Teaching with blogs
That’s right, make your students write a blog. I suggested this idea some time ago, now David Tufte has tried it. Here is the result. Keep in mind they are undergraduates. Here is one cynical but not totally inaccurate post about “bad economists.”
The advantages of this teaching method? People tend to remember and care about what they write. And getting students to write regular short bits is probably better than giving them a procrastination-inducing longer paper.
The disadvantages? There are not enough constraints on blather and fallacious reasoning. And perhaps the students decide that whatever they wrote is in fact true, a kind of lock-in bias. [Not that we professional bloggers ever have this problem…]
Here is Tufte’s own blog, and he directs my attention to this post. It is reported that only ten percent of published Journal of Money, Credit, and Banking papers can be replicated by outside parties.
Is economics a science? Yes, but let’s keep in mind that being a science, taken alone, doesn’t get you very far.
Robin Hanson tells me this will be huge
There’s a big advantage that you missed, btw. Check out, for example, the “gnu radio” open source software radio project. Then consider this: the FCC can pass any rule that it likes saying you can’t copy digital television off the air or what have you, but anyone who decodes HDTV with a software defined radio (SDR) can just change the software to ignore the desires of the regulators, and open source SDRs are already here. This is yet another instance where general purpose computers make regulation very difficult.
Really, though, SDR isn’t that interesting until it is coupled with another major advance that is creeping up — phased array active antenna technologies. These have the capacity to literally make the amount of bandwidth available in radio unlimited. I do not use the word “literally” figuratively here — I mean “literally”. With phased arrays, you and I can broadcast as much as we want on exactly the same frequency, and so long as we’re slightly spatially separated no one will care.
Consider the way radio works now. Two stations can’t be broadcasting at the same frequency unless they are so far apart that receivers can only hear one of them at a time. Bring them too close together and the
primitive sensors we use for electromagnetic radiation will get both signals and become confused.
Now consider the situation with another sort of electromagnetic sensor — the human eye. There is no rule that says you and your friend can’t wear the same color shirt in the same room for fear that people will
be unable to distinguish the two of you. The eye has no trouble seeing multiple sources of the same electromagnetic frequency and distinguishing them. You can easily focus on any one of several sources of the same electromagnetic frequency even though you are receiving others.
What’s the difference between your eye and your FM radio? Entirely that your eye is directionally sensitive and the radio is not. The radio has much the same view of the world that a non-directional photocell with a color filter would have — it can tell that a particular frequency has arrived but not from where and it can’t distinguish multiple signals directionally. Imagine if you had to see the world that way.
Well, as it turns out, you don’t have to see the world that way. There’s a technology out there (the details aren’t important) called “phased arrays” that allows you to broadcast a signal very directionally (like shining a light at one and only one person) or to focus very directionally on a single signal (so that you can listen to
one FM broadcast on 99.5 and not hear another originating one mile away at the exact same frequency.)
This is not a theoretical technology — it has been in use in military radar systems (such as the one used on the very expensive Aegis ships the navy has) for decades. However, it depends on doing very complicated signal correlations, and until now that has been very expensive. However, if you do the work in software, it turns out to be pretty straightforward and the expense falls by 50% every year.
There are already companies playing this game — look at Vivato (www.vivato.com) for example, which is making phased array WiFi equipment.
With phased arrays, there’s no reason why everyone can’t be using the same spectrum at once. Couple phased arrays, spread spectrum (a modern technology for reducing interference) and SDR and suddenly the way we use radio today looks totally silly.
Bartering the Big Kahuna?
For reasons mostly involving ego, Shaq and Kobe no longer wish to play together. The economic question is why two superstars can’t seem to get along on the same team. L.A., arguably America’s largest sports market, is the value-maximizing place to play ball, but pride, envy, and relative status seem to have won out.
And what would the Lakers get? Butler, a small forward/guard, can start on most teams in the NBA. Odom and Grant give them a plausible front line. The idea is that Kobe and Odom will be the new Jordan and Pippen. Unlikely, but the Dallas Mavericks were not offering anyone who could play defense.
