by Chris Bertram on November 30, 2006
Over at Econolog, TCS writer and right-wing hack Arnold Kling reports, under the headline “The Stern Swindle”:http://econlog.econlib.org/archives/2006/11/the_stern_swind.html , that Cambridge economist Partha Dasgupta “criticizes the Stern report”:http://www.econ.cam.ac.uk/faculty/dasgupta/Stern.pdf for applying a very low discount rate to the interests of future generations. Kling writes:
bq. What Dasgupta is saying is that the approach Stern uses to evaluate intertemporal trade-offs would, if applied generally, suggest that our consumption should drop from over 80 percent of GDP to 2.5 percent, in order to leave the target legacy to our children. What Dasgupta’s comment does is crystallize for me the magnitude of the intellectual swindle that Stern is attempting to pull off. Any time you assign a far-from-plausible interest rate to a long-term intertemporal problem, you get distorted results.
What Dasgupta _actually says_ :
bq. I have little problem with the figure of 0.1% a year the authors have chosen for the rate of pure time/risk discount….(p. 6)
Dasgupta’s real argument is that Stern shouldn’t adopt the egalitarian approach it does to intergenerational well-being whilst being _at the same time_ indifferent to inequality among members of the present generation. Dasgupta thinks the well-being of the actual poor should take priority over climate change abatement. Of course, we’ve heard arguments along these lines before, but Dasgupta, as someone with a record of concern for development and the well-being of the global poor, is someone who should be taken seriously when voices them and might be expected to devise and support policies that benefit the worst off. Right-wing hacks, are, needless to say, a different matter.
(Dasgupta’s critique seems to me to support the idea that economies like China and India shouldn’t be pressured into climate change abatement because the value of the benefits their growth brings to the poorest outweighs the harms to future generations. It doesn’t look anything like so plausible to claim that the least advantaged would be similarly harmed by the wealthier countries cutting back their carbon emissions.)
by Daniel on November 29, 2006
At this late stage in the occupation of Iraq, many of Henry Kissinger’s old arguments about Indo-China are being dusted down. One of the hoariest and worst is that we need to “stay the course” (or some similar euphemism) in order to maintain “credibility” – to demonstrate our resolve to our enemies, who will otherwise continue to attack us. It reminds me of my one and only contribution to the corpus of game theory.
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by Kieran Healy on November 27, 2006
Via “Jeremy Freese”:http://jeremyfreese.blogspot.com/2006/11/why-get-help-when-you-can-help-science.html, a poster for a Mass General Hospital study. As Jeremy says,
Do you have not one, but two separate problems that are associated with making bad decisions? If so, why don’t you choose to have a 50% chance of forgoing treatment for both for three months, in exchange for _$600_?… Don’t worry: you can rest assured you’ll be in the most capable, professional hands — just look at the quality of our graphic design! Yes, that’s a picture of a human brain we got off the web, with a martini glass superimposed on top of it. And, see, there’s a photo of an anguished woman, just below a photo of a cartoon man so excited he’s raising his arms with glee.
This reminds me of one of my favorite books, encountered during research for Last Best Gifts: Ed Brassard’s Body For Sale: An Inside Look At Medical Research, Drug Testing, And Organ Transplants And How You Can Profit From Them. This is a how-to guide for selling the renewable and non-renewable bits of yourself and also for getting accepted into paying clinical trials of all kinds.
by Kieran Healy on November 16, 2006
“Milton Friedman has died”:http://news.bbc.co.uk/2/hi/business/6156106.stm at the ripe old age of ninety four. Alex Tabarrok at Marginal Revolution “writes a brief appreciation”:http://news.bbc.co.uk/2/hi/business/6156106.stm from the point of view of a fan. As “Harry said”:https://crookedtimber.org/2006/11/10/adam-swifts-political-philosophy-an-beginners-guide-for-students-and-politicians/ around here only the other day, everyone should read “Capitalism and Freedom”:http://www.amazon.com/exec/obidos/ASIN/0226264211/ref=nosim/kieranhealysw-20 at least once.
