Category: History

MIT graduate micro exam, 1961

From the archives of Irwin Collier (I won’t do any extra indentation):

Economics Candidates: Answer any FOUR questions (thirty minutes each).
S.I.M. Candidates: Answer any TWO questions (thirty minutes each).

  1. Within the framework of static, partial-equilibrium theory, indicate under what circumstances advertising will reduce product prices in the long run, (a) if the advertiser is a simple monopolist, (b) if the advertisers are members of a large, perfectly symmetrical, Chamberlinian group of suppliers of differentiated products (the number of firms being large enough to rule out oligopolistic relationships, and variable in accordance with a long-run-equilibrium condition of zero profit for all firms).
  2. How is a firm’s demand schedule for a particular factor of production derived (a) when that factor is the only variable one, and (b) when the quantities of all factors are variable? Show which of these demands is, if anything, the more elastic.
  3. The demands for two products are: q1 = q2 = 54 – p1 -p2. How would you characterize their relationship? If they are produced by separate sellers at constant average costs of c1 = 12 and c2 = 6, respectively, calculate each man’s equilibrium price, quantity, and profit under each of the following conditions:
    1. Each seller assumes that the other’s price is a constant;
    2. The second seller behaves that way and the first seller realizes that he does;
    3. Both sellers maximize their joint profit and share it equally.
  4. Two countries can produce food (F) and clothing (C) with labor (L) as the only factor of production. Country A has 20 billion units of L, each of which can produce either 5 units of F or 2 units of C. Country B has 10 billion units of L, each of which can produce either 8 units of F or 6 units of C. Everyone always spends half of his income on F and the other half on C. In a purely competitive equilibrium with balanced trade between the two countries (and no transportation costs), what is the effect on the quantities of F and C produced and consumed in each country? Could either country benefit by imposing a tariff on the imported good?
  5. What are the various reasons why a free-private-enterprise economy may fail to allocate its resources in an optimally efficient way? Explain.
  6. Discuss the roles of “real” and “monetary” elements in a satisfactory theory of interest. Is it logically possible to fashion an interest theory exclusively in terms of one or the other of those elements? Explain.

TC again: I don’t think current graduate students (outside of MIT and a few other places) would do very well on #1, nor do I think they would understand what is being asked on #6, much less have a good answer.  On #5, I wonder how many would give a sufficiently analytical answer rather than just repeating a bunch of cliches from media and social media?

Radio and riots

Although the 1960s race riots have gone down in history as America’s most violent and destructive ethnic civil disturbances, a single common factor able to explain their insurgence is yet to be found. Using a novel data set on the universe of radio stations airing black-appeal programming, the effect of media on riots is found to be sizable and statistically significant. A marginal increase in the signal reception from these stations is estimated to lead to a 7% and 15% rise in the mean levels of the likelihood and intensity of riots, respectively. Several mechanisms behind this result are considered, with the quantity, quality, and the length of exposure to radio programming all being decisive factors.

That is from a recent paper by Andrea Bernini, a job market candidate from Oxford University.  We forget sometimes that arguably the internet is a more peace-inducing institution than was radio.

Erasmus Darwin, apostle of progress

Erasmus Darwin plunged into popular scientific poetry.  Cantering along in the style — if not with the elegance — of Alexander Pope, he never aspired to greatness.  His verses, however, were remarkable for their vivid pictures of evolution interlaced with stirring accounts of the advancement of science, technology, and human culture during the late eighteenth century, the very epitome of optimistic entrepreneurial thought applied to the natural world in the bright glow of the prerevolutionary era.

It is hard to recapture the full extent of the fame these writings, virtually forgotten today, brought him.  Yet for many readers of the 1790s, Darwin was the poet for the age of liberty and social advance: an advocate of industrialisation and cultural improvement; an avid admirer of the power of steam; a discipline of the French philosophes, revealing his Jacobin-like fervour for change and transformation at every turn, and deliberately provocative in taking as his publisher the radical Joseph Johnson, the Londoner who printed William Godwin and friends; at all times a poet of progress, with such an obvious sense of humor that his zest for life could not fail to amuse.

Erasmus Darwin (1731-1802) was of course the grandfather of Charles Darwin and also of Francis Galton.  And that passage is from the truly excellent biography Charles Darwin Voyaging, by Janet Browne.

Post-Covid, is the U.S. falling behind China?

I don’t think so, as I argue in my latest Bloomberg column, here is one bit:

If you are wondering whether China or the U.S. with its allies is more likely to make a big breakthrough, in, say, quantum computing, ask yourself a simple question: Which network will better attract talented immigrants? The more that talent and innovation are found around the world, the more that helps the U.S.


Perhaps most important, the European Union has evolved from seeing China primarily as a customer to seeing China primarily as a rival. Even Germany, a longstanding advocate for closer ties with China, has become more skeptical. Furthermore, most European nations have ended up agreeing with the U.S. that Chinese telecom giant Huawei be kept out of the critical parts of their communications infrastructure.

