Macroeconomic faith

by  Tyler Cowen in

Pretty much everything in AS/AD is riding on the hypothesis that labor supply is highly elastic at the nominal wage and labor demand is reasonably elastic at the real wage. There is nothing for entrepreneurs to figure out–they will employ more workers as long as you can trick those workers into taking lower real wages.

That is Arnold Kling, here is more.  Many Keynesians like to poke fun at the RBC or rational expectations ideas of unemployed workers taking a "voluntary vacation" during a downturn.  Yet Keynesian theory has a no less serious problem, namely that workers take a "stupid voluntary vacation" during the downturn, due to their stubbornness on nominal wage cuts.  Reflation, if it comes, is doing no better for them in real terms than if they cried Uncle in the first place and simply lowered their wage demands.

The more dire a story you tell about the costs of unemployment, the more embarrassing the puzzle becomes on the side of positive economics.

Aggregate demand macroeconomics works in many cases and it almost always "works" (predicts well) when the macro forces are pointed toward destructive ends.  We are not sure why it works at all, or if it always works, and yet we see a great fervor of belief in it and a demonization of those who are skeptics.

On which issues will we become less moral?

by  Tyler Cowen in

Ross Douthat considers the hoary question of which current practices we will someday condemn, linking also to Appiah, who raised it, and Will Wilkinson.  Prisons, factory farming, immigration barriers, and abortion are among the nominations.  I would suggest an alternate query, namely which practices currently considered to be outrageous will make a moral comeback in the court of public opinion.  Torture and loss of privacy — in some of its forms at least — already seem to be on the rise, at least in terms of their acceptability in the United States.

What kind of moral status will "probabilistically causing natural disasters" have in the future?  What status does it have now? 

With rising health care costs and tight budgets in many countries, can we not expect euthanasia to rise in moral popularity?  Will the principles for cutting off care force us to transparently embrace some ugly moral principle, or will the ugliness be our lack of transparency and arbitrariness on these matters?

Preemptive warfare feels unpopular, because Iraq and Afghanistan have gone poorly, and because there have no more major successful terrorist attacks on U.S. soil.  I predict the idea will make a comeback.  Robot and drone warfare may become even more commonplace, as will targeting at a distance and selective cyberwarfare.  Those practices don't have to be wrong, but they could lead us to be morally cavalier about fighting a destructive war, even more than we are today.  By the way, the French seem pretty happy about the recent U.S. intensification of drone warfare in Pakistan, which is directed at stopping an planned attack in Europe.  

Tolerance of gay individuals and alternative lifestyles is at a historic high.  I would not endorse a crude "regression toward the mean" hypothesis, but we should at least try it on for size.  That tolerance is as likely to fall back as to progress.

Won't targeted genetic tests make abortion more popular and less sanctioned?  Rural India is already full of ultrasound clinics.  Won't the possibility of discrimination on the basis of genes (not many will refuse to do it, or make use of the information, if only implicitly) make discrimination more acceptable altogether?

On the bright side, totalitarianism and mass murder of one's civilian population have been out of style since the Nazis, the Soviets, and Mao.  In that sense we still can expect the future to be morally superior to the past.  But those gains were achieved some time ago.  If we capitalize them, and take them for granted, at the other margins I am not convinced that we are going to see lots of moral improvement over the next fifty to one hundred years.

Trolley Problem Biases

by  Alex Tabarrok in

In one variant of the trolley problem a trolley is rapidly bearing down on the Trolley-problem-1 innocent five who can be saved but only by pushing a single fat man onto the tracks.  Do you push the fat man or not?  The question throws into stark relief the moral theories of consequentialism and deontology.

Now suppose the fat man is named Tyrone.  Does that change your answer?  What if the fat man is named Chip?

In The Motivated Use of Moral Principles (pdf) the authors show that self-identified liberals are more reluctant to sacrifice Tyrone than Chip despite prior agreement that race is irrelevant to moral questions of this kind.  Even more interesting when first presented with the Tyrone story liberals subsequently become less consequentialist even regarding Chip.  But when first presented with the Chip story they maintain consequentialism for Tyrone.  