Shaq is 32, has played twelve seasons (mostly long and tough), and no longer has stellar games on a back-to-back basis without a few days’ rest. He doesn’t try very hard throughout most of the regular season, which is poison for team morale, and he is on the verge of being a defensive liability. Miami may make the Eastern finals, but if the Lakers can’t get through Detroit I bet Miami won’t either. Miami already made the second round of the playoffs this year. In two years what will they have left?
The Lakers would be taking on risks too. If Odom is caught smoking pot again, he has to sit out an entire year. And how about this bit?
“Even though his scoring average dropped from 15.2 to 9.2 points last season, [Caron] Butler has great potential.
Butler also has a checkered past, being arrested 15 times before age 15. He spent a year in jail for bringing a gun and cocaine to school.”
Here is the analysis of the ever-smart Marty Burns on the pending deal. Tony Kornheiser agrees.
The bottom line? This would be one of the biggest deals in NBA history. But oddly neither team is giving up or getting very much.
And oh yes, this guy could stop the deal.
Miracles are Everywhere?
In the course of any normal person’s life, miracles happen at a rate of roughly one per month…during the time that we are awake and actively engaged in living our lives, roughly for eight hours each day, we see and hear things happening at a rate of about one per second. So the total number of events that happen to us is about thirty thousand per day, or about a million per month. With few exceptions, these events are not miracles because they are insignificant. The chance of a miracle is about one per million events. Therefore we should expect about one miracle to happen, on the average, every month.
Got that? That’s one miracle a month.
So next time something extraordinary happens to you, keep this calculation in mind.
What About Me? I feel cheated. I had a great last month, but no miracle. No miracle the month before that either. I’m not sure I’ve ever had a miracle of this kind. According to this calculation, my history of no miracles is a miracle in and of itself. Now I feel better.
The information is from the August Scientific American, p.32, quoting Freeman Dyson; pick it up if you can, it is one of their best issues this year.
Addendum: Charles Martin points out that a miracle is relative to what you expect. The exact time I arrived at the office this morning was no miracle, although that particular time was extremely unlikely ex ante. So you can eliminate miracles from your life simply by expecting a wide class of possible events. You can increase your number of “miracles” by expecting some very specific outcomes.
What are the most expensive pieces of real estate?
Currently on the market, that is. Here is the list, along with a separate tally of top “equestrian properties.” Oddly there is only one of the homes that I would prefer to my current (modest) abode in Fairfax, Virginia. I simply do not wish to live in Aspen, Palm Springs, Palm Beach, or Long Island, no matter how luxurious the quarters. If I had billions, I would buy in New York, Los Angeles, Freiburg, and Mexico, and otherwise opt for hotels.
You may notice that the post is from a new and intriguing economics blog, CommonKnowledge.blogs.com, run by two graduate students out of our own George Mason.
Gordon Tullock triumphant
My colleague Gordon Tullock, along with Thomas Schelling, is one of the most deserving scholars never to have received a Nobel Prize [Ed Prescott and Eugene Fama are also obviously deserving, though they are much younger].
A new Liberty Fund series may help rectify this injustice. In ten cheap volumes ($12.00 for the first, 450 pp.) we will receive the greatest hits of Tullock. The first book, just published, presents Tullock’s best essays, including his classic article on rent-seeking behavior; read this summary as well.
Gordon’s degree is in law, many of his formative experiences were in post-WWII China (some say he was a spy), and he took only a single economics class, from Henry Simons at Chicago. Nonetheless Gordon is an economist to the core and full of intellectual surprises.
Gordon is best-known for his co-authorship of Calculus of Consent, which set the foundation for how economists think about voting rules and “politics as exchange.” But I think as much about his lesser-known contributions. He wrote early works on the economics of scientific organization, the economics of trials, and the economics of animal societies, including insects. These works have yet to be mined for their full insights. His Politics of Bureaucracy remains a classic.