It is also worth noting that GPT-3 came out of the Anglosphere, not China, even though we have been hearing for years that China may be ahead in AI.

Judge Richard Neely, RIP

Judge Richard Neely, former head of the WV Supreme Court, held a special place in my heart. I never met the man but early on in my career, Eric Helland and I wrote a paper on elected judges and tort awards (PDF):

We argue that partisan elected judges have an incentive to redistribute wealth from out‐of‐state defendants (nonvoters) to in‐state plaintiffs (voters). We first test the hypothesis by using cross‐state data. We find a significant partisan effect after controlling for differences in injuries, state incomes, poverty levels, selection effects, and other factors. One difference that appears difficult to control for is that each state has its own tort law. In cases involving citizens of different states, federal judges decide disputes by using state law. Using these diversity‐of‐citizenship cases, we conclude that differences in awards are caused by differences in electoral systems, not by differences in state law.

While researching the paper I found this quote from Neely and when I read it I knew we were going to be published in a good journal:

As long as I am allowed to redistribute wealth from out-of-state companies to injured in-state plaintiffs, I shall continue to do so. Not only is my sleep enhanced when I give someone’s else money away, but so is my job security, because the in-state plaintiffs, their families, and their friends will reelect me. (Neely 1988, p. 4).

That is what you call anecdotal gold.

To be clear, when Neely was looking for a law clerk he advertised:

“America’s laziest and dumbest judge” seeks “a bright person to keep (the judge) from looking stupid,” and gave preference to University of Virginia law students “who studied interesting but useless subjects at snobby schools.”

Neely spoke brutally honestly to break conventions and reveal underlying truths. Thank you Judge Neely for your candor as it surely helped me in my career.

That was then, this is now, wartime casualties edition

U.S. Civil War combat deaths per day: 449

World War II U.S. combat deaths per day: 297

Covid-19 U.S. deaths per day: > 1,000

And rising, 1500 per day seems baked in, 2000 per day might also be within reach.  I just don’t get you people who say this isn’t a big deal.

By the way, deaths as a percentage of population isn’t the right metric here.  Losing 320,000 lives (including excess deaths) has about the same moral import, whether or not there are a billion Morlocks living under the earth’s surface, though that fact would change the loss greatly as measured in percentage terms and of course make it look much smaller.

If one thousand lives (and more) per day is not a big deal, then what is?  The global toll is much larger of course, and most of the gdp contraction has come from fear rather than lockdowns per se — see for instance Sweden.

And as Scott Gottlieb tweeted:

This is not a question of lockdowns vs no lockdowns. The question is how do we take targeted measures, get broader compliance to prudent steps like masks, distancing, avoiding large gatherings; to reduce, slow spread so that the healthcare system doesn’t risk getting overwhelmed.

You won’t do a bit of restraint to stem these losses, and shift infections into the future, while a good vaccine is coming not to mention other therapeutics?  Or try this simple question: If you are a limited government libertarian, then when would you deploy government action if not now?

Speaking of “that was then, this is now,” here is Jeffrey Tucker of AIER (of GBD fame) predicting, circa October 14, that there will never be a vaccine.

My Conversation with Edwidge Danticat

Here is the audio, video, and transcript.  Here is the CWT summary:

She joined Tyler to discuss the reasons Haitian identity and culture will likely persist in America, the vibrant Haitian art scenes, why Haiti has the best food in the Caribbean, how radio is remaining central to Haitian politics, why teaching in Creole would improve Haitian schools, what’s special about the painted tap-taps, how tourism influenced Haitian art, working with Jonathan Demme, how the CDC destroyed the Haitian tourism industry, her perspective on the Black Lives Matter movement, why she writes better at night, the hard lessons of Haiti’s political history, and more.

Here is one excerpt:

Recommended.  And I thank Carl-Henri Prophète for assistance with the transcription.