On different questions, such as how consequentialist to be in military situations, self-identified conservatives swing back and forth in similar ways depending on whether Americans are attacking or being attacked.

Unfortunately, the authors don't present their statistical results in as clear a form as I would have liked (percentage changes would have been nice) so it's a little unclear how large the effect is.  Nevertheless, although the conclusion isn't surprising it's interesting to see these results even in as clean a context as one could ever hope for:

Rather than being moral rationalists who reason from general principle to specific judgment, it appears as if people have a “moral toolbox” available to them where they selectively draw upon arguments that help them build support for their moral intuitions. While the present studies do not imply that general principles never play a direct, a priori role in moral judgment, they do suggest that moral judgments can be influenced by social desires or motivations, and that moral principles can be rationalizations for other causes of the judgment. 

Hat tip Psychology Today.

*Berlin at War*

by  Tyler Cowen in

That's an excellent new book by Roger Moorhouse.  I found good material on virtually every page:

Heinz Knobloch was dispatched by his mother to a department store by the Hallesches Tor to buy something — anything — exempt from the rationing.  He managed to return with two tins of sardines.  He was lucky to have escaped with his booty intact: the new legislation against hoarding meant that some of the more punctilious shopkeepers were already insisting on opening all tins immediately upon purchase.

I also learned that many Berliners starting suspecting the Holocaust because of the rather efficient German postal system.  When letters would be sent to "ghetto inhabitants" on the Eastern front, often they would be returned with notice that the intended recipient had passed away.

Department of Unintended Consequences

by  Tyler Cowen in

Here's Stanley Fish:

Commentators who explain smugly that O’Donnell’s position on masturbation (that it is a selfish, solitary act) is contradicted by her Ayn Rand-like attack on collectivism, or who wax self-righteous about Paladino’s comparing Sheldon Silver to Hitler and promising to wield a baseball bat in Albany, or who laugh at Sharron Angle for being in favor of Scientology (she denies it) and against fluoridation and the Department of Education, are doing these candidates a huge favor. They are saying, in effect, these people are stupid, they’re jokes; and the implication (sometimes explicitly stated) is that anyone who takes them the least bit seriously doesn’t get the joke and is stupid, too.

Sometimes I think of the political blogosphere as a huge commons.  An individual blogger can gain in readership or influence by attacking or ridiculing some enemy, but at the cost of making that enemy stronger in the world as a whole.

I also believe that every time the words "stimulus" or "fiscal policy" are blogged it helps the electoral prospects of the Republican Party, no matter what the content of the blog post.

*Listen to This*

by  Tyler Cowen in

She [Mitsuko Uchida] tells of how she once tried to get [Radu] Lupu to visit Marlboro.  "I got every excited, describing how people do nothing but play music all day long.  But he said no.  His explanation was very funny. "Mitsuko," he said, "I don't like music as much as you."

That's from the new book on music by Alex Ross.  It's not a comprehensive tour de force like The Rest is Noise was, but it is smart and well-written on every page and if you liked the first book you should buy and read the second.  The portraits cover, among others, Radiohead, Bjork, John Luther Adams, Marian Anderson, Lorraine Hunt Lieberson, and Uchida.  The chapter on Bob Dylan is especially good and it eclipses Sean Wilentz's entire recent book on Dylan.

Why is the suicide rate rising for baby boomers?

by  Tyler Cowen in

Julie A. Phillips, Ashley Robin, Colleen Nugent, and Ellen Idler report (partially gated):

Our analysis of suicide rates among the middle-aged for the period 1979–2005 showed a substantial increase in suicides by men aged 50–59 years and women aged 40–59 years between 1999 and 2005, following a period of stability or decline in rates for these groups. Suicide rates also increased for younger middle-aged men between 1999 and 2005, but we found that this increase was better characterized as a continuation of previous, ongoing trends for this group. The post-1999 increase for all cohorts was found among both married and unmarried members, although the risks were higher for unmarried people. The rise was particularly dramatic for those without a college degree, while those with a college degree appeared largely protected from the trend. The timing of the increase coincided with the complete replacement of the U.S. population’s middle-age strata by the postwar baby boom cohorts, whose youngest members turned 40 years of age in 2004.