_Update_: The “Milton Friedman Choir”:http://video.google.com/videoplay?docid=-6407847019713273360&q=milton+friedman sings about corporations, markets and social responsibility. (Hat tip: CB.)
by Chris Bertram on November 16, 2006
Over at Marginal Revolution, Tyler Cowen has “responded”:http://www.marginalrevolution.com/marginalrevolution/2006/11/xxx.html to “my claim”:https://crookedtimber.org/2006/11/13/relativities-local-and-global/ that, once societies have achieved a certain threshold level, continued growth in output doesn’t matter that much (and that inequalities among such societies matter little, certainly when set beside the absolute poverty of the global poor). Tyler writes:
bq. Just as the present appears remarkable from the vantage point of the past, our future may offer comparable advances in benefits. Continued progress might bring greater life expectancies, cures for debilitating diseases, and cognitive enhancements. Millions or billions of people will have much better and longer lives. Many features of modern life might someday seem as backward as we now regard the large number of women who died in childbirth for lack of proper care. Most of all, economic growth limits and mitigates tragedies. It is a simple failure of imagination to believe that human progress has run its course.
I think what is most striking about what Tyler writes here is the way in which he runs together human progress and economic growth, as if they were the same thing. I’ll leave to one side any moralized or perfectionist thoughts about human progress and just notice that there’s a basic distinction to be made between scientific and technological development and economic growth in the sense of increased per capita GDP. Capitalism’s advocates have always had a tendency to equate progress with increased output, but there are other possibilities, chief among them being that output remains constant and people become progressively freed from burdensome toil. Jerry Cohen has some trenchant observations about Max Weber’s enslavement to a Tyler-like view towards the end of his _Karl Marx’s Theory of History_ (p. 321 and thereabouts). If the passage were online, I’d link. But you should all own a copy anyway.
The other thing to note is the way Tyler holds out the carrot of the benefits of medical technology, including “cognitive enhancements”. If scientific progress can come apart from growth in GDP I could just suggest that giving up on growth in one sense doesn’t necessarily require us to forgo such future benefits. (And I could also point to a list of societies that have innovated in medical technology despite not being at the front of economic development: the British invention of MRI scanning in the 1970s being a case in point.) But it is worth noting that the really great advances in longevity (so far) have mainly come from improvements in diet and public health and rather less from hi-tech. Maybe Tyler thinks that all this will change in the future and that we need to incentivize innovators now so that the benefits of “cognitive enhancements” trickle down to ordinary Westerners and then to the global poor. I’m unconvinced.
by Henry Farrell on November 15, 2006
“Dan Drezner”:http://www.danieldrezner.com/archives/003001.html disagrees with “Chris Hayes”:http://www-news.uchicago.edu/citations/06/061108.sanderson-itt.pdf about whether Econ 101 is a form of right wing indoctrination, saying that his own first micro class waxed rhapsodic about the joys of technocratic intervention, and that he didn’t discover the public choice critique of government until grad school. Now public choice _is_ an unabashedly ideological approach to the world, at least if the co-editor of the flagship journal in the field, Charles Rowley, is to be believed. In his introduction to the Edward Elgar public choice reader, he describes public choice as a “program of scientific endeavor that exposed government failure coupled to a programme of moral philosophy that supported constitutional reform designed to limit government,” and suggests that its opponents are “scholars who had rendered themselves dependent on the subsidies of big government and whose lucrative careers in many instances were linked to advising … agents of the compound republic.”
There is a strong strain in economics more generally that is unabashedly ideological too. Take “this effort”:http://cafehayek.typepad.com/hayek/2006/10/the_society_of_.html to figure out a sort of Nicene creed that would allow ‘real economists’ to profess their faith and thus distinguish themselves from “bluffers”:http://maxspeak.org/mt/archives/002605.html like Kenneth Arrow and Robert Solow. “Real” economists apparently believe that demand curves always slope downwards, even when empirical evidence tells you that they don’t (I’ve always preferred the “Apostles’ Creed”:http://www.thesharpener.net/2006/08/10/mea-culpa/ myself). Now this doesn’t say, _contra_ both some economists and some of their sillier critics, that a commitment to the kinds of models that economists use _necessarily_ makes you predisposed to be right wing (Jack Knight and Jim Johnson, two rational choice lefties, have an interesting forthcoming piece discussing how rhetorical slippage between general equilibrium and partial equilibrium models provides a bogus ideological justification for many pro-market arguments). But it does mean that many people who take economics courses, as they are typically taught in this country, end up coming out of these courses more right wing than they were going in, and perhaps more right wing than the actual theory itself would support, if it were looked at carefully. I think (although I can’t find it using Google, so I may be wrong), that there’s actually empirical evidence supporting the first of these claims – a survey someone did a few years back measuring the political opinions that people had entering graduate programs in economics, and their political opinions after a few semesters of coursework, which found that there was a pronounced and statistically significant shift to the right (if anyone knows where this survey is to be found, feel free to point to it in comments).