Gordon is very much a systematic thinker, although he is oddly reluctant to admit this fact. I take his central insight to be the importance of law, but also that real laws are given by economic incentives, rather than by what is on the books. Here is Gordon’s 46-page vita, with a brief written introduction.
Kudos to Charles Rowley for having edited the volumes, and here is a more general link to the Liberty Fund publishing program.
The greatest poet of the twentieth century?
I don’t think it is crazy to pick the late Pablo Neruda, whose one hundredth birthday is today. (Yeats or Wallace Stevens are serious competition, however. Not to mention Rilke, who is probably my first choice…) Read this appreciation. Here are three poems in English, but no most poetry doesn’t translate well. Here is a (much better) concordance of poems in Spanish.
But why did so many artists love Stalin?
Neruda had become an ardent communist. Over the years he wrote a lot of sincerely felt, but otherwise weak, didactic poems denouncing Western imperialism. His strident praise for the Communist Party seems at best naive, and his admiration for Stalin, whom he never disavowed, can be hard to stomach. Such figures as Octavio Paz and Czeslaw Milosz broke with him over communism. In his Memoirs, completed just a few days before his death, he called himself “an anarchoid,” and that seems closer to the truth. “I do whatever I like,” he said.
Nonetheless, Neruda’s social and political commitments were crucial to his life and work. He was elected senator for the Communist Party in Chile in 1945. He campaigned for Gabriel González Videla, who became president the next year — and whose government then outlawed the Communist Party. Neruda denounced him, and in 1948 he was accused of disloyalty and declared a dangerous agitator. After a warrant for his arrest was issued, he went into hiding in Chile, then fled to Argentina and traveled to Italy, France, the Soviet Union and Asia. (His brief stay on the island of Capri during his exile was fictionalized in the touching film “Il Postino.”)
If I could have the answers to five questions in political science/sociology, the appeal of Stalinism to intellectuals would be one of them.
Addendum: Tom Myers notes that it is also the hundredth birthday of Deng Xao-Ping, here is a full list of famous July 12 babies.
Eight empirical propositions I used to think were correct
Just below I claimed that economics is a science. If that is so, we should expect to see empirical progress. Here are a few issues where I (and many others) have been swayed by the data; I will state these in the form of untrue claims which I no longer believe:
1. We can both control the price level and keep interest rates stable by targeting the monetary base. Twenty years ago I believed this, but even the Swiss have not stuck with monetary targeting. A better solution is to broadly target the price level but allow for mild inflation.
2. Minimum wage boosts will generally put many low-skilled workers out of work. I covered this one a few days ago.
3. Investment is highly elastic with respect to observed changes in real interest rates. I’ve seen a few good studies that generate significant elasticities, typically using taxes as an exogenous instrument. But more often than not you can’t get this result. Short-term cash flow is often a better predictor of business investment.
4. Free capital movements for developing countries should usher in macroeconomic stability. Ask Argentina, Thailand, and Indonesia. Sometimes this proposition will be true, it is simply not as true as we once thought. If you don’t do all your reforms to perfection, and perhaps even if you do, international capital markets may put you through the wringer. But note, I am not endorsing capital controls, which have problems as well, most of all corruption.
5. Immediate privatization is more important than establishing the rule of law. Arguably the jury is still out on this one. We haven’t observed the other sequencing in many cases (when has rule of law come first?) and thus we do not have the relevant counterfactual. But privatization alone is less effective than we used to think, pick almost any ex-Communist country as an example.
6. It is relatively easy for a disinflation to be credible, provided the government sticks to its guns. So expect some nominal wages to remain sticky and some unemployment to result. People simply won’t believe a government, can you blame them? Of course the disinflation may still be worth doing, but the costs are higher than we used to think.
7. Fairness perceptions, envy, and a stubborn attachment to the status quo have little to do with nominal wage stickiness. OK, this one remains up for grabs. But the evidence is mounting in favor of the importance of fairness perceptions; furthermore this is strongly consistent with my real world experience. We used to look more toward long-term contracts and efficiency wage theories to explain sticky wages.
