Category: Uncategorized
Seminal books for each decade
Andrew asks a tough question:
what do you think is more or less the equivalent of the great gatsby in every decade after the 20s?
Here are my picks:
1930s: The Grapes of Wrath, John Steinbeck.
1940s: Farewell, My Lovely, by Raymond Chandler.
1950s: Invisible Man, by Ralph Ellison, with Kerouac’s On the Road as a runner-up.
1960s: Catch-22, by Joseph Heller, with The Bell Jar and Herzog as runners-up.
1970s: This is tough. There is Vonnegut’s Breakfast of Champions, Stephen King, and even Peter Benchley’s Jaws. I’ll opt for Benchley as a dark horse pick, note that these aren’t my favorites but rather they must be culturally central. Jonathan Livingston Seagull is another option, as this truly is an era of popular literature.
1980s: Tom Wolfe, The Bonfire of the Vanities.
1990s: The Firm, by John Grisham, or Barbara Kingsolver, The Poisonwood Bible. Maybe Brokeback Mountain.
2000s: Malcolm Gladwell, The Tipping Point.
The Hayek Twitter game
The game: Take a sentence or two on Hayek’s clause and qualification ridden Germanic prose, and turn it into a 144 character twitter feed.
Example. Here’s a brief passage from Hayek 1976 essay “Socialism and Science” posted a few days ago in the comments by Richard Ebeling:
“A society in which everyone is organized as a member of some group to force government to help him get what he wants is self-destructive. There is no way from preventing some from feeling that they have been treated unjustly — that feeling is bound to be wide spread in any social order — but arrangements which enable groups of disgruntled people to extort satisfaction of their claims — or in the recognition of an ‘entitlement’, to use the new-fangled phrase — make any society unmanageable.”
And here it is as a 144 character twitter feed:
When everyone is organized to force government to get them what they want, many will be left feeling that they have been treated unjustly.
Ho hum! I would have done “Rent-seeking groups lead to perceptions of unfairness.”
When did the big gains in agricultural productivity come?
I had the general and indeed correct impression that U.S. agricultural productivity has been rising for a long time. It’s less commonly known how big was the productivity acceleration in agriculture in the 1940s. Between 1880 and 1940, agricultural productivity in this country rose at the rather modest rate of about one percent a year. After World War II, the trend rate of growth jumps to 2.8 percent annually. Multi-factor productivity in agriculture skyrockets in the mid-1930s, not earlier.
The information is from Bruce Gardner’s American Agriculture in the Twentieth Century: How it Flourished and What it Cost, pp.20-21, p.44.
My favorite things South Africa
Torr writes to me:
Please will you consider doing a “favorite things South Africa” on Marginal Revolution. I’m also curious: have you ever visited South Africa?
I have yet to go, but here is what I admire so far:
1. Visual artist (you can’t quite call him a painter): William Kentridge. He is one of the contemporary artists who is both a realist and has a lot of the emotional power of the classics. His extraordinary body of work spans film, drawings, prints, and mixed media. Here are some images.
2. Home design: I am an admirer of the Ndebele, some photos of their colorful homes are here. They are better represented in picture books than on the web.
3. Movies: I don’t know many. I enjoyed The Gods Must be Crazy, even though some might find it slightly offensive. Nonetheless I hand the prize to District 9 for its interesting take on ethnic politics, its deconstruction and mock of Afrikaaner settler myths, and its commentary on how South Africans view Zimbabwean immigrants to their country.
4. Movie, set in: Zulu, 1964 with Michael Caine.
5. Novels: My favorite Coetzee is Disgrace, though I like most of them very much, including the early Life and Times of Michael K and Waiting for the Barbarians and the later semi-autobiographical works. Nadine Gordimer I find unreadable, call the fault mine. Same with Alan Paton. A dark horse pick is Trionf. Agaat sits in my pile, waiting for the trip of the right length.
