Category: Books

Tim Harford on *The Great Stagnation*

by  Tyler Cowen in

In the FT magazine, here is the end bit:

In short, if Cowen is right, there will be less growth in future unless a new wave of technology arrives, and our political institutions will have to cope, if they can. The same argument surely applies to western Europe too, and will come as no news to Japan.

And the solution? I am not sure, and neither is Cowen. He hopes to raise the status of scientists and researchers – a good idea, but how? The UK coalition plans to introduce charter schools; we shall have to see whether that delivers results. The government is also reducing subsidies for universities and, indirectly, for public libraries. Both those policies are probably progressive: universities (certainly) and libraries (probably) tend to be middle-class haunts. But if the great stagnation is the problem, making access to knowledge more expensive is surely not much of a solution.

In my pile

by  Tyler Cowen in

1. Edward Glaeser, Triumph of the City: How Our Greatest Invention Makes us Richer, Smarter, Greener, Healthier, and Happier.  Self-recommending.  I've browsed a few pages and he seems like…such a normal, happy man.

2. Bengt Holmstrom and Jean Tirole, Inside and Outside Liquidity.  This is a take on what follows from the imperfect pledgeability of corporate assets, by two of the world's leading economic theorists.

3. Jonathan Bendor, Daniel Diermeier, David A. Siegel, and Michael M. Ting, A Behavioral Theory of Elections.  The point is to predict both turnout and voting behavior (hard to get both right at once in a model), and the authors a computational model on top of all of that.  I have long been wanting more behavioral public choice.

*The Evolution of Progress*

by  Tyler Cowen in

The excellent Brink Lindsey pointed my attention to this fascinating book, subtitled The End of Economic Growth and the Beginning of Human Transformation (like many subtitles, that one is an exaggeration), wirtten by C. Owen Paepke and published in 1993.  A brief book summary is here.

It is fascinating to read his take on how the biosciences will be the wave of the future and how much of human progress will come in the "interior" dimension.  Here is one excerpt:

The United States enjoyed the dubious honor of leading a world-wide parade toward lesser productivity gains.  The growth of both total factor productivity and labor productivity of every advanced economy, notably including Japan, has slowed since 1973.  Only the newly industrialized countries, such as South Korea and Singapore, maintained or increased their productivity growth during the 1970s and 1980s, largely by exploiting innovations earlier pioneered in the advanced economies.

In fairness to the data, this productivity trend was temporarily reversed in the mid-1990s, for a few years, right after Paepke wrote.  And:

By the middle of the next century, a new generation will surpass its precedessor, not in the traditional realm of possessions of life-style, but in the more fundamental one of genetic endowment.

It seems Paepke is a lawyer (one source has him running a pharmaceuticals company), here is Paepke on "Facebook like."  Here is Paepke's patent for "affinity analysis."  Here are Paepke's thirteen trademarks.

*Endgame*, and the rationality of Bobby Fischer

by  Tyler Cowen in

The author is Frank Brady and the subtitle is Bobby Fischer's Remarkable Rise and Fall — from America's Brightest Prodigy to the Edge of Madness.  It is sure to make my list of the best books of 2011 and it requires no real knowledge of chess.  Here is an excerpt on the rationality of the young Fischer:

While they were waiting for the results, Bisguier asked Bobby why he's offered the draw to Shipman when he had a slight advantage and the outcome wasn't certain.  If Bobby had won that game, he would have been the tournament's clear winner, a half point ahead of Bisguier.  Bobby replied that he had more to gain than lose by the decision.  He'd assumed that Bisguier would either win or draw his own game, and if so, Bobby would have at least a tie for first place.  That meant a payday of $750 for each player, a virtual gold mine for Fischer.  Recognizing Bobby's greater need for money than the capture of a title, however prestigious, Bisguier noted: "Evidently, his mature judgment is not solely confined to the chessboard."

Much later in Fischer's life:

…Bobby and Miyoko attended a screening [in Japan] of the American film Pearl Harbor.  When the Japanese Zeroes began bombing the ships in Battleship Row and destroyed the USS Arizona, Bobby began clapping loudly.  He was the only one in the theater to do do — much to the embarrassment of the Japanese.  He said that he was shocked that no one else joined in.

There are many revelations in this book, including that Bobby turned to Catholicism in the last period of his life.

Observations about Chinese (Chinese-American?) mothers

by  Tyler Cowen in

I agree with many of Bryan Caplan's views on parenting, and Yana can attest that I have never attempted a "dragon mother" style.  Yet I think that Bryan is overreaching a bit in rejecting virtually all of Amy Chua's claims.  The simpler view — which most Americans intuitively grasp — is that some Asian parenting styles do make kids more productive, and better at school, although it is less clear they make the kids happier.  It remains the case that most people overrate how much parenting matters in a broader variety of contexts, and in that regard Bryan's work is hardly refuted.  Still, I see real evidence for a parenting effect from many (not all) Asian-American and Asian families.

