What the Deuce is Going On?

Tyler Cowen writes,

The contemporary world is not very well built for a large chunk of males. The nature of current service jobs, coddled class time and homework-intensive schooling, a feminized culture allergic to most forms of violence, post-feminist gender relations, and egalitarian semi-cosmopolitanism just don’t sit well with many…what shall I call them? Brutes?

His point seems to be that we are becoming a more feminized society, and some of what we observe is (futile) pushback against that. My thoughts:

1. When one speaks of feminized culture (or at least when I speak of it), it is not to suggest that all women have traits that differ from all men. Rather, think of tendencies that are higher in one gender or another.

2. I am less positive than Tyler about the traits of feminized culture. While the favorable characteristics are there, I also associate with feminized culture: consensus-driven to the point of repressing unpopular ideas; elevation of feelings relative to reason; too much tolerance for roles with authority without accountability and for roles with accountability without authority, rather than constructing a hierarchy that keeps authority and accountability aligned (“the buck stops here”.

My impressions are based on experiences working in organizations as well as observations about society at large. I used to say that I felt uncomfortable at business meetings that were male-dominated or female-dominated. I felt most comfortable with close to a 50-50 mix.

3. I am considering reading another Peter Turchin book, from ten years ago, called War and Peace and War. He apparently offers a grand theory of the integration and disintegration of empires, and I wonder how well 21st-century developments fit the “disintegration” model.

A Post to Waste My Time

Jonathan H. Adler writes,

When newspapers make mistakes or false accusations, they publish corrections. That’s not always the case with bloggers, however. And sometimes it seems the more prominent the blogger, the less likely a correction will be made.

A recent example comes from noted economist Paul Krugman. . .

I think that Adler is wrong to frame this in terms of newspapers vs. blogs. Krugman does not limit his remorseless slander to blogs.

Everything written by, for, or against Krugman over the past 15 years is a waste of time. That includes this post as well as Adler’s. It includes various attempts by Henderson, Cowen, and Sumner to engage with Krugman. They try to treat him as if he had some sense of decency. Instead, he is Joe McCarthy with a Nobel Prize.

When do you stop reading?

Tyler Cowen was asked this question.

My answer is based on my classification system for op-eds and political blgs.

1. A piece that speaks to people on the same side as the author and tries to close their minds.

2. A piece that speaks to people on the same side and tries to open their minds.

3. A piece that speaks to people on the other side and tries to open their minds.

I try to read 2 and 3 and to avoid 1. But there is so much 1 being written that even though I try my best to avoid it, I still probably read more of it than anything else.

There is much more pseudo-3 than actual 3. That is, the “advice” to the other side is to admit that you are stupid and evil. It might look like 3 but it is really 1.

The book by Kim Holmes that I have been reading has a bit of 2 and 3. I think it would have been better if he had focused more consciously and consistently on those aspects of his message.

I think that 30 years ago there was much less 1 and more 2 and 3. Back then, people on the left seemed to me to have open minds.

I think that Holmes would blame the influence of post-modern philosophy, which denies that issues can be dealt with through reason.

I blame Paul Krugman.

Interpret These Data

The WaPo reports,

In 2000, about 14 percent of young New Yorkers worked in finance, earning about 77 percent more than average for their age group. Now they make about 115 percent more than average, and their numbers have shrunk to about 10 percent of their cohort.

Pointer from Tyler Cowen.

I am sure that there are many possible interpretations. The one that comes to my mind is that NYC financial firms are hiring fewer mediocre/marginal young workers. This reduces the proportion of young workers in the financial industry but raises the average incomes of those who do work in that industry.

Another Theory of the Trump Phenomenon

Someone writes,

Girard discovered the answer. Society has survived because it has developed a mechanism for concentrating violence on a limited number of victims. This he called the “scapegoating mechanism”. In fact the scapegoating mechanism exploits the very mimetic mechanisms that render it necessary for society’s survival. People who fall into violent, obsessive desire quickly lose their grip on reality. It is easy to convince them that the source of their frustration – their inability to satisfy their mimetic desires without running into violent conflict – is the fault of some group of scapegoats. It is important for the scapegoats to be a disenfranchised minority, so that the violence of society can be turned upon them without fear that they will be avenged. Here, again, Girard’s theory renders unsurprising that which economists and political scientists are at a loss to explain: for instance how the favoured ‘cure’ for economic depression is to visit structural violence upon low-paid immigrants, racial minorities, the homeless, the unemployed and the disabled.

