My GOAT podcast with Robert Murphy
He is of the Mises Institute, so plenty of talk about Mises and the Austrians as well.
Bob is very smart and widely read. The other links are here: https://mises.org/library/tyler-cowen-goat-economics, https://soundcloud.com/misesmedia/tyler-cowen-on-the-goat-in-economics
Chile’s pension system out of whack
Together, I estimate these policies have effectively pushed returns down by more than 2 percentage points in most cases as suboptimal asset allocation choices with significant practical implications. Note that a mere 1.5 per cent difference in annual returns over a 35-year period can lead to a 30 to 40 per cent reduction in pension payouts. Additionally, there are three more critical issues to consider.
First, the initial design mandated an insufficient 10 per cent contribution from a worker’s salary. Studies suggest that a 15 per cent to 17 per cent contribution is necessary to obtain an acceptable pension. But there has been political reluctance to increase this figure, which would require workers to sacrifice their current take-home pay for future benefits.
Second, about 30 per cent of Chile’s labour market operates informally, and many workers frequently shift between formal and informal employment. Unfortunately, during informal periods, they seldom contribute to their pension accounts.
Here is more from Arturo Cifuentes in the FT.
Summary trends of 2023
That is the topic of my latest Bloomberg column, here is my biggest worry:
Another takeaway from 2023 is more depressing: Deterrence is less powerful than I thought. Persistence, combined with a belief in one’s cause, is worth more.
The Israeli military is much stronger than Hamas, for example, and is currently proving that on the ground. Yet that did not stop Hamas from proceeding with a violent incursion into Israel. In Ukraine, substantial support from the US and other NATO nations has not stopped Russia from pursuing a war, even with very heavy losses in terms of its military power and international reputation. Russian President Vladimir Putin simply wants Ukraine, and believes some parts of it rightfully belong to Russia.
None of this is good news for the US, which relies on deterrence to support its numerous alliances. It is also bad news for the world at large, because deterrence tends to support peaceful outcomes and the status quo.
Which leads me to another piece of academic research: I am increasingly inclined to reject psychologist Steven Pinker’s view that the world is becoming more peaceful. Unfortunately, the available evidence suggests that international conflict is on the rise again, after a long period of decline. Cyclical theories of world peace and conflict — in particular the idea that peace eventually breeds the conditions for war — are thus due for an upgrade.
You could add the Houthis to that list as well. I consider AI and governance issues as well.
Friday assorted links
1. How the president of Columbia University avoided much of the current mess (NYT). She also is an economist. And part of how Harvard screwed up the tactics on the PR side.
2. Profile of Stevenson and Wolfers.
3. A typology of who is easiest and hardest to troll on-line. For instance: “People who are focused on economic issues are harder to troll. People who care primarily about social issues are easier to troll.”
4. Scott Sumner on my macro podcast with David Beckworth.
5. A claim that NYT will lose their copyright case. And Rohit. And Kevin Fischer. So far Open AI is favored in the betting markets.
Request for requests
In the year to come, what would you like to read more about on MR? Comments are open…
My pick for the best movie of the year, in which I share a bill with Kevin Spacey
Tyler Cowen, economist and author of Marginal Revolutions
May December
I found May December to be the most interesting movie of the year. It examines deep questions about who envies whom, what a meaningful life consists of, what about possession is satisfying, art versus artifice, the nature of celebrity, and how hard it is to live without worrying about what other people think. The stars are Natalie Portman and Julianne Moore, and the director is Todd Haynes. The plotline (these are not spoilers) is that a grown woman had sex with a male seventh-grader, was sent to prison, and later ends up marrying him and having his children. Natalie Portman plays the role of a well-known actress who comes by to learn their story, so that she may better play the woman in a movie. The biggest cinematic influence is perhaps Bergman’s Persona, as we increasingly see different ways in which the two women are parallel or “twinned” in their stories. The movie poster reflects this. The highlight is when Natalie Portman explains to a group of teenagers what it is like to do a sex scene in a movie. In an era where Hollywood is supposed to be stale, this one resets the clock.
From The Spectator, there are many other (lesser) picks as well.
Thursday assorted links
1. Claims about coffee, and how to make it taste better.
2. Ed Glaeser on the changing fact of NYC (NYT).
3. Jacques Delors, RIP at 98 (FT).
4. New breakthroughs in biotech.
5. Age differences in romance.
6. The New Left takes some digs at The Beatles. An unfair but interesting piece, sometimes getting it right. Quite a good piece at its peaks.