Update: I’ve found the survey via Google Scholar, although it isn’t a longitudinal study as I thought it was; the findings are reported in “The Making of an Economist Redux”:http://www.atypon-link.com/AEAP/doi/abs/10.1257/0895330053147976 in the _Journal of Economic Perspectives_.
The large majority of [students surveyed in seven top ranked econ grad programs] (80 percent) felt that their political views did not change in graduate schools, although that changed by year, with 10 percent of first-year students reporting a change in their views, but 32 percent of fourth- and higher-year students reporting a change in their views. In particular, 10 percent of first-year students considered themselves conservative; by the fourth and fifth year, this number had risen to 23 percent. There was also a large drop by year in students who considered themselves radical; that percentage fell from 13 percent of first year students to only 1 percent of fourth-year and higher students.
by John Q on November 14, 2006
The release of the Stern review on the economics of climate change has had a huge impact on the climate change debate in Australia. There had already been signs of movement, but the government was still adamant in rejecting both the Kyoto protocol and any form of emissions trading. And, although the offical position did not dispute the science of climate change, many of the government’s supporters in the media, and even some ministers, were pushing the denialist line.
That was only a few weeks ago. Now the Australian government has endorsed emissions trading (in principle at least) and is calling for a ‘new Kyoto’. Ratifying the old Kyoto is still a step too far for a government that has never disagreed with George Bush on anything, but it’s hard to see how long this position can last.
Given the impact of the Stern review, it’s important to see if it stands up to scrutiny, and I’ve done a series of posts on parts of the report at my blog. My main conclusions:
(i) Stern’s estimates of the cost of stabilising CO2 levels (1 per cent of GDP by 2050) are optimistic, but in the right ballpark
(ii) Stern’s treatment of discounting is correct (More to come on this, I hope)
(iii) Stern underestimates the costs of Business As Usual, particularly in relation to environmental damage
(iv) Headline reporting of Stern overstates the risks of worst-case outcomes in the long tail, but critics are wrong to suggest that low-probability extreme outcomes should be ignored.
Overall, my conclusion is that the Stern review gets the basic economics and the policy recommendation right, even if the presentation is inevitably political.
by Chris Bertram on November 13, 2006
In the past few weeks John and Henry have engaged in arguments with Tyler Cowen and Will Wilkinson on the subject of whether relative wealth matters. To be sure, that isn’t the ostensible focus of the dispute with Tyler, which is about demographics. But digging deeper, the crux of Tyler’s argument has been that Europe’s ageing population matters because it will lead to lower growth rates and that the compounding effect of these will be that Europe’s position relative to the US (and China, and India) will decline, and that that’s a bad thing for Europeans. Whilst Tyler insists that these global relativities matter enormously, Will suggests that domestic relativities between individuals matter hardly at all. Since I think of Will and Tyler as occupying similar ideological space to one another, I find the contrast to be a striking one, and all the more so because I think that something like the exact opposite is true. That is to say, I think that domestic relativities matter quite a lot, and that global ones ought to matter a good deal less (if at all) just so long as the states concerned can ensure for all their citizens a certain threshold level of the key capabilities.
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by Chris Bertram on November 13, 2006
From chapter 6 of E.M Forster’s _Howard’s End_ (1910):
“Evening, Mr. Bast.”
“Evening, Mr. Cunningham.”
“Very serious thing this decline of the birth-rate in Manchester.”
“I beg your pardon?”
“Very serious thing this decline of the birth-rate in Manchester,” repeated Mr. Cunningham, tapping the Sunday paper, in which the calamity in question had just been announced to him.
“Ah, yes,” said Leonard, who was not going to let on that he had not bought a Sunday paper.
“If this kind of thing goes on the population of England will be stationary in 1960.”
“You don’t say so.”
“I call it a very serious thing, eh?”
“Good-evening, Mr. Cunningham.”
“Good-evening, Mr. Bast.”
by John Q on November 10, 2006
by Kieran Healy on November 9, 2006
I came across “The Cambridge Companion to Keynes”:http://www.amazon.com/exec/obidos/ASIN/1163114559/ref=nosim/kieranhealysw-20 in the bookshop yesterday and went to add it to my Amazon wishlist this morning. When I looked it up in the catalog I saw that it had a rating of only 2 stars and my first thought was: I bet _that_ guy is responsible! And I was right. A while ago I was poking around in the literature on Keynes and Post-Keynesianism and anytime I checked a book on Amazon there would be a review from “Michael E. Brady”:http://www.amazon.com/gp/pdp/profile/A1UI9T8WKJPZN5/ref=cm_cr_auth/002-9644667-3828001. Typically, it would be a long, desnely-written single paragraph of criticism, complete with page references to the literature and especially to Keynes’s works.