8. Human beings maximize expected utility in the same way, regardless of context. But now, alas, I despair as to how general a science economics can ever become. The non-economist may not be shocked here. Still we now have a wide body of knowledge about the importance and specifics of framing effects.
Remarks:
All these results share some common features. All have real world policy implications. All spring from a variety of economic methods, but most prominently from direct observation and economic history, informed by fairly straightforward theories and simple approaches to data. Rarely have fancy-schmancy empirical methods, on their own, led a radical reshaping of our understanding.
Is economics a science?
Yes, says the Royal Society, the most prestigious scientific body in the world; no, says Cambridge, the UK’s leading science university which still considers it part of the arts.
What might appear an arcane academic argument has suddenly assumed huge significance following the election of Sir Partha Sarathi Dasgupta, an economics professor at Cambridge, as a fellow of the Royal Society which was founded in 1660.
From Venice, where he has been attending a gathering of the European Association for Economists, a delighted Dasgupta told The Telegraph: “This is a bigger honour for me than my knighthood. I believe I am the first economist in 350 years of the Royal Society to be made a fellow.”
He added: “Until now, economists have been considered social scientists eligible for membership of the British Academy, of which I am a fellow, but not the Royal Society, which was only for scientists and mathematicians.”
Each year, the Royal Society can elect 44 new members, which this year includes Dasgupta.
An official statement from Cambridge University proudly declared: “He is the first economist elected to the Royal Society.”
Here is the full story. Here is a press release. Here is Dasgupta’s home page. I’ve long been an admirer of how he blends microeconomic technique and philosophic reasoning about welfare economics. I would have voted for him without reservation. That being said, he is an odd pick in the sense of being less “scientistic” than most traditional empirical economists. He is not an ideal test case to broach the precedent.
And in my view economics is surely a science. We produce empirical knowledge which is subject to process of testing, broadly interpreted, and feedback; see my post above. We even now have controlled experiments. And look at some of our competitors. String theory is not yet empirical. Environmental science and ecology are rife with ideology. Astronomy doesn’t have controlled experiments. And isn’t chemistry just plain outright boring? There is plenty of empirical economics I don’t trust, but usually it is for quite hackneyed reasons (e.g., data mining), rather than for “intrinsic to economics” reasons.
Addendum: Here is a neat description of economic historian Niall Ferguson.
Markets in everything
But hey, when you buy bottled water isn’t fluoride what you’re trying to avoid?
Imagine a whole string of products along these lines:
“Organic produce with pesticides“
“Large print books, we fit more on the page than anyone else!”
Remember the old joke about the Soviet Union producing “The world’s largest microchip”?
I discovered the strange water on my second visit to Wegmans. By the way, I need to revise my last post about this super-supermarket. Upon further scrutiny, I can report that the prices are much lower than you will find in the competitors. It is truly a marvel of the modern world.
Foundation grants for everything
In the abandoned Burchardi church in the German town of Halberstadt, the world’s longest concert moved two notes closer to its end Monday: Three years down, 636 to go.
The addition of an E and E-sharp complement the G-sharp, B and G-sharp that have been playing since February 2003 in composer John Cage’s ”Organ2/ASLSP” — or ”Organ squared/As slow as possible.”
The five notes are the initial sounds played on a specially built organ — one in which keys are held down by weights, and new organ pipes will be added as needed as the piece is stretched out to last generations.
The concert is more than just an avant-garde riff on Cage’s already avant-garde oeuvre. ”It has a philosophical background: in the hectic times in which we live, to find calm through this slowness,” said Georg Bandarau, a businessman who helps run the private foundation behind the concert. ”In 639 years, maybe they will only have peace.”
The concert began Sept. 5, 2001 — the day Cage would have turned 89. The composition, originally written to last 20 minutes, starts with a silence, and the only sound for a first 1-1/2 years was air. The first notes were played in February 2003. The two new notes rang out Monday.