7. David Brooks’s Sidney Awards go to small magazine pieces this year (NYT).
The Sullivan Signal: Harvard’s Failure to Educate and the Abandonment of Principle
The current Harvard disaster was clearly signaled by earlier events, most notably the 2019 firing of Dean Ronald Sullivan. Sullivan is a noted criminal defense attorney; he was the director of the Public Defender Service for the District of Columbia and he is the Director of the Criminal Justice Institute at Harvard Law School, he advised President Obama on criminal justice issues, he represented the family of Michael Brown. He and his wife were the first black Faculty Deans in the history of the college.
Controversy erupted, however, when Sullivan joined Harvey Weinstein’s legal defense team. Student protests ensued. The students argued that they couldn’t “feel safe” if a legal representative of a person accused of abusing women was also serving in a role of student support and mentorship. This is, of course, ridiculous. Defending an individual accused of murder does not imply that a criminal defense attorney condones the act of murder.
Harvard should have educated their students. Harvard should have emphasized the crucial role of criminal defense in American law and history. They should have noted that a cornerstone of the rule of law is the presumption of innocence and the right to a fair trial, irrespective of public opinion.
Harvard should have pointed proudly to John Adams, a Harvard alum, who defied popular opinion to defend hated British soldiers charged with murdering Americans at the Boston Massacre. (If you wish to take measure of the quality of our times it’s worth noting that Adams won the case and later became president—roughly equivalent to an attorney for accused al-Qaeda terrorists becoming President today.)
Instead of educating its students, Harvard catered to ignorance, bias and hysteria by removing both Sullivan and his wife from their deanships. Harvard in effect endorsed the idea, as Robby Soave put it, that “serving as legal counsel for a person accused of sexual misconduct is itself a form of sexual misconduct, or at the very least contributes to sexual harassment on campus.” Thus Harvard tarred Sullivan and his wife, undermined the rule of law and elevated the rule of the mob. Claudine Gay, then Dean of the Faculty of Arts and Sciences, contributed to the ignorance, bias and hysteria. (It’s also notable, that Sullivan also criticized Harvard’s handling of the investigation of Roland Fryer as being “deeply flawed and deeply unfair.” This may have been Sullivan’s real sin, as the investigation of Fryer was under Dean Claudine Gay.)
Thus, we see in the Sullivan episode disregard for free speech, unprincipled governance in which different rules are applied to different actors in similar situations, and a bending to the will of the mob, all issues which have repeated themselves under the Gay regime. Sad to say, however, that these flaws were not so much ignored at the time as lauded.
Harvard followed the mob and when the mob turned and the season changed it had left itself no defense.
Addendum: See also Tyler, My thoughts on the Harvard mess.
Sure on non-profit university board motives (from the comments)
2023 CWT retrospective episode
Here is the link, here is the episode summary:
On this special year-in-review episode, Tyler and producer Jeff Holmes look back on the past year in the show and more, including the most popular and underrated episodes, the origins of the show as an occasional event series, the most difficult guests to prep for, the story behind EconGOAT.AI, Tyler’s favorite podcast appearance of the year, and his evolving LLM-powered production function. They also answer listener questions and conclude with an assessment of Tyler’s top pop culture recommendations from 2013 across movies, music, and books.
And one excerpt:
COWEN: That’s a unique experience. You have a chance to do Chomsky. Maybe you don’t even want to do it, but you feel, “If I don’t do it, I’ll regret not having done it.” Just like we didn’t get to chat with Charlie Munger in time, though he’s far more, I would say, closer to truth than Chomsky is.
I thought half of Chomsky was quite good, and the other half was beyond terrible, but that’s okay. People, I think, wanted to gawk at it in some manner. They had this picture — what’s it like, Tyler talking with Chomsky? Then they get to see it and maybe recoil, but that’s what they came for, like a horror movie.
HOLMES: The engagement on the Chomsky episode was very good. Some people on MR were saying, “I turned it off. I couldn’t listen to it.” But actually, most people listened to it. It did, actually, probably better than average in terms of engagement, in terms of how much of the episode, on average, people listen to.
COWEN: How can you turn it off? What does that say about you? Were you surprised? You thought that Chomsky had become George Stigler or something? No.
Fun and interesting throughout. If you are wondering, the most popular episode of the year, by far, was with Paul Graham.
Wednesday assorted links
1. Cam Peters does his Favorite Things New Zealand.
2. China accusation of the day, anal beads edition.
3. Progress on the Moderna mRNA cancer vaccine. This shows you just how bad and anti-scientific the anti-vaxx movement currently is.
4. First nuclear reactor since 2016 in the U.S. is now in operation.
My thoughts on the Harvard mess
Some of you have asked for this. I’ll list a few points that have been in the forefront of my mind, noting they are partly subjective in nature:
1. Harvard is by no means “wrecked.” In 2023, as in every other single year, Harvard along with MIT had the best and most interesting job market papers in economics. That isn’t about to change. I see good evidence that Harvard remains excellent in many other fields as well. Perhaps the humanities are in trouble there, I don’t know enough to speak to that.
