Results for “age of em” 16717 found
Assorted links
1. Joanne McNeil on science fiction and glamour
2. Taiwan tries to break the liquidity trap
3. The Midwest has the safest weather in the U.S.
4. German woman now the editor of the Michelin Guide; if you are into breaking stereotypes, there was also an article (gated) in today’s WSJ entitled "France Credits Deregulation for Cushioning its Economy."
How did Nazi fiscal policy work?
Please do not think I am trying to call anyone, or any advocate of active fiscal policy, a Nazi. The point is that Nazi fiscal policy did drive a recovery in measured gdp, so it is worth knowing how and why. Robert J. Gordon has some answers (NBER; I don’t see an ungated copy):
Tooze confirms previous findings that relatively little of the
expansion in public expenditures took the form of public works like the
autobahns, while over 80 percent consisted of spending for rearmament.
Abelshauser (1998, p. 169) calls this “military Keynesianism on a large
scale.”
Furthermore real wages were falling not rising:
The previous literature has emphasized the Nazi policy of holding down real wages as a contribution to the rapid expansion of employment, the opposite of the perverse wage†increasing policies of Roosevelt’s NRA. Indeed, Barkai shows that the share of German wage income in national product declined from 64 to 59 percent between 1932 and 1936, while the increase in profits was “quite spectacular” (p. 196). Likewise, Abelshauser (p. 148) reports that the income share of the bottom half of the income distribution fell from 25 to 18 percent between 1928 and 1936.
In other words, Nazi fiscal policy boosted measured gdp rather than driving a recovery with higher real standards of living. Even putting the brutality of the Nazi regime aside, this should not count as an example of successful fiscal policy. I’ll look at some other historical examples soon but — at the risk of sounding like a broken record — I wish to stress my conclusion that the evidence in favor of government spending as effective fiscal policy is weak.
Addendum: On fiscal policy more generally, Mark Thoma has many comments.
Tyrone runs monetary policy
Tyrone barely knows enough technical macroeconomics to bark out an opinion, much less defend it or specify coherent policies. Nonetheless he suggested that I pass the following along to Ben Bernanke:
It seems there is not enough lending. People would lend more if interest rates were higher or at least I think I learned that in Econ 101. So let’s raise interest rates. I’ve also heard we have banks buying T-Bills and the Fed and government buying claims to real businesses. Can that be true? Isn’t that backwards? If they aren’t working properly, why not just recall all the T-Bills? (Didn’t General Motors do something like this once? It seemed to work out for them.) Then the banks would have to invest somewhere. Give a bonus to any bank that does something real. Let the others rot. (Tyrone then called up Trudie, who told him: "Have the Fed announce it will go massively short in the T-Bill futures market, sometime in the near future and without further warning. That would scare people out of government assets.")
What about that guy who set up the phony investment company? Can the Treasury make a new one of those, only bigger? He took money away from people and gave it to charities and the needy and the arts and higher education. That sounds like stimulus so why are we sending him to jail? Wasn’t he ahead of the curve?
Why don’t we increase the tax deduction for donations to any charity which manages to expand its spending on overhead or is the word infrastructure? For every dollar given, let the donor deduct more than a dollar from taxes. That’ll get the money out of the banks of those rich people and into the hands of real Americans. Still, it’s not as good as the phony guy who’s been doing this for twenty years. I guess we’re all trying to catch up to him. It seems he had help from his family but Bernanke does not. Makes all the difference.
Tyrone tells me, by the way, that soon he will try his hand at a restaurant review. It can’t be any worse than this.
Assorted links
2. Robert Mundell sponsors a Chinese chess tournament
Markets in everything China fact of the day
This is from the excellent Seth Roberts, now in Beijing:
The 2008 China International Petroleum Equipment and Technology Exhibition concluded last Friday in the eastern city of Dongying. 3000 guests from over 40 countries attended and everything appeared to run smoothly. Yet the majority of the foreign delegates were hired just to make the event look "international". Among the 200 fake delegates was Jez Webb, The Peking Order‘s energy correspondent.
Most guests had responded to an ad on theBeijinger.com with the curious title: “Free trip to Shandong, 200 foreign visitors invited (Be paid)”. We would, depending on our age, receive between 600 and 700 RMB (£60-70) for two days “work” – two 6 hour bus journeys to and from the city, full board in a luxury hotel and a couple of hours walking round an exhibition, pretending that we were involved in the petroleum industry.
You’ll note the monopsony market structure behind the offer. The story is full of interesting further detail.
The best sentence I read yesterday
Yes, I am skeptical of most medicine because on average it seems folks who get more medicine aren’t healthier. But I’ll heartily endorse one medical procedure: cryonics, i.e., freezing folks in liquid nitrogen when the rest of medicine gives up on them.
Here is the full post and of course that is Robin Hanson. The post has another very good sentence:
It seems far more people read this blog daily than have ever signed up for cryonics.
