Monthly Archives: September 2015

Our S.O.B

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1. I thought that some Republican once told Senator McCarthy, “Joe, you’re a real S.O.B. But you’re our S.O.B.” But apparently no one ever said exactly that, although Senator Bricker said something close.

2. When President Obama uses high-handed means to achieve his ends, I think of Progressives murmuring that he is “our S.O.B.”

3. Interpreting voter opinion is a fool’s game, on the order of interpreting short-term movements in the stock market. Still, I am going to be a fool, and offer an interpretation of the Trump boom as a desire on the part of some voters for “our S.O.B.”

Why would a Republican voter be in the mood for an S.O.B.? I think it is perhaps a reaction against John, John, and Mitch.

President Obama has used a “words mean whatever I say they mean” approach to implementing the Affordable Care Act. Instead of slapping him down, as an S.O.B. might have done, John Roberts effectively said, “I’ve got your back.”

When Republican voters delivered a landslide in November of 2014, the Republican leaders acted as if it never happened. Instead of acting like S.O.B.’s, Boehner and McConnell have compromised with and caved into Obama like they were John Kerry at a meeting with the Iranian nuclear delegation.

Hence, the longing for “our S.O.B.”

In any casey, if you were one of those libertarians who sensed a yearning for someone who wants to return America to its roots of limited government and aversion to foreign intervention, it appears you might have over-estimated the American voter just a tad. Sorry, Nick, Matt, David, …

Maybe it’s time to give Seasteading another look.

Tyler Cowen after the Republican Debate

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He writes,

The two participants who have done the best relating to voters, through the media, are the two former CEOs, Donald Trump and Carly Fiorina.

A priori, you would think that being a professional politician selects exactly for people who can do well in a televised national debate. Yet, from this limited number of data points, it is the CEOs who have the relevant skills.

Politicians make more speeches. CEO’s participate in more business meetings.

Think of making a speech as like playing rhythm guitar on a 1960s pop single. You play continuously, and your job is to give the song atmosphere through your use of volume, tempo, and tone.

Think of participating in a business meeting as like playing lead guitar. You come in for short “fills,” and your job is to move the song from where it has been to where it is going by hitting a few really striking notes at just the right time.

Because there are so many candidates at this point, Republican media events are more like business meetings than speech-making opportunities. So that would be my explanation. I think that the comparative advantage of the lead guitarists will be much less when there are only two or three candidates on stage.

How Bad was the Victorian Era?

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Not bad at all, if you believe this historian.

My husband and I have slowly, gradually worked to base our lives around historical artifacts and ideals because — quite frankly — we love living this way. People assume the hard part of our lifestyle comes from the life itself, but using Victorian items every day brings us great joy and fulfillment. The truly hard part is dealing with other people’s reactions.

1. The irony of this story appearing on Vox.

2. I really wanted to tie this in with Vickies and Thetes, but I leave that to the reader.

3. Thanks to Michael Gibson for the pointer.

How Bad was 2008?

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Timothy Taylor writes,

my point here is not to parse the details of economic policy over the last seven years. Instead, it is to say that I agree with Furman (and many others) on a fundamental point: The US and the world economy was in some danger of a true meltdown in September 2008. Here are a few of the figures I used to make this point in lectures, some of which overlap with Furman’s figures. The underlying purpose of these kinds of figures is to show the enormous size and abruptness of the events of 2008 and early 2009–and in that way to make a prima facie case that the US economy was in severe danger at that time.

Taylor highlights the fall in house prices, the drop in bank lending, and the rise in the TED spread. However, if you look at just these indicators, the crisis ended relatively quickly. But employment just kept dropping (long after the official end of the recession). So it looks to me like the policies had a neutron bomb effect. The buildings (banks) were left standing but the people (workers) died.

As Taylor says, these are points that are not going to be settled. In my terminology, there are many frameworks that can be made consistent with observed economic performance. Some of these frameworks will be consistent with policies having made a positive difference, and others will not.

Jonathan Haidt on Academic Monoculture

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On the field of social psychology, he writes,

The lack of political diversity is not a threat to the validity of specific studies in many and perhaps most areas of research in social psychology. The lack of diversity causes problems for the scientific process primarily in areas related to the political concerns of the Left – areas such as race, gender, stereotyping, environmentalism, power, and inequality – as well as in areas where conservatives themselves are studied, such as in moral and political psychology.

As you know, I am concerned about a monoculture in economics, particularly in macroeconomics. I believe that the dynamics behind this monoculture are somewhat different than the ones that underly the alleged monoculture in social psychology. I think that macroeconomics came to be dominated by just a few professors who were so successful in placing their students that they came to dominate the entire ecosystem.

Earnings of College Graduates

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Kevin Carey reports,

The Department of Education calculated the percentage of students at each college who earned more than $25,000 per year, which is about what high school graduates earn. At hundreds of colleges, less than half of students met this threshold 10 years after enrolling. The list includes a raft of barber academies, cosmetology schools and for-profit colleges that often leave students with few job prospects and mountains of debt.

But some more well-known institutions weren’t far behind. At Bennington College in Vermont, over 48 percent of former students were earning less than $25,000 per year. A quarter were earning less than $10,600 per year. At Bard College in Annandale-on-Hudson, the median annual earnings were only $35,700. Results at the University of New Mexico were almost exactly the same.

