Saturday assorted links


7. Smith (Noahpinion): "[R]eality is a thicket of market failures . . ." Really? Why are unwanted (or unexpected) economic events called market failures? I suppose for the same reason unwanted (or unexpected) health events are called medical failures. Maybe the unwanted (or unexpected) is what's supposed to happen, and our intervention disrupts what would be the natural order of things. Isn't suffering the path to salvation? I sound like a damn Calvinist, or worse, an Austrian! We so admire markets, except when we don't; and we don't when yours truly suffers.

People who say this also rarely acknowledge the enormous lava pit of government failures.

I found this take more insightful:

We (sociologists, historians, political scientists, lawyers, doctors) are all economists now. Notice I included doctors on the list. I have worked with physicians most of my professional life, so I follow developments in medicine, and I'm a devoted fan of the blog created by Dr. Carroll and Professor Frakt called The Incidental Economist (TIE). Frakt is a "health economist", but his doctorate (from MIT) is in statistical and applied mathematics. I greatly admire Frakt, but regular readers of TIE will know what I mean when I suggest there is economics creep in his work. A big issue in medicine, maybe the biggest, is the use of statistics to establish best practices, or protocols. Supporters say it would reduce medical mistakes, while detractors say that it would take away the physician's judgment with respect to the unique medical condition of her patient. My view, widely shared, is that there's way too much intervention in medicine, much of it useless and some of it harmful. Is intervention in the economy like intervention in medicine, much of it useless and some of it harmful? I've pointed out that markets are efficient and correct excesses and imbalances, but corrections can be quite painful, so governments and central banks intervene, with fiscal stimulus and monetary stimulus, during times of economic corrections. I've also pointed out that fiscal stimulus and monetary stimulus are both redistributive, the former redistributive downward, the latter redistributive upward, so a balance of the two is necessary to avoid making a bad situation worse. What's the proof? In this crisis, intervention (since 2009) has been almost exclusively in the form of monetary stimulus, the intent and effect of which is to inflate the value of assets. And it's worked! Asset values (financial assets anyway) have been restored to the pre-crisis level, and beyond. Some smart people are concerned that monetary stimulus has worked so well that it's created another asset bubble, and that we are at great risk of another financial crisis. Krugman isn't buying it; indeed, he can't even understand what these naysayers are talking about (read his blog entry yesterday). The concern, (intentionally) not made clear by those expressing it, is that if we do experience another crisis and asset values plummet, the monetary stimulus tank is empty, so who or how can we intervene to mitigate/avoid the correction. Intervention in medicine has to be undertaken with great care or the patient will be made worse off. Intervention in the economy has to be undertaken with great care or the patient will be made worse off.

Those power points in #4 are actually terrible ... Too much information is posted on each slide

It takes a lot of text to wave away the supply-demand curve.

I agree. You know what they say about powerpoint and lecturing prowess: it raises the floor but lowers the ceiling.

I think you are missing the point.

Students always ask for lecture notes or handouts to help them study and this request is sometimes driven by students who doze off during class or ditch it altogether. It would be easy (especially if you a prominent, tenured professor at Princeton) to blow them off, lecture from scribblings on 3x5 notecards and tell them they need to take better notes during the lecture. The fact that an otherwise busy professor takes the time to put together slides -- even if they are crammed full of text and obviously not something that someone who has hours to spend on carefully designing a slide deck would produce -- and give them away for free on the internet is already a sign that person is going beyond the call of duty to help his or her students (and even presumably non-students like you and me) understand the material.

Don't complain too loudly that your free ice cream isn't the right flavor.

Elites trading off the welfare of citizens for the welfare of non-citizens, at any %, should go fuck themselves. Full stop.

BTW, I have been drinking.

Really? There is no cost, however negligible, that could fall on a single citizen of the United States that would be worth saving the life of a non-citizen? None? Wow.

If there is that is a number that the citizens of the nation not its self-interested elites should decide. I took his comment to be directed at the idea that bleeding heart elitism shouldn't have to consult the body politic in its decisions, but just act with altruistic motives being the only necessary justification.

I don't find that strange. When that is the collective sentiment, there you have a nation.

You speak in the passive voice, but someone decides who pays. Sam Read me correctly.

If you dont think that the people who have been given power in exchange for the responsibility to look over the welfare of a particular group of people should live up to their end of the bargain then we have different priors.

Actually, there's not. A nation-state is set up for the benefit of its members in good standing, i.e., its citizens, just like your household benefits its members to the exclusion of others and your business benefits its shareholders to the exclusion of others. If private citizens want to donate money to the citizens of other states, that should be a private matter. For the state to do it is ultra vires.

Incidentally, why do we bother recognizing the sovereignty of states that can't even exist without foreign aid? How long are we going to pretend places like Haiti are legitimate sovereigns?

Why 'wow'? This is exactly why we have charity, if there are people outside the state that are suffering then then aid bought with resources acquired through charity sounds completely appropriate.

Unless what you are really asking for is to confiscate resources from others that do not agree with your sentiments, and apply them as you see fit. Ahh, now I understand you motivations.

When you permanently give up a couple of bedrooms in your house to a couple of Nigerian and Salvadoran immigrants and share your other resources with them, you can give us your condescending "wow", but, until then, save the hypocrisy.