Love and Liberty: A Short History of Adam Smith in Love

The author devotes his full scholarly attention to the mystery of Adam Smith’s love life by carefully re-assembling all the admissible amorous evidence, by subjecting such facts to critical lawyerly scrutiny, and by drawing reasonable inferences from these sundry proofs. Part 1 of this paper will set the stage by revisiting several intriguing hypotheses concerning Doctor Smith’s sexuality and romantic attachments. Next, Part 2 presents four pieces of evidence regarding Adam Smith’s lost loves: (i) an obscure but intriguing footnote in Dugald Stewart’s 1793 biography of Smith’s life and writings, (ii) a letter dated July 14, 1784 addressed to Professor Stewart, (iii) a brief anecdote by Henry Mackenzie, a prominent Scottish lawyer and writer, as well as (iv) a letter dated 18 September 1766 containing key corroborating details about Adam Smith’s lost loves. Part 3 then speculates about the whereabouts of Adam Smith’s lost diary and also about why Smith instructed his literary executors as early as 1773 to destroy his private papers and correspondence. Next, Parts 4 and 5 of this paper will consider two additional clues that may shed light on this amorous enigma. Specifically, Part 4 will revisit Adam Smith’s analysis of romantic love in The Theory of Moral Sentiments, while Part 5 will discuss the legal and ecclesiastical regulation of sex in 18th Century Scotland and France–the locales of Smith’s love affairs. Part 6 then presents one last and potentially relevant clue: the notorious case of the Chevalier de La Barre, which played out during Adam Smith’s sojourns in Paris and Abbeville, and Part 7 concludes with observations for future research. In short, contrary to the conventional biographical wisdom, reports of Adam Smith’s love life are not mere rumors or unfounded speculations. Although Adam Smith’s lifelong devotion to his intellectual life and to his widowed mother Margaret Douglas may have ultimately prevented him from getting married and forming his own household, the evidence will show that it is “more likely than not” that Adam Smith was deeply in love at least twice in his life.

That is a new working paper by F.E. Guerra-Pujol.

*Kindred: Neanderthal Life, Love, Death and Art*

By Rebecca Wragg Sykes, an excellent book, a very responsible treatment of what we do and do not know about Neanderthals, with a bit on Denisovans as well.  It is a book full of sentences such as: “Micro-morphology has also provided proof that, far from being slovenly, Neanderthals were regularly disposing of their rubbish.”  It seems they enjoyed mussels and also grubs, among many other foodstuffs.  The hearth was the center of the home and they had fairly advanced systems for butchery.  They used leather and deployed pigments.

I enjoyed this segment:

Parisians, Londoners or Berliners today with ostensibly European heritage have very little connection even to Mesolithic people just 10,000 years ago.  The vast majority of their DNA comes from a massive influx of Western Asian peoples during the Neolithic.  This means that many of the first H. sapiens populations are more extinct than the neanderthals; not a great sign of evolutionary dominance.

Recommended, you can order here.

Christina Romer!

Christina Romer is excellent in this video on her work and influence. Obama had a great line. When Romer, clearly upset, told Obama that the economy was much worse than expected and heading downwards he replied, “Christy, it’s not your fault….yet.”

An interesting tension in Romer’s work. Her early work suggests that macroeconomic policy has not done much to stabilize the economy. Yet her later work has been in trying to stabilize the economy!

The window tax

The window tax in Great Britain (1696–1851) provides a remarkable case of tax-induced distortions in resource allocation. Tax liabilities on dwelling units depended on the number of windows in the unit. As a consequence, people boarded up windows and built houses with very few windows, to the detriment of both health and aesthetics. Using data from local tax records on individual houses, the analysis in the paper finds compelling evidence of such tax-avoidance and goes on to make a rough calculation of the excess burden associated with the tax.

Here is the full paper by Robert M. Schwab and Wallace E. Oates.

What should I ask Zachary Carter?

Zachary is first and foremost the author of the New York Times bestselling The Price of Peace: Money, Democracy, and the Life of John Maynard Keynes.  Here is part of a broader bio:

Zach Carter is a senior reporter at HuffPost, where he covers economic policy and American politics. He is a frequent guest on television and radio whose work has appeared in The Washington Post, The New Republic, The Nation, and The American Prospect, among other outlets. Zach began his career at SNL Financial (now a division of S&P Global), where he was a banking reporter during the financial crisis of 2008. He wrote features about macroeconomic policy, regional economic instability, and the bank bailouts, but his passion was for the complex, arcane world of financial regulatory policy. He covered the accounting standards that both fed the crisis and shielded bank executives from its blowback, detailed the consumer protection abuses that consumed the mortgage business and exposed oversight failures at the Federal Reserve and other government agencies that allowed reckless debts to pile up around the world. ​Since joining HuffPost in 2010, Zach has covered the implementation of the 2010 Dodd-Frank financial reform law, political standoffs over trade policy and the federal budget, and the fight over the future of the Democratic Party. His feature story, “Swiped: Banks, Merchants and Why Washington Doesn’t Work for You” was included in the Columbia Journalism Review’s compilation Best Business Writing. ​

So what should I ask him?

Stagnation is the real risk

The accelerated economic growth also accelerated our path along the inverted-U shape of risk. Faster growth means people are richer sooner, so they value life more sooner, so society shifts resources to safety sooner—and ultimately we will begin the decline in risk sooner. As a result, the overall probability of an existential catastrophe—the area under the risk curve—declines!

…The model also suggests a broader insight. Making people richer doesn’t improve their well-being, but it can also change what they value. In this case, people value life more as they grow richer, and valuing life more leads them to care more about reducing existential risk.

That is from a very useful essay by Leopold Aschenbrenner.  It is from the newly appeared second issue of Works in Progress, an excellent on-line journal.  And here is Samuel Hughes defending pastiche.