Pointer from Tyler Cowen.

In summary, there is this:

the most historically common form of spontaneous order is that of a human community tacitly agreeing to vent all of its violent frustration upon a defenceless subgroup.

I have some doubts about Girard’s core hypothesis, which is that we all want the same few goods. It seems to me that there are all sorts of things that other people want which interest me not at all. By the same token, many of my most favorite pastimes seem to be shared by only a few others.

The theory that our tastes are modeled on the tastes of others may be right, but I am not sure that its implications are as dire as Girard would have it. When I go to a folk dance session, it is true that I will like a dance more when there are others who also like the same dance. But I don’t want to kill them so that I can “possess” the dance. Quite the contrary.

In fact, I think that this is generally true. Nobody wants to be the only person who owns an i-Phone. Even with status goods, we all want others to own them, in order to validate our tastes.

I am sure that in some sense we sometimes desire that others have less than they do. But I am not ready to sign on to the idea that this is a major driver of a lot of our behavior.

American Economic Geography

In the NYT, Parag Khanna writes,

The Northeastern megalopolis, stretching from Boston to Washington, contains more than 50 million people and represents 20 percent of America’s gross domestic product. Greater Los Angeles accounts for more than 10 percent of G.D.P. These city-states matter far more than most American states — and connectivity to these urban clusters determines Americans’ long-term economic viability far more than which state they reside in.

Pointer from Tyler Cowen.

Khanna’s bottom line:

the next president has to move beyond platitudes and implement a serious policy of leveraging new infrastructure investment from home and abroad and backing the shift toward a new urban political economy built around transportation engineering, alternative energy, digital technology and other advanced sectors.

In other words, we’ve had too much organic growth in cities. From now on, it needs to be planned. Needless to say, I do not (note correction) share in this assessment.

Yes, I Saw This

From Claudio Borio and others.

The hitherto unsuspected villain in this story is the misallocation of resources – in our case, labour – during the credit boom and its long post-crisis shadow. More generally, the findings support the view that the disappointing developments we have been witnessing may be the result of a major financial boom and bust that has left long-lasting scars on the economic tissue (e.g. BIS 2014, Borio 2014, Borio and Disyatat 2014, Rogoff 2015) rather than the reflection of a structural, deep-seated weakness in aggregate demand.

Pointer from Tyler Cowen.

Yes, this seems to support PSST, but they use methods that are of a sort that I cannot endorse. I do not think that “aggregate” productivity growth is well measured to begin with, and then when you try to decompose that into smaller pieces, you really lose me. Another way of putting this is that aggregate productivity is a concept borrowed from the model of the economy as a GDP factory. If your conclusion is that reallocation of resources matters for economic performance, then that suggests that the GDP factory is not a good model, which in turn makes your methods suspect.

By the way, there will be some discussion of PSST in a podcast I did with Russ Roberts that will come out in a few weeks, which in turn is about my forthcoming book, Specialization and Trade, which will come out early this summer. Meanwhile, you will find relevant papers here.

Answers on Breaking Up the Big Banks

Aaron Klein writes,

While big banks are extremely politically unpopular, people are increasingly banking at large banks.

Pointer from Tyler Cowen. My comments:

1. I guess once Brookings is bought and paid for, they stay bought and paid for. Remember?

2. Don’t try to make it sound like people are switching out of small banks as a conscious preference. Big banks do not grow organically, like Wal-Mart or Costco. They grow through mergers and acquisitions. I did not choose to bank with Capital One. Capital One simply swallowed up Chevy Chase Bank, the community bank where I had my accounts.

3. Don’t try to make it sound like an international business cannot operate without a bank at its disposal with at least $1 trillion in assets. My guess is that $10 billion would be plenty big for a bank to be able to satisfy multinational businesses. Remember that if there were fewer ginormous banks, there would be many more large banks. Banks can syndicate deals, also.

4. Don’t try to make it sound like big banks are an American comparative advantage. On the contrary, if we have a comparative advantage in finance in the world, it is that historically we have had other large institutional sources of capital.

5. Don’t tell me that you have solved the too-big-to fail problem. See my tests for that in the link in (1).