Someone I believe to be Megan McArdle weighs in at the Economist blog on the laughable graphic run by the WSJ the other day. Brad DeLong is not impressed, nor is Mark Thoma (in part because comments are misattributed to him in the post), and nor am I. She singles me out for membership in “a special category of wrong,” I think mostly because my Ph.D is in sociology and not economics.
From the category archives:
Economics/Finance
By now you’ve probably all seen this ridiculous graphic from todays’ WSJ, which purports to show that the Laffer curve is somehow related to the data points on the figure. “Brad DeLong”:http://delong.typepad.com/sdj/2007/07/most-dishonest-.html, “Kevin Drum”:http://www.washingtonmonthly.com/archives/individual/2007_07/011682.php, “Matt Yglesias”:http://matthewyglesias.theatlantic.com/archives/2007/07/worst_editorial_ever.php, “Mark Thoma”:http://economistsview.typepad.com/economistsview/2007/07/yet-again-tax-c.html and “Max Sawicky”:http://maxspeak.org/mt/archives/003184.html have all rightly had a good old laugh at it, because it’s spectacularly dishonest and stupid. I just want to make a point about so-called outlying cases, like Norway.
[click to continue…]
A little while ago, when “Harry discussed the latest addition to the Real Utopias Project on basic income and stakeholding”:https://crookedtimber.org/2007/02/28/redesigning-distribution/, some commentators raised the issue of the gender effects. I promised at that time that I would write a post about it. Well, finallly the time has come — thanks to a workshop on this topic that the “Heinrich Boell Foundation”:http://www.boell.de/ organised last Thursday in Berlin. They are the think-thank of the Green German Party, which is currently seriously debating whether they should advocate a basic income as (part of) a welfare state reform strategy. The workshop addressed the question whether a basic income would have different implications for women and men, and whether, all things considered, it would be a policy reform that feminists may want to support. [click to continue…]
“Tyler Cowen”:http://www.marginalrevolution.com/marginalrevolution/2007/07/is-economic-ine.html points to a very interesting new paper by Daron Acemoglu and his colleagues (PDF – it was “here”:http://econ-www.mit.edu/faculty/download_pdf.php?id=1510 this morning, but this link isn’t working for me any more; see “here”:http://www.isop.ucla.edu/cms/files/acemoglu_bautista_querubin_robinson.pdf for a slightly earlier version) on the relationship between political and economic inequality. Tyler’s gloss is that this provides general insights into the “meme” of whether economic inequality is bad for growth, and concludes that “at least from that data set, the real problem seems to be rent-seeking behavior through the political process.” Thus, unless I misunderstand him (which is possible; he may just be blogging in shorthand), he is saying that this paper provides significant evidence suggesting that economic inequality isn’t the cause of slower economic growth; instead, political inequality and rent-seeking are at fault. [click to continue…]
So checking the post today I found a letter addressed to my son, inviting him to apply for a Citibank Platinum Select Mastercard. Up to 40,000 American Airlines airmiles included! I’ve had a chat with the little guy about it (I still call him the little guy — corny, I know, but other Dads will understand), and he won’t be signing up, partly because it’s a bad deal (18.24 percent variable rate, annual fee after the first year), but mostly because he is six and a half weeks old.
I was able to pick up an iPhone early through a local contact at Apple, and I have to say it’s really something. No of course I wasn’t able to do that — who do you think I am? Besides, I already have a phone on a relatively new contract. But I was in the Campus Bookstore here at the U of A and, while briefly down in the computer section, I heard store employees field two calls from people asking whether it would be possible to buy an iPhone there tomorrow, and whether there would be an educational discount on them. The guy in the store replied with more than a trace of sadness that they weren’t carrying the phone because it was only available at Apple Stores and AT&T outlets. He didn’t know about the educational discount. I was only there for about five minutes and clearly these weren’t the first two calls they’d had about this today.
I won’t be buying one anytime soon but, like I “said before”:https://crookedtimber.org/2007/06/04/iphone/, it seems to me that the iPhone is going to be a success for Apple, and will probably provide a large kick in the ass to other cellphone manufacturers in the process. Criticism of the iPhone — and general backlash against the widespred interest amongst consumers — has been brewing for some time now. “John Gruber”:http://daringfireball.net/ has been keeping track of “some”:http://daringfireball.net/2007/06/straws_grasping “examples.”:http://daringfireball.net/2007/06/iphone_high_water_mark
Having read a bunch of the iPhone Naysayers, I’m struck by how much they miss the point of what Apple is trying to do with the device (in addition, I find myself wondering what the qualifications for becoming an IT Industry Analyst are, exactly).
The “paperless office” is one of those catchphrases that gets bandied about for a while, only to disappoint and eventually be used in a purely derisive way. As Wikipedia says, it has become ‘a metaphor for the touting of new technology in terms of ‘modernity’ rather than its actual suitability to purpose’. The death of the phrase was cemented by a 2001 book, by Sellen and Harper “The Myth of the Paperless Office”. Here’s a good review from Kirk McElhearn.
This book wasn’t a snarky debunking but a fairly sophisticated analysis, pointing out that a sensible analysis of task requirements could allow a significant reduction in paper use. But it was the title that stuck. No one would ever again refer to the paperless office with a straight face.
Six years later, though, looking at my own work habits, I find that I have virtually ceased to use paper, in all but a couple of marginal applications.
The appreciation of the euro against the dollar has taken the currency close to its highest value ever around $1.35. By contrast, the rate estimated as Purchasing Power Parity by the Penn World Tables International Comparisons Project (ICP) is around $1.00 for most eurozone countries (It’s 1.10 for Italy, 1.05 for France and Germany, 0.96 for the Netherlands. The price differential between eurozone countries is interesting in itself, but that’s another post).