1. James Flynn argues, using evidence from tests, that Chinese families boosted their children's IQs by intensive parental techniques.  Based on some very specific research, he claims the parenting was causal and the IQ boost followed.  I hardly consider this the final word, but it's more to the point that the adoption studies and the like, which don't try to measure this effect directly and don't have measures of strict Asian parenting.

2. It is obvious that some Asian parenting techniques make the children much more likely to succeed as classical musicians.  It's a big marginal effect upon whatever genetic influence there might be (and in this case the genetic influence might well be zero or very small; Chinese hardly seem genetically superior in music.)  The only question is how much longer this list can become.  What else can the parents make their kids better at, even relative to IQ?  Future engineering success?  If violin is a slam dunk, I don't see why engineering is a big stretch.

3. I suspect that Bryan and his wife do, correctly, apply the notion of "high expectations" to their children and to the benefit of those kids. 

4. Bryan, like Judith Harris, argues that the influence of parents is typically mediated through peers and peer effects.  But we should not confuse the partial and general equilibrium mechanisms here.  For any single parent, the peers may well carry the chain of influence to their child and a lot of the parenting style applied to that individual kid will appear irrelevant.  But for the culture as a whole, the peers can serve this function only because of the general influence of culture and parenting on all of the peers as a whole.  In other words, peer quality is endogenous and a single family is free-riding upon the parenting efforts of others.  That's a better model than just looking at the partial equilibrium coefficient on the parent effect and concluding that parenting doesn't matter.  This is a mistake commonly made by Harris fans.

5. As an aside, I wonder how much there is a common Chinese parenting or mothering style.  Chua, of course, is from the Philippines.  It is estimated that about 20 percent of the children are China are "abandoned" by their parents — mothers too – typically as the parents move to the cities to take better jobs.  When Chua writes, to what extent is she referring to Chinese immigrant parenting styles, uniquely suited to new situations, and derived from Chinese culture but distinct nonetheless.

6. There is a significant literature on Chinese immigrant parenting styles, based on lots of empirical evidence, but I don't see anyone giving it much of a close look.  Here is a simple and well-known piece, not about Asians per se, arguing that "authoritative parenting" leads to superior performance in school.  There is also evidence that the effects accumulate rather than disappear over time.  There is a lot of research here, often quite disaggregated in its questions, and it goes well beyond the twin studies and it does not by any means always yield the same answers.

7. I expect great things from Scott Sumner's children.

My video dialogue with Nick Schulz

by  Tyler Cowen in

Find it here, and Nick's summary is very good:

In my conversation with Tyler about his new and much-debated book, The Great Stagnation, I was particularly struck by his explanation (at around 21:30) for how he came to embrace the idea that we are experiencing an innovation slowdown. His remarks about Julian Simon are also very noteworthy.

It would be an innovation for this blog if I could embed, but alas it is not to be…

Dialogue with David Leonhardt

by  Tyler Cowen in

It's about how to spur innovation, read it here.  Here is one excerpt:

I would also like to see more of our elite institutions of higher education take the explicitly meritocratic and indeed arguably anti-egalitarian approaches of Caltech and also University of Chicago. Those two institutions are big successes – M.I.T. too – yet they are not always so easy to copy. We should be trying harder. In terms of respect for intelligence, achievement, and science, we should be more like Singapore.

The question did not come up, but I also favor reduced liability standards for major new innovations.  Take the various plans for robot-driven cars.  They will kill some people, as do human-driven cars.  We run the risk of having the status quo so locked into place, so grandfathered, and so implicitly favored by the realities of regulation and lawsuits, that such an idea might never get off the ground.  That in turn affects the incentives of innovators ex ante.

What I’ve been reading

by  Tyler Cowen in

1. Tino Balio, The Foreign Film Renaissance on American Screens, 1946-1973.  One of the best pieces of U.S. cultural history I've read in years.  This book explains and recreates the time when foreign films were culturally central in the United States.  Here is a recent article on how we are consuming foreign films today; we're in a new renaissance of production, but few people seem to know the films themselves.

2. Darin Strauss, Half a Life.  The author, as a young man, runs over a young girl on her bike and it ruins much, but not all, of his life.  It wasn't his fault.  This tract was well done enough to hold my interest, but I'm not sure how much it goes beyond the summary I offer right here.  Nominated for a National Book award.

3. Martin Gilman, No Precedent, No Plan: Inside Russia's 1998 Default.  This is not the definitive study it could have been, but it is a start toward writing a serious economic history of a still-neglected period.

4. Jeffrey Friedman, editor, What Caused the Financial Crisis.  Of all the books on the crisis, this one is arguably the most conceptual.  The authors of the essays include Stiglitz, John Taylor, Acemoglu, and Richard Posner.

5. New readings on the Euro include Paul Krugman's essay, Philipp Bagus, The Tragedy of the Euro, and Matthew Lynn, Bust: Greece, the Euro, and the Sovereign Debt Crisis.