Pointer from Tyler Cowen.

Confirmation Bias, Illustrated

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Scott Sumner writes,

And I just want to make sure readers are not getting lost in the weeds here. This is not one of those “he said, she said” where reasonable people can disagree on whether the PCE or CPI is a better price index. This is a pay/productivity gap being invented by using the slowing moving price index (NDP, which is similar to the PCE) to make worker productivity look better, and the faster moving price index (CPI) to make real wages look lower. That’s not kosher. You need to use the same type of index for both lines on the graph.

Brad DeLong writes,

I score this for Larry Mishel….

Pointer from Mark Thoma.
DeLong and Sumner are on opposite sides, and each is certain.

Fundamentally, I think that the reason that this happens is that economic propositions are not falsifiable. They only hold “other things equal,” and other things are never equal. A measure of worker productivity that is reasonable according to one person’s framework is not reasonable according to another person’s framework.

If you continue to insist that economics is a science in spite of the non-falsifiability of propositions, you end up deciding that those who disagree with you are evil and anti-science. As I say in the Book of Arnold, you end up wallowing in confirmation bias.

On this particular, by the way, my inclination is to agree with Sumner. That may be political bias on my part. But also, I think you would be seeing a lot of other dramatic things happening if productivity were outstripping wage growth. Very high demand for labor. A big improvement in international competitiveness, leading to large trade surpluses. etc. At the minimum, it seems to me that Mishel and DeLong owe us some comment on why these other developments do not seem to have taken place.

Contrary to what you see in online debates “this one chart” is never a debate-settler. You don’t make a convincing case with one chart. You need lots of disparate, corroborating evidence.

Paul Krugman’s Keynesian Framework

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AS Mark Thoma echoes, Krugman writes,

1. Economies sometimes produce much less than they could, and employ many fewer workers than they should, because there just isn’t enough spending. Such episodes can happen for a variety of reasons; the question is how to respond.

2. There are normally forces that tend to push the economy back toward full employment. But they work slowly; a hands-off policy toward depressed economies means accepting a long, unnecessary period of pain.

3. It is often possible to drastically shorten this period of pain and greatly reduce the human and financial losses by “printing money”, using the central bank’s power of currency creation to push interest rates down.

4. Sometimes, however, monetary policy loses its effectiveness, especially when rates are close to zero. In that case temporary deficit spending can provide a useful boost. And conversely, fiscal austerity in a depressed economy imposes large economic losses.

Note that there are no microfoundations anywhere. Which is fine, in the sense that microfoundations do not add anything to this framework. They do not make it more rigorous, in my view, because they squeeze the economy into a GDP factory.

Of course, I have a different framework, starting with point 1. I think that the drop in spending during a recession is like the thunder that comes during a storm. The thunder does not cause the storm, nor does the drop in spending cause the recession. See may essays on PSST if you need my views in more detail.

Contemporary Segregation

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Ann Owens writes,

Segregation of upper-middle-class and affluent families from all others increased the most. In 2010, families with incomes in the top 10 percent of the national income distribution lived in the most homogenous districts, with other affluent families like them. In contrast, we found that poor families have become slightly more integrated by income between school districts. However, given that high-income families have distanced themselves from others, poor families are likely integrating with working-poor or lower-middle-class families rather than the affluent.

Pointer from Mark Thoma.

As I have said, the affluent folks advocating for more Syrian refugees are unlikely to end up living next to them.

Incidentally, Charles Murray gives a generous review (gated) to Robert Putnam, which is particularly gentlemanly in comparison to Putnam’s treatment of Murray.

Gender and Culture

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A commenter writes,

I would posit that the phenomena they’re describing–gossiping, passive-aggressive, back-stabbing, shaming, and appeals to 3rd parties (hey-la, hey-la, my boyfriend’s back)–represents the worst kind of feminine social striving. If an honor culture full of duels, blood-feuds, and vendettas is the ugly, barbarous version of male social interactions, this ‘cry victim and try to sick a mob on my social rivals,’ ala the UVA rape hoax, is the female equivalent. Perhaps this was inevitable, given the increasing sex ratios on college campuses, but it’d be nice if level-headed adults would recognize this behavior for what it is and avoid indulging it rather than actively egging it on, as many campus administrators seem to do.

I think that this is an under-explored topic, because people are afraid to touch it. But I do believe that the political culture changes when women can vote and that the college culture changes when women are in the majority. It would be surprising if all of the changes are for the better, just as it would be surprising if all of the changes are for the worse.

I found in business that I felt uncomfortable in meetings that were nearly all male or nearly all female. The dynamics of both types of meetings bothered me, in ways that I found difficult to articulate. I want neither Randle McMurphy nor Nurse Ratched.

I believe that men and women tend to differ on the Big 5 personality characteristic known as “agreeableness.” For (low-agreeable) men, disagreement can be exciting and competitive (“wanna bet?”). (High-agreeable) women prefer not to have disagreement. Perhaps I am uncomfortable with the meetings that are dominated by males, because they strike me as overly confident and aggressive. Yet I am uncomfortable with the meetings dominated by females, because I feel that I cannot freely express a dissident point of view.