6. Music: Where to start? Malanthini, for one. As for mbqanga collections, The Indestructible Beat of Soweto series is consistently excellent. Singing in an Open Space, Zulu Rhythm and Harmony 1962-1982 is a favorite. Random gospel and jazz collections often repay the purchase price and in general random CD purchases in these areas bring high expected returns.
7. Economists: Ludwig Lachmann was an early teacher of mine and I owe him my interest in post Keynesianism and also financial fragility hypotheses. G.F Thirlby remains underrated. W.H. Hutt was one of the most perceptive critics of Keynes and his insights still are not absorbed into the Keynesian mainstream. His book on the economics of the colour bar remains a liberal classic. Who am I forgetting?
The bottom line: There’s a lot here. Here are previous MR posts about South Africa.
Assorted links
Assorted links
1. Facebook and TGS, and Robin Hanson reviews TGS. Mike Mandel responds to Karl Smith.
2. Is envy a stronger motivator than admiration?
3. Passing to yourself off the backboard (video).
4. Yet another way of viewing our labor market troubles, or in other words, start-ups have suffered too (NYT blog).
5. Via Chris F. Masse, when will China overtake the U.S. in science? (NB: I’m not convinced by this article).
The fallacy of mood affiliation
Recently I wrote:
It seems to me that people are first choosing a mood or attitude, and then finding the disparate views which match to that mood and, to themselves, justifying those views by the mood. I call this the “fallacy of mood affiliation,” and it is one of the most underreported fallacies in human reasoning. (In the context of economic growth debates, the underlying mood is often “optimism” or “pessimism” per se and then a bunch of ought-to-be-independent views fall out from the chosen mood.)
Here are some further examples:
1. People who strongly desire to refute those who predicted the world would run out of innovations in 1899 and thus who associate proponents of a growth slowdown with that far more extreme view. There’s simply an urgent feeling that any “pessimistic” view needs to be countered.
2. People who see a lot of net environmental progress (air and water are cleaner, for instance) and thus dismiss or downgrade well-grounded accounts of particular environmental problems. There’s simply an urgent feeling that any “pessimistic” view needs to be countered.
3. People who see a political war against the interests of the poor and thus who are reluctant to present or digest analyses which blame some of the problems of the poor on…the poor themselves. (Try bringing up “predatory borrowing” in any discussion of “predatory lending” and see what happens.) There’s simply an urgent feeling that any negative or pessimistic or undeserving view of the poor needs to be countered.
4. People who see raising or lowering the relative status of Republicans (or some other group) as the main purpose of analysis, and thus who judge the dispassionate analysis of others, or for that matter the partisan analysis of others, by this standard. There’s simply an urgent feeling that any positive or optimistic or deserving view of the Republicans needs to be countered.
In the blogosphere, the fallacy of mood affiliation is common.
Assorted links
2. Why you should ride escalators.
3. There is no Great Stagnation (video).
Assorted links
1. Secrets of success in Singapore.
2. The Art of Theory, a new on-line political philosophy quarterly; first issue has a symposium on Adam Smith.
3. Review of the new Peter Chang outlet in Chartlottesville.
4. Scott Winship’s statistical adjustment to male median wage estimates.
5. Actor Farley Granger dies at 85 (NYT).
Assorted links
1. How to avoid a gendered conference; at first I thought this was a Straussian satire by a confirmed chauvinist.
2. Yakuza step forward with relief supplies.
3. Zero marginal product Frank Lloyd Wright homes?
4. Persistent wage disparities in Britain are due to people rather than place.
How much productivity growth was there during 2007-2009?
Michael Mandel has a long and excellent blog post on this question. He claims that the supposed productivity gains were concentrated in a small number of sectors (one of which, by the way, was financial services ha-ha) and that they are mostly illusory when cross-checked with other sources of data. Here is his final conclusion:
However, the effect of the adjustment on the 2007-2009 period is spectacular. Productivity growth, which had been 1.6% annually in the original data, basically disappears. The decline in real GDP is twice as large (-1.3% per year in the original data, -2.9% in the adjusted data). And economists are no longer presented with the confounding puzzle of why unemployment rose so much with such a modest decrease in GDP–it’s because the decrease in GDP was not so modest. (see a piece here on Okun’s Law, which links GDP changes with unemployment changes).
