From the NYT on the remarkable profitability of Goldman Sachs

A big reason for Goldman Sachs’s blowout profits this year has been the willingness of its traders to take big risks — they have put more money on the line while other banks that suffered last year have reined in such moves. Executives say there are big strategic gaps opening up between banks on Wall Street that are taking on more risks, and those that are treading a safer path.

Hmm. I’d be willing to take big risks if I knew the Fed and the US Treasury were standing by, ready to pick up all my losing bets. In the circumstances, the guys at GS doubtless stand amazed at their own moderation in creaming off a mere $20 billion for the year.

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I got my hands on a pretty good old book, Cartoon Cavalcade (1943) – and if you got your hands on it too, you wouldn’t pay more’n a few dollars for the privilege, my friend. It’s an anthology of American cartoons from the 1880’s to the 1940’s: 450 pages worth, plus editorial matter from the early 40’s, providing a historically interesting perspective on all this history. Following up this much-commented post of mine, I’ll post a Reginald Marsh item from 1934: [click to continue…]

Those of you working in higher education in the UK already know about the barbarous proposal to make future support for research depend on a government assessment of its “impact” – in other worlds whether there’s a tangible payoff in terms of economic growth or social policy. Whilst some people — “Wordsworth Country!” — will no doubt be able to spin the positive effects of their works for tourism, and those designing surface-to-air missiles systems will be about to cite the probable benefits to UK exports, others are not so lucky. Medieval French poetry, the metaphysics of holes, set theory … forget it, basically. The comedian David Mitchell had a pretty good column recently on the whole miserable business.

My colleague James Ladyman has launched a petition on the No.10 website to tell Gordon Brown what we think of the idea. If you’re British, even if you don’t live in the UK any more, “pop over and sign it”:http://petitions.number10.gov.uk/REFandimpact/ .

Just a brief note about one of my side projects, the Territory and Justice Network. Cara Nine (UC Cork) and I have been funded by the Arts and Humanities Research Council (UK) and the Irish Research Council for the Humanities and Social Sciences for this project. We’ve now had a couple of conferences. The first, in London back in February and now a little workshop in Novi Vinodolski, Croatia last week. We’ve now launched a blog for the project, which is my reason for posting here. Pay us a visit if you are interested in territory, justice, secession, migration and similar issues (especially from a political philosophy standpoint). And drop me a line if you’d like to become involved in the network in some way.

Steve Benen ponders John Boehner on hate crimes: “The Democrats’ ‘thought crimes’ legislation … places a higher value on some lives than others. Republicans believe that all lives are created equal, and should be defended with equal vigilance.” Benen: “if Boehner doesn’t want to consider the circumstances behind a violent crime, and doesn’t want to pursue “thought crimes,” then he’d necessarily reject the rationale behind every hate-crime law, right?” Benen goes on to note that, apparently, Boehner does not. He “supports existing federal protections … based on immutable characteristics.” Which Boehner thinks include religion, but not sexual orientation. Who knew?

There is, I think, an even more basic problem, which is theoretically interesting, which I would certainly like to see used to swat down Boehner-style arguments, and which I’ve never actually seen anyone make (but probably I just missed it). Practically all crime is ‘thought crime’ in the good ol’ common law sense of the Latin phrase actus non facit reum nisi mens sit rea – ‘the act does not make guilt unless the mind be guilty.’ If we were to take a strict liability approach to all violent crime we would be obliged to place wrongful death on a par with premeditated murder. (After all, it’s not as though the lives of those killed accidentally are worth less.)

This refutes the notion that there is something sinister and Orwellian about post-Drakonic/post-Hammurabian developments in criminal law. (Damn liberals and their newfangled political correctness!) It doesn’t follow that ‘hate crime’ legislation makes moral and practical sense, of course. We could have that discussion after Boehner is done looking up ‘immutable’ in the dictionary.

Wow, I’d certainly like to know the name of the PR agency employed by Trafigura. It couldn’t have been easy to turn a fairly obscure oil trading company into the number one trending topic on Twitter. How do you manage to create that kind of buzz? I certainly hope that the people responsible will be appropriately rewarded.

In general, I have got quite a lot to say in favour of English libel law, and perhaps will for a future “contrarian Wednesday” post. But the current trend toward aggressive use of preliminary injunctions seems to me to be clearly abusive, particularly when (as alleged by Private Eye) some law firms attempt to file for injunctions as late as possible in the hope of getting an inexperienced judge out-of-hours and putting him under pressure. Anyway, this attempt to gag the press has backfired spectacularly, which will hopefully (viz, the McLibel case) make any future would-be muzzlers of the press think twice before pushing too hard.

Jeremy Freese is doing some analysis:

So, the General Social Survey reinterviewed a large subset of 2006 respondents in 2008. They have released the data that combines into one file the respondents interviewed for the first time in 2008 and the 2008 reinterviews of the respondents originally interviewed in 2006. In a separate file, of course, you can get the original 2006 interviews for the latter people.

What has not yet been released, however, is the variable that would identify what row in the first file corresponds to what row in the second file. In other words, you know that person #438 in the reinterview data is somebody originally interviewed in 2006, but you don’t know what person in the 2006 data there are.

Well, especially because the last thing I need to be doing right now is procrastinating, that sounded like a challenge. Just as I have learned that just because there are no microwave instructions for a frozen dinner doesn’t mean you can’t microwave it, just because there isn’t a merge variable doesn’t mean you can’t merge the data. At least if no secure data agreement is involved.