#5: "This is consistent with Olson’s theory and provides insight into how post-crisis Iceland was able to successfully reform institutions that were previously decayed as a result of decades of interest group formation that preceded Iceland’s financial crisis. "

I guess our crisis was not severe enough since we never reached the reform stage. As far as I can tell interest groups still control America's financial system.

It might have been severe enough had we not had a crudnik like Barney Frank in a gatekeeper position, had not had a president notable for vapidity, and had not had Turbotax Timmy in another gatekeeper position. And then there's Congress as a whole. Asked to explain his behavior a year later, Henry Paulson said that Congress does nothing unless there's a crisis.

What Conrad Black said: the American political class has flubbed every issue of the post-Cold War era but welfare reform (which Obama and his minions wish to gut). He might have added the restoration of some degree of order in select local areas (which Obama, the Holder 'Justice' department and current office holders wish to gut as well).

The brutal truth may be that our position is analogous to that of the South American Southern Cone, ca. 1971. Our elected officials are the problem and the process which put them there does not act to replace them with anyone better.

(Unlisted) Any thoughts on the Faux-sa Parks story? I'd file it under "foreseeable outcomes of identity politics."

Cowen has made a name for himself NOT commenting on the hottest culture war issues of the day. You know, to the extent one can make a name for themselves doing this.

I could have sworn that he posted an entry on "Star Trek v. Star Wars" a few years ago.

Rachel is a social construct.

Re. #4 - until Libertarians get over their fantasy of destroying the standard of living of most of the U.S. population and replacing the culture which permits the current level of economic activity here with dysfunctional ones found in S America and Africa via promoting unlimited immigration they will have virtually no political influence. The slides here are absurd as they utterly fail to note how in a democracy both culture and political power will be fundamentally transformed via mass immigration.


"Workers of the world, unite!"

Dani Rodrik is no libertarian and it seems you didn't read past page 12 of the notes he posted where he presents some of the counter-arguments you allude to.

The tweeted responses to #3 are instructive. Brianna Wu's (@Spacekatgal) career, and the career of her peers is firmly rooted in inequality between men and women. If that inequality doesn't exist, or disappears, "bye bye" to the fame and money, Brianna.

2: Postrels review is a good one; she cited Betchen Barber's work. But she could've put more emphasis on a likely reason why textile technology was often given short shrift by archeologists: for decades most archeologists were men, and on average men pay less attention to textiles than women do, both in ordinary life and in archeology, formerly at least.

Another example of this is in hair-styling, where archeologists for decades (centuries?) assumed that the Roman hairstyles depicted in sculptures and portraits had to be created using wigs. But a hairstylist in Baltimore used her professional skills and showed that those Roman hairstyles actually can be created on most women's heads.

Postrel also correctly identifies a niche market that has been paying close attention to textiles for decades: outdoors people, who rely on goretex, fleece, hydrophobic fabrics, etc. to stay warmer and drier than natural textiles would permit. She overlooks however a sub-market of that market: tent manufacturers, who make ever lighter tents by switching from polyurethane-coated nylon to silnylon (silicon-coated nylon) to cuben fiber. Many of these technological advances have come from an even more specialized market: sail manufacturers, who want fabrics that are light, strong, and water-resistant and wind-resistant.

Postrel's review of textiles was laughably bad, but probably her target audience is women or people light on science and history. There's a lot about fabrics she could have talked about, as you mention, as well as pointing out that one key to northern Europe's industrialization was the shift from wool to cotton (requires lots of machines), which incidentally also helped fuel the US Civil War and was the prototype of the computer (references omitted, but they are legion). As has been remarked before, a lot of what TC cites is old stuff made new again by recasting it...a Great Stagnation in literature, lol.

Mistaking reader friendly, interesting and read by lots of people with laughably bad. Not everyone is aware of textiles inside car tires, medical devices or the awesomeness of Dyneema cords for exciting weekend activities.

This text is aimed at the public awareness of science/history. If you want something higher, read and criticize scientific publications.

If MR does not fulfill your intellectual aspirations...........why are you losing your time here? Could it be that MR fulfills your emotional needs?

7: fascinating thoughts about the future of empirical vs theoretical economics. I wonder though why the articles seem to list only three techniques: instrumental variables, difference-in-differences, and regression discontinuity models. Do propensity scoring models (which seem to be used relatively rarely by economists) not count? And for that matter Heckman's Heckit models (which are heavily used by economists).

Unless propensity or selection are predicted by some instrument -- meaning they fit into one of the three techniques usually given -- then any additional identifying information is entirely from functional form assumptions. They're just kinds of control functions. For this reason, they're generally excepted from the "credibility revolution."

Empirical economics will fall by the wayside the same way bogus social science experiments have. It's just nonsense, flavor-of-the-month stuff.

I would add, my impression is "Heckit" really isn't used much anymore.

#1 The Sawyer is right to show that being a party clown requires more creativity than being a stage actor. But it doesn't follow that party clowns actually have more creative talent. A talentless actor might end up as a talentless party clown as a way to pay the bills. Whereas a highly talented party clown might find he can quickly move up in the world and end up as a stage actor.

1. The idea that "stage actor" is higher-status than "priest" is, frankly, bunkum.

I hope that author is running in a Republican primary somewhere, because the analysis is otherwise grievously misguided.

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