Here is a related press release and it mentions substance abuse and chronic disease (more of a rude awakening for them?).  Here are some speculations about the rising rate; one possibility is that regulatory warnings have to some extent discouraged anti-depressant drugs.  Here is a related paper, on measurement and considering a few possible explanations.  It seems there is no comparable rise for African-Americans.

No Religion, Know Religion

by  Alex Tabarrok in

From a recent Pew Survey on U.S. Religious Knowledge, atheists and agnostics know more about religion than most religionists.  Atheists and agnostics score particularly well on knowing something about world religions but also do better than most on Christianity.  The effect remains even after controlling for education.

Take a short version of the quiz here. Graphic from the NYTimes.

Addendum: The Atlantic has a good run down on commentary. I was especially amused by religion scholar Stephen Prothero's line "those who think religion is a con know more about it than those who think it is God's gift to humanity."

28religion-articleInline

Structural Unemployment in South Africa

by  Alex Tabarrok in

Unemployment in South Africa is now running at 24% overall with significantly higher rates for blacks.  A shift away from low-skill labor combined with minimum wages and strong trade unions, however, has meant that it is very difficult to lower wages and reduce unemployment.  From a very good piece in the NYTimes:

The sheriff arrived at the factory here to shut it down, part of a national enforcement drive against clothing manufacturers who violate the minimum wage. But women working on the factory floor – the supposed beneficiaries of the crackdown – clambered atop cutting tables and ironing boards to raise anguished cries against it…

Further complicating matters, just as poorly educated blacks surged into the labor force, the economy was shifting to more skills-intensive sectors like retail and financial services, while agriculture and mining, which had historically offered opportunities for common laborers, were in decline.

The country’s leaders invested heavily in schools, hoping the next generation would overcome the country’s racist legacy, but the failures of the post-apartheid education system have left many poor blacks unable to compete in an economy where accountants, engineers and managers are in high demand….

Last year, as South Africa’s economy contracted amid the global
financial crisis, unions negotiated wage increases that averaged 9.3
percent [inflation is 5.1%, AT]….

Eight months ago, Mr. Zuma proposed a wage subsidy
to encourage the hiring of young, inexperienced workers. But it ran
into vociferous opposition from Cosatu, the two-million-member trade
union federation that is part of the governing alliance [insiders v. outsiders, AT], which
contended that it would displace established workers.

Hat tip: Brandon Fuller.

Will social networks boost good political change?

by  Tyler Cowen in

Malcolm Gladwell says not so much:

Shirky considers this [web-based] model of activism an upgrade. But it is simply a form of organizing which favors the weak-tie connections that give us access to information over the strong-tie connections that help us persevere in the face of danger. It shifts our energies from organizations that promote strategic and disciplined activity and toward those which promote resilience and adaptability. It makes it easier for activists to express themselves, and harder for that expression to have any impact. The instruments of social media are well suited to making the existing social order more efficient. They are not a natural enemy of the status quo. If you are of the opinion that all the world needs is a little buffing around the edges, this should not trouble you. But if you think that there are still lunch counters out there that need integrating it ought to give you pause.

The point is well-taken but still activism of some kinds should go up.  Loose ties favor campaigns to get out the vote and sign petitions; those developments can bring about many positive changes.  Most unsettled issues in American politics today would not be well-served by organizing less cooperative confrontations, even if you perceive a great injustice.  I believe that "making the existing social order" more efficient, to use Gladwell's phrase, is positively correlated with many desirable reforms, as are the qualities of "resilience" and "adaptability."  If we look at the recent experience in Iran, web mobilization seems to have encouraged — not discouraged — people from risking their lives for a cause.  Is the web doing much to help the worst African dictators or the totalitarians in North Korea?  Not so many data are in, but so far I score this one for Shirky.

Ireland estimate of the day

by  Tyler Cowen in

So in those parts of Irish economy where our Leaders had a say…[non-exports, mostly]…we have suffered a decline in domestic income of cumulative 34.35% since 2007.

The full blog post is here.  I wouldn't use language in the way that this post does (can "Leaders" much control the non-export sector when defaults are pending or even in normal times?), but I think you get the point.