All I have to say is: holy crap. You’d think knowing somebody’s sex, survey ballot (which was kept the same both times), zodiac sign, year of birth, self-identified race, region where they lived where they were 16, whether they lived with their parents when they were 16, whether they lived in the same place they did growing up, who they said they voted for in 2004, their marital status, their education, what they say they did for a living, how many years their mother went to school, inter alia, would allow you to pretty easily pinpoint who is who. I am here to tell you this is not the case.

I was able to devise some convoluted scheme and check how well it was doing thanks to a pretty big clue that I’ll refrain from posting, but even then there ended up being 50 cases that out of 1500 that I wasn’t sure who they were. In general the experience affirmed a fundamental suspicion I’ve had about analyzing survey data: the data seem so much less real once you ask the same person the same question twice.

The real distinction between qualitative and quantitative is not widely appreciated. People think it has something to do with counting versus not counting, but this is a mistake. If the interpretive work necessary to make sense of things is immediately obvious to everyone, it’s qualitative data. If the interpretative work you need to do is immediately obvious only to experts, it’s quantitative data.

More bookblogging! It’s all economics here at CT these days, but normal programming will doubtless resume soon.

Most of what I’ve written in the book so far has been pretty easy. I’ve never believed the Efficient Markets Hypothesis or New Classical Macro and it’s easy enough to point out how the occurrence of a massive financial crisis leading to a prolonged macroeconomic crisis discredits them both.

I’m coming now to one of the most challenging section of my book, where I look at why the New Keynesian program (with which I have a lot of sympathy) and ask why New Keynesians (most obviously Ben Bernanke) didn’t, for the most part, see the crisis coming or offer much in response that would have been new to Keynes himself. Within the broad Keynesian camp, the people who foresaw some sort of crisis were the old-fashioned types, most notably Nouriel Roubini (and much less notably, me) who were concerned about trade imbalances, inadequate savings, and hypertrophic growth of the financial sector. Even this group didn’t foresee the way the crisis would actually develop, but that, I think is asking too much – every crisis is different.

My answer, broadly speaking is that the New Keynesians had plenty of useful insights but that the conventions of micro-based macroeconomics prevented them from forming the basis of a progressive research program.

Comments will be appreciated even more than usual. I really want to get this right, or as close as possible
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To amplify what Kieran has just said – political scientists are going to be very, very happy today. I had seen Lin cited as a 50-1 outsider by one betting agency a few days ago, and had been surprised that she was at the races at all, given that economists tend (like the rest of us) to be possessive of their field’s collective goodies. I’m delighted to see that my cynicism was completely misplaced. But this is also a very interesting statement of what the Nobel committee see as important in economics.

Lin’s work focuses on the empirical analysis of collective goods problems – how it is that people can come up with their own solutions to problems of the commons if they are given enough room to do so. Her landmark book, _Governing the Commons_, provides an empirical rejoinder to the pessimism of Garret Hardin and others about the tragedy of the commons – it documents how people can and do solve these problems in e.g the management of water resources, forestry, pasturage and fishing rights. She and her colleagues gather large sets of data on the conditions under which people are or are not able to solve these problems, and the kinds of rules that they come up with in order to solve them.
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I just heard this from a passing radio and initially didn’t quite believe it. Ostrom, in particular, is a terrific choice. She’s at the other end of the spectrum defined on one side by Freakonomics. Which is to say her work is not flashy, it’s very thorough, and it arrives at, you know, correct answers. I bet the Political Scientists are very, very happy today.

Over the fold, yet more from my book-in-progress, Zombie Economics: Undead ideas that threaten the world economy. This is from the Beginnings section of the Chapter on Micro-based Macro, and covers the breakdown of the Phillips curve and the rise of New Classical and Rational Expectations macro. This (along with the bits to come on DGSE models) is probably the section on which my own background is weakest, so feel free to point out my errors.

I’ve now posted drafts of the first three chapters (+Intro) at my wikidot site, so you can get some context. In particular, before commenting on omissions, take a quick look to see that the point hasn’t been covered elsewhere.

Micro-based macro is here

I’ve got a lot out of comments and discussion so far, and I hope some of this is reflected in what you are reading.

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What is your best theory about how this image was generated? (I got it from Amazon.)

Seriously. This can’t be a picture of a published book, can it? On the other hand, it’s an image of a book published in 1984, so presumably they made the image by scanning an old book. I am curious whether such a monstrosity exists in real life. It’s not just the misspelling. It’s like a full course in how not to design a book cover.

That is all.

Jonah “organic honey at Dachau” Goldberg wonders, “Is ‘Nazi’ the only label our culture understands as irredeemably evil?”

Additional Corner hilarity: someone ought to tell n00b Lee Edwards about his colleague Andrew McCarthy’s views. Edwards puts forward Uighur activist Rebiya Kadeer as a more plausible Nobel Peace prize-winner, as she supports peaceful dissent from the Chinese government over its “deliberate and often brutal campaign to suppress the Uighur language, culture, and religion (the Uighurs are Muslim).” I couldn’t agree more, but there’s that niggling “Muslim” detail. McCarthy opposed the release of any of the 17 Uighur detainees at Guantanamo, calling them “alien jihadists” who are “affiliated with a terrorist organization and have received terrorist paramilitary training.” Likewise, during the recent conflict between Uighurs and Han Chinese in Xinjiang, McCarthy deferred to “accounts of some witnesses to state-controlled media” in his sober assessment entitled “Hard to Believe the Lovable Uighurs Could Be Involved in Terrorism . . . ” Then again, this is the same McCarthy who observed that “as a man of the hard Left, Obama is more comfortable with a totalitarian Islamic regime than he would be with a free Iranian society.” Thus, as a man of the hard Right, McCarthy is more comfortable with a totalitarian Communist regime than he would be with a free Chinese society. I feel something has gone sort of wrong there, but–SCARY MUSLIMS OMG!