2. There is still a lot else wrong about Harvard, especially at the level of undergraduate education and pressures for peer conformity. And academic pressures placed on faculty, and lack of freedom of speech, and inconsistent standards at the administrative level, depending on the particular issues at stake in a disciplinary case. On all those issues, Harvard gets poor marks, much poorer marks than my own George Mason University. That shouldn’t be the case for what is supposed to be “America’s best university.”
3. I don’t usually like to engage in internet pile-ons, especially if the person involved might have some personal or personality problems. So I’ve let that topic sit. In any case, I believe the core issues here are clear, and I haven’t felt I have new insight to add.
5. The point I would like to add, if I may be a bit rude, is that Harvard, upon closer examination, seems to have a quite mediocre governing board. I believe there are a few exceptions on the list of names, but nonetheless I see a lot of evidence for a critical mass of poor decision-makers, many of them also lacking in courage. Furthermore, they are bad at the things they are supposed to be good at.
Just as Harvard has many of the best faculty, and many of the best students, I had expected the school would have a super-distinguished and super-competent board, even if it was a board I might have disagreed with on many key issues. I had never looked at the Harvard board before. So I was naive. But in fact the board of “the Corporation” is a big, big disappointment (WSJ), relative to the rest of the institution. Harvard seems to do best when the relevant decisions are not being made by the governing board. More fundamentally, viewed as a political economy problem, I don’t see which are the institutions or incentives in place to make the board really, really good, as it ought to be. Nope. So this month I learned something big about Harvard.
The first step toward reform and improvement would be for a significant portion of the board to realize — if only to itself — that it is not very good at precisely the matters its members are supposed to be good at. And then make plans to step down, and to have the remainder of the board set up better institutions to govern board membership in the future. I don’t expect that to happen, though there may be a resignation or two over time. In any case, that is my recommendation, noting that procedures for choosing future board members is a “collective choice” problem without a simple answer. Many of the very best boards are great for circular reasons, namely you have great members over time choosing other great members. That is the way to go, when you can.
I believe many people — including insiders — know and agree with what I have written under this point, but I haven’t seen it spelt out as explicitly as it should be. So there you go.
Micah Siegel interviews me about animal welfare and policy
Mark Skousen reviews *GOAT*
An excellent review, here is one excerpt:
Oddly enough he leaves out several economists who many consider possible GOATs: From the British school, David Ricardo (Milton Friedman’s favorite); from the Monetarists, Irving Fisher (whom James Tobin ranked “the greatest economist America has produced”); from the Austrians, Ludwig von Mises and Murray Rothbard (which the Mises Institute would consider leaving out unforgiveable); from the Institutionalists, Thorstein Veblen (who Max Lerner called “the most creative American social thought has produced”) and Max Weber (the “one man” that Frank Knight admired); and from the Marxists, Karl Marx (which they would consider his omission a cardinal sin). Cowen tells me he may write a short monograph on Marx (email dated November 22, 2023).
He also excluded the big three of the Marginal Revolution of the 1870s: Carl Menger, William Stanley Jevons, and Leon Walras.
Do read the whole thing, and note I may write more on the Marginal Revolution as well, the revolution that is not the blog!
And here is Mark’s daughter, doing a skating back flip on ice.
Boxing Day assorted links
1. Dwarkesh on the arguments pro- and anti-scaling.
2. Defending billionaire-built cities (NYT, Glaeser and Ratti).
3. Open Skies policy for Argentina.
4. Managerial innovations in America from WWII?
So reading through the parliamentary rules, this is what I’m gathering about the process:
1. Milei’s government has 10 days to formally submit the DNU to a bicameral commission consisting of 8 senators and 8 congressman (apportioned to their relative majorities in the houses)
2. The commission then has 10 days to submit their formal opinions to their respective houses of congress.
3. Each house votes on the DNU, and cannot introduce amendments or deletions to the proposed DNU.
4. rejection by both houses will permanently strike down the DNU. It does not specify what a split decision means – perhaps it means its not defeated?With that in mind, to answer your other question If Milei introduced the DNU as a bunch of separate ones, it would seem to me they would vote on the validity of each. Since no amendments can be made by congress, it’s possible that negotiations are occurring right now before Milei’s gov has to formally submit them to congress for review.
Rules link: https://servicios.infoleg.gob.ar/infolegInternet/anexos/115000-119999/118261/norma.htm
Here is the link, though not on the whole worth threading through.