After debates in Germany about what ”as slow as possible” could mean — anywhere from a day to stretching on infinitely — the group of German music experts and organ builder behind the project chose the concert’s 639-year running time to commemorate the creation of the city’s historic Blockwerk organ in 1361.
About 10,000 tourists visited the city last year to hear the first three notes, Bandarau said.
Just imagine a German debate over what “as slow as possible” could mean. Here is the link to the story, the previous link also brings you to an audio version of the piece, just fight your way through the German instructions.
Does anyone listen to XTC anymore?
I’ve had satellite radio for over a year now, and even they don’t play XTC. Once seen as one of the UK most vital independent pop bands, XTC first rose to popularity and now seems to have fallen out of both indie and pop markets.
To be sure, the group had its problems. They don’t have a single album you can listen to straight through without wincing at least occasionally [Black Sea comes closest, though English Settlement has their highest peaks], the fey Britishisms can be offputting, and the vocals are sometimes monotonous [have I sold you on them yet?]. Plus they don’t have a truly convincing greatest hits collection. But their very best songs are among the most significant achievements of rock and roll. Andy Partridge’s songwriting, polyrhythms and studio sense have given me some of my most treasured musical moments. Let’s hope they stand the test of time.
I don’t do iPod (I can’t stand the poor sound quality), but buy the following if you can: 1) No Language in our Lungs [Partridge’s favorite song from the group], 2) Helicopter, 3) Ladybird, 4) Snowman [my favorite], 5) No Thugs in Our House, 6) Senses Working Overtime, 7) I’d Like That, 8) Crocodile, 9) Rocket from a Bottle, 10) Yacht Dance, 11) Brainiac’s Daughter [technically by the “Dukes of Stratosphere”], and 12) Holly up on Poppy, just to name a few. Those songs are my nomination for what belongs in the canon but isn’t yet there.
Addendum: Economist Dan Klein, who first turned me on to XTC, adds the following:
“I liked Tyler’s post on the British rock band XTC. But there is something about XTC he didn’t mention. Not sure how to describe it. Something like the soul wrenching sound of focus and determination. In Led Zeppelin and NWA you also get a pure sense of masculine being, but there’s something special about it in XTC. The self as a team of men in a boiler room making a machine serve an over-riding purpose. I think of songs like “Paper and Iron,” “Travels in Nihilon,” “Heaven is Paved with Broken Glass,” “Tissue Tigers,” and, above all, “Roads Girdle the Globe.” I’d say the peaks come on the albums Go 2, Drums and Wires, and Black Sea.”
“Hail mother motor!
Hail piston rotor!
Hail wheel!””
Does the minimum wage put people out of work?
Steve Landsburg imparts much wisdom on the minimum wage; read Brad DeLong as well. Steve writes:
How do we know what was in all the unpublished research about the minimum wage? Of course we don’t know for sure, but here’s what we do know: First, the big published studies were no more statistically significant than the small ones. Second, this shouldn’t happen if the published results fairly represent all the results. Third, that means there must be some important difference between the published and the unpublished work. And fourth, that means we should be very skeptical of what we see in the published papers.
Now that we’ve re-evaluated the evidence with all this in mind, here’s what most labor economists believe: The minimum wage kills very few jobs, and the jobs it kills were lousy jobs anyway. It is almost impossible to maintain the old argument that minimum wages are bad for minimum-wage workers.
The work of Card and Krueger has emphasized the puzzle of why minimum wage boosts don’t cause a big downturn in employment. They offer up a complicated story about labor market monopsony.
My take:
On this issue (and many others) I’ve been much influenced by my colleague Gordon Tullock. Gordon notes that the government can make an employer raise nominal money wages, but can’t stop him from turning off the air conditioner. [A more optimistic scenario is that the employer invests in creating a higher-productivity job.] Surely just about every job out there can be made worse, one way or another, in a way that saves the employer money.