6. Richard B. McKenzie, Predictably Rational: In Search of Defenses for Rational Behavior in Economics.  The subtitle says it all, and the cover inverts the colors on the Dan Ariely book.  Here is a short McKenzie piece on the book and here is Mario Rizzo on the book.

Stan Kenton and Leslie Kenton

by  Tyler Cowen in

I never knew my paternal grandfather, but I was told he loved the music of Bartok, Stravinsky, Hindemith, and above all, Stan Kenton.  My grandfather was a professional jazz drummer in the era of big band, supposedly with more talent than workplace discipline.  Maybe because it's a way of keeping a connection with Grandpa Tom, but I've been listening to the music of Stan Kenton for about thirty-five years.  In any case the best Kenton cuts (download here) still strike me as underrated.  Despite the clunky and sometimes elephantine side of Kenton's style, his work draws upon, and anticipates, developments in compositional jazz, European modernism, Phil Spector's "Wall of Sound," and early Latin rhythms, all topped off with an energetic American brashness.  I eagerly lapped up last year's new Kenton biography.  But now — what am I to do? I've just read Leslie Kenton's Love Affair: A Memoir of a Forbidden Father-Daughter Union, which among other things is a very good treatment of how little consent lies behind father-daughter incest (review here, and it was from ages 11 to 13).

None of Kenton's previous biographers seems to have suspected this horror and overall he had the reputation of a straight-laced man.  I had long thought of him as a somewhat dour disciplinarian, firmly wrapped up in middle American values. 

The lesson is how little we know of an individual life.  And what do we still not know?  When we judge others, or decide not to, that is worth keeping in mind. 

*Euphemania: Our Love Affair with Euphemisms*

by  Tyler Cowen in

The author is Ralph Keyes and you can buy it here.  Here are three excerpts:

Yesterday's polite euphemism is tomorrow's prissy evasion.  "Cherry" was once considered more respectable than "hymen."  Now, just the opposite is true.  The former is thought to be vulgar, the latter decent.

And:

When the unfortunately named rapeseed oil had trouble competing with products that had nicer names, a Canadian strain low in saturated fat was dubbed Canola (i.e., "Canadian oil") in 1978 and has done rather well since.

And:

It used to be said that "Horses sweat, men perspire, and ladies glow."

Most of all, this book was…interesting.

Median-itis and The Great Stagnation

by  Tyler Cowen in

Here is my NYT column from today, on themes relevant to The Great Stagnation.  I won't rehash this entire discussion, but I would like to focus on this one column excerpt:

From 1947 to 1973 – a period of just 26 years – inflation-adjusted median income in the United States more than doubled. But in the 31 years from 1973 to 2004, it rose only 22 percent. And, over the last decade, it actually declined.

I am noticing that some reviews or commentaries (and here) are citing per capita income growth as a response to my argument.  It is true that per capita income grows at a slower rate post-1973, but my argument is about the slowing down of median income growth and that is a much stronger shift.  The productivity data also tell a glum story.   

CPI bias can change those numbers in absolute terms (see comments from Russ Roberts), but it also changes the pre-1973 median income growth numbers and arguably more so.  The gap remains and TGS refers to the living standard for the average person or household in the United States, not the total amount of innovation, which remains quite high.  They're just not innovations with the same trickle-down or broad-based effects as in an earlier era.

Kindle eBooks are themselves a good example.  It's a real improvement for a lot of us — especially travelers – but even the median reader, much less the median American, doesn't have a Kindle or buy eBooks.  As I argued in The Age of the Infovore, the big gains of late have gone to the extreme information-processors.  

I've seen in the MR comments (and elsewhere) a lot of anecdotal comparison of recent gains vs. earlier gains in technology.  Don't we now have this, don't we now have that, and so on.  Of course.  Median incomes have risen somewhat.  But, when it comes to the average household, the published numbers for median income are adding up and trying to measure those gains and it turns out their recent rate of growth really has declined.  Most serious researchers who work in this area use and accept these numbers as the best available (though they do not in general advocate my causal interpretation; see for instance Mark Thoma or Jacob Hacker).  

If the numbers for median income growth are low we ought to take that seriously, as does Scott Sumner.  We are not cheerleaders per se (BC: "I'm baffled why Tyler would focus on slight declines in American growth when the world just had the best decade ever."  Is it then wrong to focus on any other problems at all?  I also was one of the first people to make the "best decade ever" argument, which I still accept.)  Medians also matter for the political climate, even though the median earner is not exactly the median voter.  Adam Smith's welfare economics was basically that of the median, a point which David Levy has made repeatedly.

I'm also being called a "pessimist" a lot.  Yet in my view our current technological plateau won't last forever.  That's probably more optimistic than the Hacker-Pierson approach, which requires a Progressive revolution in economic policy (unlikely), although it is not more optimistic than denying the relevance of the numbers.

I'll soon blog some remarks on changing household size as another attempt to avoid confronting the facts about slow median income growth.