost everything.
Matt Yglesias has the scoop, and here is his chart:
You can think of that as another way of viewing the lost economic decade of the oughties.
In a new survey paper (pdf), Greg Duncan and Katherine Magnuson report:
Programs beginning before 1980 produced significantly larger effect sizes (.33 standard deviations) than those that began later (.16 standard deviations). Declining effect sizes over time are disappointing, as we might hope that lessons from prior evaluations and advances in the science of child development would have led to an increase in program effects over time. However, the likely reason for the decline is that counterfactual conditions for children in the control groups in these studies have improved substantially. We have already seen in Figure 1 how much more likely low-income children are to be attending some form of center-based care now relative to 40 years ago. This matters because, though center-based care programs have varying degrees of educational focus, most research suggests that center-based care is associated with better cognitive and achievement outcomes for preschool age children (NICHD Early Childcare Research Network and Duncan 2003).
Even more impressive are gains in the likely quality of the home environment provided by low-income mothers, as indexed by their completed schooling. In 1970, some 71 percent of preschool age children in the bottom 20 percent of the income distribution had mothers who lacked a high school degree, while only 5 percent of the mothers had attended at least some postsecondary schooling…
There is also this:
Analysis of the meta-analytic database shows that, taken as a whole, effect sizes were neither larger nor smaller for children who started programs at younger ages (Leak, Duncan, Li, Magnuson, Schindler, and Yoshikawa 2012). This suggests that other modes of early childhood investments—for example, home visitation for high-risk, first-time mothers (Olds, Sadler, and Kitzman 2007) or developmental screenings and interventions for children living in families with documented domestic violence—may be more-effective ways of building children’s capacities during the very early years of life.
It would be a mistake, however, to read the authors as simply trashing pre-school programs. Part of their close emphasizes this question:
This finding raises a puzzle: How do we reconcile the fade-out of preschool program impacts on test scores during elementary school with the evidence showing that such programs nonetheless have beneficial impacts on a broad set of later-life outcomes like high school graduation rates, teen parenthood, and criminality?
It is an interesting essay which raises good questions throughout.
This is an email from his press secretary:
I wanted to write to applaud your great piece in the NYT this weekend, and make sure you were aware of Sen. Sanders’ legislation on the issue.
During the last congress Sen. Sanders introduced a bill to create a $3 billion fund tasked with giving away prizes for drug breakthroughs. Here’s a release for the bill and here’s a video of a hearing the senator held on it where Joseph Stiglitz, Lawrence Lessig and Jamie Love all testify in support.
I thought you might be interested.
He is referring to my piece from this Sunday.
I loved this novel. It is immediately gripping, subtle, fun to read, runs counter to cliche, and is also fairly short. You will find some (strongly positive) reviews here. I quite liked her last book, but if you didn’t, this is a whole level better, and different in nature, so you should try it anyway.