So the scenario is now simple. The government boosts the minimum wage. Low-wage workers earn more. Few lose their jobs. Workers sweat more too, one way or another. Few are much better off.
Addendum: There is a neat twist on this argument, drawing on the idea of an intra-family externality. Let’s say you hold the “traditionalist” view that the poor don’t work hard enough for their families. If Tullock’s mechanism is operative, you might then favor increasing the minimum wage. The end result would be more sweat at a higher money wage.
Would Kerry be more fiscally irresponsible than Bush?
Virginia Postrel says yes; read more here. Paul Krugman suggests Kerry will repeal the tax cut [tax shift, more accurately] to spend more on health care, rather than trying to restore a balanced budget (my words, not his). Can these two luminaries, not always in total agreement, be wrong?
No doubt, if you look at what Kerry says, it sounds like he will spend more than Bush. But the ever-perceptive Jane Galt reminds us that, well…politicians are liars! (Just don’t let on you heard it here…)
I look less at what politicians say, and more at what kind of coalition they would have to build to rule. The high domestic spending of Bush I take as a sign of perceived political weakness (“we need to buy more allies”), rather than a reflection of Bush’s ideology. So in part it depends on what a Kerry victory would look like. But here are a few reasons to think Kerry might be more fiscally responsible:
1. The Republicans will still probably control the House and maybe the Senate too, check out the odds. The political benefits from spending are less, the less you control the content of that spending.
2. The Republicans become more fiscally conservative in opposition.
3. Kerry’s supporters hate Bush, most of all, for what is perceived to be his “Texan-evangelical-grammatically challenged-frat boy” symbolism [just for the record, I don’t buy this picture]. Kerry can appease his base on these symbols fairly easily, just by showing up for work. I doubt if many Kerry supporters are expecting or requiring that a Kerry candidacy would bring a significant movement toward the left on economic policy, above and beyond repealing some of the tax cuts. The left hates Bush so much they would become captives of the center, if Kerry held the presidency. The left would have nowhere else to go (advice to the left: be careful how much Bush hatred you show!)
4. Kerry would be under constant pressure to show that he is “tough” on foreign policy. This will limit his ability to make domestic spending commitments. And if he does well on foreign policy, and appears suitably in charge, he could get reelected without much using spending to buy domestic support. If he is weak on foreign policy, will lots of spending really help him?
5. If Bush is re-elected, it affirms that a Republican can get away with jacking up domestic spending. Such a precedent is worrying for the longer run, not just for Bush’s second term.
6. Have many Presidents moved closer toward their original ideological base in their second terms?
That’s enough raw unfounded speculation for one day. But no, it is not obvious to me that Kerry would be less fiscally responsible than Bush. It’s a judgment call, but let’s not obsess over what candidates say when campaigning. Don’t forget, it was Bush who campaigned on a platform of fiscal responsibility and no nation-building.
The continuing earthquake in Germany?
There is an old and not quite historically accurate joke:
Question: Why don’t they have a revolution in Germany?
Answer: Someone would have to step on the grass.
Well, the Germans are continuing to reform their welfare state, albeit in baby steps. The latest step is to cut jobless benefits. Under the old regime, a German who hadn’t worked for a year would receive 53 percent of his or her old salary, forever. Oh, plus supplements as well. Under the new law they will get $426 per month plus supplements, basically the same as the minimum relief offered to the poor. And the forever word will no longer hold. Recipients can lose some of their benefits if they turn down possible jobs. And they also can take low-paying jobs without losing the benefits. This is a better policy all around.
Here is another recent MR post on German reforms. And did you know that they are cutting taxes by 6.5 billion Euros next year? That paltry sum is hardly Arthur Laffer’s dream, but any movements out of Germany’s previous policy gridlock are welcome. By the way, are you surprised to learn that most German trade unions oppose the change in benefits policy?
Some of the information in the post is taken from The Wall Street Journal, 8 July, p.12.
Addendum: Here is a New York Times article about how Europeans are moving away from their ideal of a leisure society.