Atlas Sucked

by Henry on October 23, 2009

There’s been a lot of discussion of Ayn Rand the last few days, because of the new (and very-interesting sounding) “biography”: Personally, I could never stand her work, not because of the libertarian philosophy (I like me mid-period Heinlein just fine), but the excruciatingly bad writing. If Chris Hayes is right, she finally has a worthy successor. Ladies, gentlemen, I give you Ralph Nader and “Only the Super-Rich Can Save Us”:

As a novel it is a dismal affair: gracelessly written, ploddingly plotted, and long. Oh God so long. And as a political tract it advances a conception of politics both grossly condescending and depressingly elitist. Democracy, Nader seems to say, could be ours: if only the oligarchs would get behind it. The basic plot goes like this. Moved by pity to travel to New Orleans in the wake of Katrina to oversee relief efforts, Warren Buffett encounters one desperately poor and grateful recipient of his charity who announces, “Only the super-rich can save us.” This gets Buffett thinking, and he proceeds to convene a top secret meeting in a Maui resort. There he gathers an eclectic group of the super-rich: Paul Newman, George Soros, Bill Gates Sr., Ted Turner, Barry Diller, Peter Lewis (owner of Progressive Insurance), and, somewhat randomly, Yoko Ono, among others, to create a “people’s revolt of the rich.”

This is apparently not a satire. But it does raise the question of whether there are any genuinely good, genuinely political novels out there. Since we’re coming up on the weekend, I’ll throw this out as an open thread (I have a few nominations myself, but don’t want to bias the sample). Have at it.

The Internets Never Forgets

by Henry on October 23, 2009

I wrote a “review”: a couple of weeks ago of Viktor Mayer-Schoenberger’s “Delete: The Virtue of Forgetting in the Digital Age” (“Powells”:, Amazon)

Information technology has grown so entwined with our lives that it is easy to overlook the marvels flowering forth from it. … But if Viktor Mayer-Schonberger is right, these technologies may grow to entangle and choke us. They create a kind of external memory, recording our actions and interactions in digital video footage and thousands upon thousands of digital photographs. … Mayer-Schonberger argues that these developments challenge how we organise society and how we understand ourselves. … At its heart, his case against digital memory is humanist. He worries that it will not only change the way we organise society, but it will damage our identities. Identity and memory interact in complicated ways. Our ability to forget may be as important to our social relationships as our ability to remember. To forgive may be to forget; when we forgive someone for serious transgressions we in effect forget how angry we once were at them. … Delete argues that digital memory has the capacity both to trap us in the past and to damage our trust in our own memories.

I probably should have linked to it before, but didn’t, because I wanted to combine the link with a short review of Tyler Cowen’s recent book “Create Your Own Economy: The Path to Prosperity in a Disordered World” (Powells, Amazon) As I mention in the review, Tyler’s book presents a very interesting contrast to Viktor’s. What Tyler sees as evidence of individual empowerment, Viktor sees as as a serious threat to personal identity. Viktor fears that technologies will undermine our sense of self, and our ability to remake ourselves in order to respond to a changing social environment. Tyler sees new technologies as valuable precisely _because_ they allow us to remake ourselves and our identities, creating our own ‘economies’ (here, I think he is harking back to the Greek origins of the term) or internally ordered environments by picking and choosing “small cultural bits” and assembling them according to our own personal hierarchies.
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A snippet on representative agents

by John Quiggin on October 23, 2009

In response to some comments, I’ve written a little bit about the representative agent assumption in Dynamic Stochastic General Equilibrium Models. I argue that, given the underlying DSGE assumptions, you won’t get very much extra by including heterogeneous agents.

But, I intend to say in the “Where next” section, it seems likely that heterogeneous and boundedly rational individuals, interacting in imperfect and incomplete markets will generate ’emergent’ macro outcomes that are not obvious from the micro foundations. Of course, this is going to be a prospectus for a theory, not the theory itself.

In the meantime, comments on my snippet would be much appreciated.

Update Looking at the responses, I think just about everyone has missed the point, which suggests that maybe I didn’t make it very well.

I’m not saying that heterogeneity doesn’t matter, but that introducing (tractable) heterogeneity into a DSGE model isn’t likely to yield radically different predictions about macroeconomic outcomes. If that’s correct, then if you think DSGE models work well (for some evaluative procedure), you can be relaxed about using representative agents. And if you don’t think DSGE models work well, the representative agent assumption isn’t the problem, or at least it isn’t the only problem.

Since my statement of the situation didn’t help much, I’ll present it as a question instead. Can anyone point me to a DSGE-style model that derives strongly non-classical results from the introduction of heterogeneity? Or, failing that, does anyone have a convincing argument that such results should emerge?

I’m aware of course that, in general, anything can happen with aggregation across heterogeneous agents, so I’m not much interested in arguments for agnosticism starting from that point. End update

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