Here is Robin’s excellent post on why cryonics is unpopular. Here is Bryan Caplan’s. My current view is this: one’s attention is extremely scarce and limited, as are one’s affiliations. Insofar as you have the luxury of thinking "bigger thoughts," those thoughts should be directed at helping others, not at helping oneself. The real opportunity cost of cryonics is not just the money but whatever else you would have done with that intellectual energy.
Furthermore the universe (or multiverse) may be infinite, so in expected value terms it seems my copies and near-copies are already enjoying a kind of collective immortality.
There is an anthropic effect insofar that only people who are not regularly tortured have the luxury of thinking about cryonics. But not all worlds have to be so peaceful. What probability of future torture would cause us to wish to die forever rather than be resurrected? And should I therefore be scared by the idea of an infinite universe? Do Darwinian selection pressures — defined in the broadest possible way — suggest it is worth spending energy on making entities happy? Or do most entities end up as suffering slaves?
Addendum: Robin responds.
Markets in hardly anything any more?
The remaining 3 “major” labels – Universal, Sony and
EMI – will be out of the classical business within 2 years. They will
create no more than a handful of additional classical CDs. With the
possible exception of a few “crossover” artists the labels will drop
all of their classical artists. The majors will focus on trying to
salvage their pop business and will abandon classical because it is
more trouble than it is worth. The 20th century recording industry and
business model is obsolete. It will soon be gone.The
remaining viable classical label will be Naxos. Their costs are
dramatically lower and their business model allows them to operate
profitably in a smaller industry and with much lower sales numbers. A
primary contributor to Naxos’ lower costs is the fact that they don’t
pay any residuals to the performers. There is no income potential for performers in the Naxos model! They will profitably produce CDs for several years longer than the majors.There
will be a small number of “vanity” labels left but their volume will be
microscopic and they will operate on the same financial model as Naxos.
They will ultimately disappear as well.Virtually
the entire recorded history of classical music will vanish from the
world. None of the pre-2000 material had digital rights cleared when it
was recorded and the cost of clearing these rights now dwarfs any
income that could result. There is no commercially viable model for
reviving this material.
Here is more, interesting throughout and the comments are excellent. The author does suggest that live concerts still will be broadcast over the web and in some other ways marketed. An alternative is that governments assign the digital rights unilaterally or the whole model goes grey/illegal as people dump their CD content onto web sites. Furthermore I don’t think recorded classical music will disappear, as the independent labels continue to issue releases, the demise of recording has been forecast for a long time, and my copy of Fanfare (classic music reviews) is much thicker now than two years ago.
Progress against Economicitis?
Jason Shafrin, the Healthcare Economist, has a nice post explaining how a statistical illusion can make early screening for disease appear much more effective than it really is.
Here is an example using the dreaded disease economicitis. Let us
divide people into 3 groups.
- Healthy: You live forever.
- 1st stage economicitis is asymptomatic. Life
expectancy when 1st stage economicitis begins is 10 years. One half of
economicisits cases are 1st stage.- 2nd stage economicitis appears when individuals
mysteriously grow a third or possibly fourth hand. Life expectancy with second
stage economicitis is 2 years. One half of economicitis cases
are 2nd stage.Before any screening was developed, individuals would learn they had
economicitis when they started growing extra hands. Thus, documented
life expectancy for those with economicitis was 2 years, since all
individuals who were recorded as having economicitis were in the 2nd
stage.Let us assume that a screening technique is now available. If the screening
device is able to detect 100% of stage 1 and stage 2 economicitis
cases, then we will see that life expectancy will increased to 6 years
(10/2+2/2=6). Statisticians looking at the data may claim the following: “The
economicitis screening test has increased life expectancy after
diagnosis from 2 to 6 years!”This claim, however, is false since there is no effective treatment for
economicitis. The increase in average life expectancy is not due to
any improvement in health care, but only because the relatively healthier
individuals with 1st stage economicitis are now being detected by the
test.
Many years ago, David Plotkin had a article in The Atlantic dealing with this issue and others with respect to breast cancer. The statistics are somewhat out of date but the article remains of real value.
How to spend the stimulus
Here is a NYT symposium of economists, including yours truly. I very much like Andrew Samwick’s point:
If I had my druthers, the word ‘stimulus’ would be expunged from
public discussion, along with ‘bailout’ and ‘rescue.’ These words
convey the idea that, because we have so mismanaged our economic and
financial affairs, we are somehow able or entitled to conjure up
additional funds out of thin air to fix our problems.
Elsewhere, here is a passage from Megan McArdle:
Is the government going to guarantee approximately 70 million
owner-occupied homes in America against a 25% price drop? No, because
that’s $3.5 trillion dollars, if my mental arithmetic serves. Or is it
only going to give the money to the least responsible homeowners: the
ones with small (or no) downpayments, houses they could only afford at
short-term teaser rates, and a long string of missed payments? The
numbers, and the political arithmetic, don’t add up. Indeed, any such
program would positively encourage people to default, in order to get
the government to cram down their loans.
In other words, don’t spend the stimulus on the housing market. From another angle, Angus reports:
I guess I’d rather give my money to people who are going to use it to
try to make more money (i.e. save/spend it in the market system) than
give it to people who are going to use it to try and get re-elected.