A gap of this magnitude between market exchange rates and estimated PPP values raises all sorts of problems. For example, using the Penn numbers, income per person in the Netherlands is about 75 per cent of that in the US, and this number is often quoted on the assumption that purchasing-power parity means exactly what it says. But using exchange rates, as would have been standard a couple of decades ago, income per person is a little higher in the Netherlands than in the US. Which of these comparisons, if either, is valid?
Lots of people (including Kevin Drum, Brad DeLong and Tyler Cowen have jumped in on this post by Will Wilkinson about this NBER study of habituation to changes in income and status. Wilkinson and most commentators focus on the findings regarding the subgroups on the right and left of the political spectrum, which I’ll come to, but it’s worth mentioning the general findings first.
Most people (in the German sample population) initially react more, as regards self-reported happiness, to a change in income than to a change in occupational status, but gradually get habituated to changes in income. This is consistent with the standard view of the happiness literature, that income changes don’t have a big effect on happiness, so that people in rich countries aren’t on average much happier than those in poor countries. Moreover, by looking at the same people over relatively short periods of time the analysis overcomes, to a significant extent, the objection I’ve made previously, that the scale on which happiness is measured is inherently relative to some notion of what is reasonable to expect.
I think I speak for every single reader and contributor to Crooked Timber when I say that we haven’t had nearly enough posts on the subject of heterodox economics recently …
[click to continue…]
to _Methodenstreit: The Extended Blogospheric Remix_. First, as a few commenters here and there have noted, Herb Gintis’s review of a Post-Autistic Economics reader has disappeared from Amazon. I’ve been in contact with Gintis, who not only didn’t take it down himself, but is rather annoyed at its disappearance. I’ve taken the liberty of reproducing it below the fold for the sake of posterity. Second, I see that an “Econ prof” claims in correspondence with “Ezra Klein”:http://ezraklein.typepad.com/blog/2007/05/more_on_heterod.html that “Aklerlof, Stiglitz, etc. all got published very easily.” For Akerlof at least, this “isn’t true”:http://nobelprize.org/nobel_prizes/economics/articles/akerlof/.
I received my first rejection letter from _The American Economic Review_. The editor explained that the Review did not publish papers on subjects of such triviality. In a case, perhaps, of life reproducing art, no referee reports were included. … again rejected on the grounds that the _The Review_ [i.e. _The Review of Economic Studies_ – hf] did not publish papers on topics of such triviality. … The next rejection was more interesting. I sent “Lemons” to the _Journal of Political Economy,_ which sent me two referee reports, carefully argued as to why I was incorrect. After all, eggs of different grades were sorted and sold (I do not believe that this is just my memory confusing it with my original perception of the egg-grader model), as were other agricultural commodities. If this paper was correct, then no goods could be traded (an exaggeration of the claims of the paper). Besides — and this was the killer — if this paper was correct, economics would be different. I may have despaired, but I did not give up. I sent the paper off to the _Quarterly Journal of Economics,_ where it was accepted. I had had such a hard time getting this article published, that I was quite surprised, on a trip to England in the fall of 1973, to discover that, not only had it been read, but even with considerable enthusiasm.
Following up on a couple of recent posts, I thought it might be useful for me to explain why I don’t think of myself as a ‘heterodox’ economist or even find the concept particularly useful. Although I’m clearly to the left of most people in the economics profession (including a fair number who would call themselves heterodox) I’m happy to identify myself with the mainstream research program in economics.
In the near future, CT will be hosting another book event. I thought it would be helpful to alert our readers ahead of time so people can read the book and thereby participate in the discussions more actively and in a more informed manner.
The book is “Higher Ground: New Hope for the Working Poor and Their Children” by Greg J. Duncan, Aletha C. Huston, and Thomas S. Weisner.
During the 1990s, growing demands to end chronic welfare dependency culminated in the 1996 federal “welfare-to-work” reforms. But regardless of welfare reform, the United States has always been home to a large population of working poor— people who remain poor even when they work and do not receive welfare. In a concentrated effort to address the problems of the working poor, a coalition of community activists and business leaders in Milwaukee, Wisconsin, launched New Hope, an experimental program that boosted employment among the city’s poor while reducing poverty and improving children’s lives. [The authors] provide a compelling look at how New Hope can serve as a model for national anti-poverty policies. [source]
You can either buy the book directly from its publisher, the Russell Sage Foundation, or get it at Amazon
In addition to Timberite contributions, we’ll have comments by Nancy Folbre and Kimberly Morgan plus a response by Greg Duncan.
Chris Hayes’ “article”:http://www.thenation.com/docprint.mhtml?i=20070611&s=hayes on heterodox economics has gotten a lot of attention; for my money, the two best takes on it are “Ezra Klein’s”:http://ezraklein.typepad.com/blog/2007/05/forgetting_the_.html and “Matt Yglesias’s”:http://matthewyglesias.theatlantic.com/. As Matt says:
What heterodox economists are really challenging isn’t neoclassical economics but the political behavior of neoclassical economists. The recent Alan Blinder fracas is a case in point. He didn’t call any of the standard neoliberal case for free trade into question, and, indeed, didn’t argue against free trade at all. He just said something that he thought would be helpful in spurring the creation of the sort of social democratic society with an open market that he favors, while many economists saw his statements as giving aide and comfort to people who have a political agenda (blocking new trade agreements) that they don’t like.