In fairness, his “complete list of Amazon reviews”:http://www.amazon.com/gp/cdp/member-reviews/A1UI9T8WKJPZN5/002-9644667-3828001?ie=UTF8&display=public&page=3 (333 of them at current count) shows he is perfectly capable of writing a generous review. But he does have a couple of bees in his bonnet. “He”:http://www.amazon.com/gp/product//B0006C2TOW/ref=cm_aya_asin.title/002-9644667-3828001 “doesn’t”:http://www.amazon.com/gp/product//1858986532/ref=cm_aya_asin.title/002-9644667-3828001 “like”:http://www.amazon.com/gp/product//0802022960/ref=cm_aya_asin.title/002-9644667-3828001 people who Get Keynes’ Macroeconomics Wrong at all. Even beyond the macro stuff, however, he gets very annoyed at critics of Keynes’ “Treatise on Probability”:http://www.amazon.com/gp/product//1596055308/ref=cm_aya_asin.title/002-9644667-3828001, whom he sees as slavishly following the “allegedly mistaken”:http://www.amazon.com/gp/product//0199279551/ref=cm_aya_asin.title/002-9644667-3828001 (and ad hominem) views of Frank Ramsey. In a way, Brady’s own reviews on this topic can be read as an effort to undo the effects of what “he clearly thinks”:http://www.amazon.com/gp/product//9812384081/ref=cm_aya_asin.title/002-9644667-3828001 of as the worst book reviews of all time, namely Ramsey’s 1922 and 1926 comments on Keynes’ _Treatise_, whose malign effects have propagated down through the literature. A true believer. Here is “his own book”:http://www.amazon.com/Essays-Keynes-Michael-Emmett-Brady/dp/141344959X on Keynes.
by Kieran Healy on November 5, 2006
I was browsing in the campus bookshop over lunch and saw the “UK/Australia edition”:http://www.amazon.co.uk/Freakonomics-Economist-Explores-Hidden-Everything/dp/0141019018/ of “Freakonomics”:http://www.amazon.com/exec/obidos/ASIN/0061234001/ref=nosim/kieranhealysw-20 for sale — this is the recently released revised and expanded version. Looking to see what had changed, I was surprised and gratified to see that the new version incorporates much of Steven Levitt’s “response”:https://crookedtimber.org/2005/05/23/response/ to “our seminar on the first edition”:https://www.crookedtimber.org/category/levitt-seminar. The essay is prefaced by a generous comment from Steve to the effect that the CT seminar is the best available discussion of the book. Unfortunately the new edition doesn’t contain our essays (though it does give the seminar’s URL), and so we won’t be getting any royalties for our efforts. This shows why traditional models of publishing are doomed in the era of free online content.
by Henry Farrell on November 3, 2006
I’ve received an email chivvying me into linking to the new “Economist blog”:http://www.economist.com/debate/freeexchange/ with the irresistible hook that now I “can attack [them] directly.” The new blog would appear to be at least in part a subdivision of “Megan McArdle industries”:http://www.janegalt.net/archives/009529.html. Consider it linked.
by Kieran Healy on October 30, 2006
Unfortunately I wasn’t able to participate in the “discussion on Sheri Berman’s book”:https://crookedtimber.org/2006/10/30/seminar-the-primacy-of-politics/, perhaps out of residual guilt at not completing her Comparative Politics seminar back when I was a graduate student. But here’s a somewhat related new paper by “Marion Fourcade”:http://sociology.berkeley.edu/faculty/fourcade-gourinchas/ and myself on “Moral Views of Market Society”:http://www.kieranhealy.org/files/drafts/moral-order.pdf [pdf] which touches on some of the Polanyian themes in the discussion, particularly debates about the relationship between the market and the moral order, broadly conceived.
by John Q on October 29, 2006
With the major issues in the scientific debate over climate change having been resolved, attention has now turned to the economics of stabilising the climate and to the costs of doing nothing. Following the House of Lords economic committee inquiry last year, which spent most of its time promoting denialist attacks on climate science, and had little of value to say on the economic issues, the UK government commissioned Sir Nicholas Stern, former chief economist of the World Bank to look at the issue properly.
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