And here’s more from Greg Mankiw.
Prudie on husbands who write books
Trudie chuckled when she read these two sentences from Prudie:
I can’t tell if your husband’s fantasies are sweetly pathetic or disturbingly delusional.
…and…
You don’t need to crush your husband—you’re right, the marketplace will take care of that task…
The highly egalitarian Trudie believes that everyone deserves a chance. What would Immanuel Kant’s wife (it is no accident he didn’t have one) have said about his draft of Critique of Pure Reason? Trudie offers the husband — if he can be located — the following deal, maintaining his anonymity if he so wishes. I’ll read the manuscript, or at least try to, and tell everyone what I really think.
Markets in everything
Of 51 countries that have received reward payments since 1999, six
overestimated their immunization gains by a factor of four, 10
overestimated them by a factor of two, and 23 by less than two. Eight
underestimated their progress.
Here is the article, interesting throughout. The bottom line is this:
Since 1986, progress in childhood immunization in the developing world
has been about half that officially reported by governments in the
developing world. Not only are year-to-year improvements overstated,
but the total percentage of children immunized is far lower than
publicly acknowledged, the study found.
Rich brains vs. poor brains in childhood
You may have heard about the recent study by Mark Kishiyama et.al. described by USA Today as follows:
A new study finds that certain brain functions of some low-income 9-
and 10-year-olds pale in comparison with those of wealthy children and
that the difference is almost equivalent to the damage from a stroke.
Here is more detail:
…[they] rigged up the noggins of 26 kids — with an average age of 9.5 years —
with probes that sense the ebb and flow of electrical current in
different regions of the brain. Then, they put them through a battery
of neuropsychological tests. Half of the kids came from families with
annual incomes that averaged just over $27,000 and generally had low
levels of parental education; the other half came from families where a
primary caregiver had completed at least four years of college and in
which annual household income averaged a little more than $97,000.
The paper is here. Who better to ask about this than Michelle Dawson? Michelle wrote to me:
I read the poor vs rich
kids brains study (Kishiyama et al.). It’s a very small study (13 in
each group) and the groups aren’t matched on ethnicity. In the major
task (the one which got media attention), where the authors looked at
ERPs [TC: here is a link on ERP], the performance of the two groups was the same. The performance
of the two groups on a Stroop task, a classic test of what the poor
kids are said to be incapable of, was also the same. The major
performance difference between groups was on vocabulary (the WISC-III
vocabulary test), but only a few tests were used. There was no attempt
to match the groups on IQ.
Just to repeat two key points: a) the observed difference in electrical current patterns may depend on IQ differences, not poverty, and b) on the actual major task the poor kids did just as well. There are tasks where the poor children do less well but this is hardly news.
Popular science reporting on neuro issues is very often not to be trusted.
Addendum: There is more from Michelle Dawson in the comments.
Elliott Carter turns 100 today
The best place to start is his Sonata for Cello and Piano, the Double Concerto for Harpischord and Piano, and the Sonata for Flute, Oboe, Cello, and Harpischord, all collected here. The string quartets and the sonata for violin and piano are also important, plus the short late works for solo instruments or small ensembles or voice; choose by which instruments you like best.
Here is Q&A with Elliott Carter, interesting throughout. It ends with this:
What are the things that people say to you that are meaningful?
People say they like my music very much, but I’m 100 years old.
Keynes’s General Theory, chapter three
The material on Say’s Law is good but J.S. Mill understood similar points as early as the 1840s.
In section ii Keynes wrote: "This particular relationship, which corresponds to the
assumptions of the classical theory, is in a sense an optimum
relationship. But it can only exist when, by accident or design,
current investment provides an amount of demand just equal to the
excess of the aggregate supply price of the output resulting from full
employment over what the community will choose to spend on consumption
when it is fully employed."
That is one of the most important passages in the book. Consumption
is stable and investment is the volatile variable. For equilibrium to
obtain, C + I (forget about G for now) must absorb Y. But "I" is ruled
by fickle forces and there is no guarantee it will play its required
role. Consider this one of Keynes’s basic models.
Garett Jones suggested to me that Keynes is postulating a vertical
AD
curve in this chapter. The question is why Say’s Law doesn’t
have more force, namely why supply increases don’t translate into
aggregate demand. Keynes thought it was the liquidity trap –receipts
get soaked up in hoards rather than spent — but I think the key
problem has to be a broken banking system. Holdings of currency just
aren’t large enough and otherwise the held money
would end up being invested through intermediation. In the model
Keynes is often looking for ways to "break the circular flow" but he
didn’t always succeed.
Section iii has some lovely prose.
Sentences to ponder
Recent data suggests that many borrowers who received help with mortgage modifications earlier this year tended to re-default on their payments, a top U.S. banking regulator said on Monday.
"The results, I confess, were somewhat surprising, and not in a good way," said John Dugan, head of the U.S. Office of the Comptroller of the Currency, in prepared remarks for a U.S. housing forum.
"Put simply, it shows that over half of mortgage modifications seemed not to be working after six months," he said.
Here is more. I thank Brad W. for the pointer.