His redone figures, by the way, are based on the assumption that intermediate inputs are growing and shrinking roughly at the rate of final product (Mandel believes we are mismeasuring these intermediate inputs and thus finding illusory productivity gains over that period.) Think of his alternative numbers as illustrative rather than necessarily his best estimate. The implications of his analysis include:
1. Productivity statistics aren’t well set up to cover outsourcing.
2. Beware of measured productivity gains, reaped over short periods of time, based on supposed drastic declines in intermediate inputs. We’re probably mismeasuring those inputs. Mike’s examples on these points are pretty convincing, walk through what he does for instance take a look at his numbers on mining: “Mining, for example, combines a 10% drop in real gross output with an apparent 46% drop in real intermediate inputs, leading to a reported 23% gain in real value-added and a 26% gain in productivity. It’s very hard to understand how intermediate inputs decline four times as fast as output!”
3. During the crisis, output fell more than we thought and thus our recovery isn’t going as well as we think. (By the way, this is the most effective critique of the ZMP hypothesis, since the implied decline in true output now comes much closer to matching the measured decline of employment.)
4. Issues of “international competitiveness” are much more important than either economists or the Obama administration have been thinking. Excerpt:
…the mismeasurement problem obscures the growing globalization of the U.S. economy, which may in fact be the key trend over the past ten years. Policymakers look at strong productivity growth, and think they are seeing a positive indicator about the domestic economy. In fact, the mismeasurement problem means that the reported strong productivity growth includes some combination of domestic productivity growth, productivity growth at foreign suppliers, and productivity growth ”in the supply chain’. That is, if U.S. companies were able to intensify the efficiency of their offshoring during the crisis, that would show up as a gain in domestic productivity.
5. Read #4 directly above, think about who captures those gains, and you can see that the Mandel productivity hypothesis is broadly consistent with some of the data on income inequality.
6. There really is a structural unemployment problem and it stems from ongoing low productivity growth.
7. At the risk of sounding self-congratulatory, if you combine Mike’s estimates with the new Spence paper, and the reestimation for male median wages (down 28 percent since 1969), in my view the TGS thesis is looking stronger than it did even two months ago when the book was published.
Assorted links
1. Here is Arnold Kling’s proof that Baron Holbach was right.
2. Julian Offray de La Mettrie’s “Man a Machine.”
4. Which political views are most and least fluent with science?
5. 15 websites that forbid you from linking to them.
7. Karel von Wolferen assesses Japan’s response to the crisis.
Paul Krugman tries to lure Scott Sumner out of retirement
Krugman writes:
But when you cut the price of everything — which is more or less what happens when wages fall across the board — there’s nothing else to substitute away from.
Yes, economics textbooks typically show a downward-sloping “aggregate demand curve”. But the reasons for that curve’s downward slope aren’t the same as for your ordinary demand curve. It’s a process that works like this: lower prices -> lower demand for money -> lower interest rates -> higher spending. And that process doesn’t operate when, as is currently the case, short-term interest rates (which are the ones that matter for money demand) are zero.
Here is more.
Yet a deflationary downward spiral is not the necessary or even the likely outcome. Even if a liquidity trap prevents the Fed from credibly inflating to recovery, it is much harder to argue that the Fed is helpless to prevent a downward deflationary spiral. The Fed can do that very credibly indeed. The Fed is already doing that. It’s credible and there is no undesired outcome, such as five or six percent inflation, which needs to be seen through ex post.
Another way to put this point is that the AD curve does not sufficiently embody the Fed’s reaction function (Larry Summers is fond of making a related observation), much less individual expectations based on that reaction function. The model is incomplete and in this case the incompleteness really matters.
A few smaller points deserve mention:
1.Wages usually fall sequentially, not across the board and all at once, especially not in a large, decentralized, non-trade union-ruled economy such as the United States. That creates a greater chance that an employment boost kicks in, in some sectors, before prices fall (prices are sticky too!) and thus the economy may enter a Clower-Leijonhufvud-Hutt upward spiral of employment and output.
2. Krugman’s third sentence (“It’s a process that works like this: lower prices -> lower demand for money -> lower interest rates -> higher spending.”) need not be the dominant causal mechanism when so many variables are changing. Scott in particular might think that interest rates are not so important.
3. A different reason to be skeptical of wage cuts, as a mechanism for macroeconomic recovery, is simply that wage cuts are often small relative to threshold required rates of return for investors, especially when “wait and see” remains an option for those holding the cash.
Assorted links
1. Can a failed spy succeed in Russian politics?
2. Does the finance premium penalize entrepreneurship?
3. “Daniel (jungleman12) Cates, a 21-year-old self-made multimillionaire, lapsed economics/computer-science major and one-day Bubble Trouble champion of the world, was mildly annoyed.” Link here.
4. Michael Spence narrates his life.
5. Reviews of Margaux Fragoso.
6. Why don’t more female economists blog?
7. Bryan Caplan, slouching toward consequentialism.
The Spence and Hlatshwayo paper is now on-line
The Browser informs us (pdf behind that link), bravo to them, here is the abstract:
This paper examines the evolving structure of the American economy, specifically, the trends in employment, value added, and value added per employee from 1990 to 2008. These trends are closely connected with complementary trends in the size and structure of the global economy, particularly in the major emerging economies. Employing historical time series data from the Bureau of Labor Statistics and the Bureau of Economic Analysis, U.S. industries are separated into internationally tradable and nontradable components, allowing for employment and value-added trends at both the industry and the aggregate level to be examined. Value added grew across the economy, but almost all of the incremental employment increase of 27.3 million jobs was on the nontradable side. On the nontradable side, government and health care are the largest employers and provided the largest increments (an additional 10.4 million jobs) over the past two decades. There are obvious questions about whether those trends can continue; without fast job creation in the nontradable sector, the United States would already have faced a major employment challenge. The trends in value added per employee are consistent with the adverse movements in the distribution of U.S. income over the past twenty years, particularly the subdued income growth in the middle of the income range. The tradable side of the economy is shifting up the value-added chain with lower and middle components of these chains moving abroad, especially to the rapidly growing emerging markets. The latter themselves are moving rapidly up the value-added chains, and higher-paying jobs may therefore leave the United States, following the migration pattern of lower-paying ones. The evolution of the U.S. economy supports the notion of there being a long-term structural challenge with respect to the quantity and quality of employment opportunities in the United States. A related set of challenges concerns the income distribution; almost all incremental employment has occurred in the nontradable sector, which has experienced much slower growth in value added per employee. Because that number is highly correlated with income, it goes a long way to explain the stagnation of wages across large segments of the workforce.
A few points:
1. p.10 offers interesting remarks about China, namely that China is approaching a “middle income range” where economic growth commonly slows.
2. This paper has some of the best disaggregated information for those who are not convinced by simpler calculations of median income growth slowdown.
3. pp.33-34 offer a good summary of results and also a good explanation of current structural unemployment which does not fall prey to the usual criticisms offered by the blogosphere Keynesians, who on this issue remain behind the curve.
4. p.37 has good, short remarks on Germany and (now switching to my words) why it is wrong to dismiss their recent successes.
5. The co-author, Sandile Hlatshwayo, is at the Stern School of Business, NYU. He, she or a namesake is taking a honeymoon poll.
Overall, this is one of the most important papers of the year and perhaps the most important paper so far on “economic malaise” issues. It is also a useful corrective to the political conspiracy theories of changes in the income distribution (if you are wondering, Spence at least would not count as a right-winger, I cannot speak to Hlatshwayo).
As for The Browser, it is better than I ever expected a web site to be.
Addendum: Arnold Kling comments.