economics
drorzel | May 3, 2011Kevin Drum notes a growing backlash against education reform, citing Diane Ravitch, Emily Yoffe and this Newsweek (which is really this private foundation report in disguise) as examples. The last of these, about the failed attempts of several billionaires to improve education through foundation grants, is really kind of maddening. It makes the billionaires in question (Bill Gates, Michael Dell, Eli Broad, and the Wal-Mart Waltons) sound like feckless idiots, but I can't tell if that's just bad writing.
The core of the piece is the finding that the districts these guys put money into haven't…
mikethemadbiologist | April 29, 2011It's an odd-sounding question, but, if you use a debit card, a very important one. I bring this up as The Huffington Post recently published an article about the political battle over the fees banks charge stores when customers use their credit and debit cards. While the article--and much of the ensuing commentary--has focused on the spectacle of Congress being available to the highest bidder (you needed this issue to tell you that?), it missed the far more important issue: how much should it cost to use money and whom do you ending paying to do so?
Because focusing on what one Senator…
mikethemadbiologist | April 13, 2011Last week, Yves Smith at Naked Capitalism posted a satirical letter by 'Outis Philalithopoulos' (Outis means 'nobody' in Greek) about another problem facing the economics profession--corruption of its practioners. Outis/Yves writes (italics mine):
Soon after receiving tenure, it occurred to me that we were being profoundly inconsistent. While we had correctly criticized the previous mainstream view that politics involved benevolent efforts to serve the common good, we had failed to apply the same rigor to the community of academic economists. As a result, we were modeling both economic and…
mikethemadbiologist | April 10, 2011David Plouffe, Obama's spokesman, responds to critics of Obama's capitulation to the Republicans:
"I would ask Robert Reich and others to actually consume the details of this," Mr. Plouffe said in an interview on Saturday. "There are some in our country who simply believe spending cuts are not required to help the economy. The president has made it very clear that we cannot stay on this fiscal trajectory."
Actually, many people in our country simply think cutting government spending with one of out seven Americans out of work or working too few hours is batshit lunacy. We've been through…
hrynyshyn | April 1, 2011No one is more surprised than I to see something worthwhile reading in The Daily, Rupert Murdoch's iPad magazine. You might even be forgiven for suspecting an April Fool. But there it is. It's an editorial by Shikha Dalmia, a senior policy analyst at frequently misnamed Reason Foundation, exploring the fundamental problem with nuclear power. Dalmia's indictment goes far beyond the nuclear industry, though. Intended or not, it strikes at the heart of the economic philosophy that dominates pretty much the entire planet To wit:
The liability cap effectively privatizes the profits of nuclear and…
mikethemadbiologist | March 24, 2011Because we are human after all. Jason Collins at Evolving Economics, in response to my post about one economist's misunderstanding of biology, asks a very good question:
On the flip side, did Dawkins or Gould (or their respective supporters) ever concede to the other side that they were wrong and substantially change their world view?
I agree with Razib about what happened:
My own attitude is that both Richard Dawkins and Stephen Jay Gould retreated from maximalist positions when it came to the gradualism vs. punctuated equilibrium arguments of the 1970s substantively. But rhetorically they…
drorzel | March 22, 2011Kevin Drum re-posts a chart on wind power made by Stuart Staniford showing that the number of new wind power plants installed in 2010 was way lower than in 2009 or 2008:
This is meant as a starting point for discussion about the big economic issues that might've caused this. One of the many, many reasons I'll never make it as a political pundit, though, is that when I see a graph like this, I'm inexorably drawn to speculating about aspects of it that really have nothing to do with the intended point. In this particular case, I look at this graphic and ask myself "Why are there so many wind…
mikethemadbiologist | March 21, 2011It really does matter: if economists are going to use biology as a model for their discipline, we need them to understand ours, to help improve theirs. But I'm getting ahead of myself.
By way of Brad DeLong, we stumble across this Russ Roberts piece discussing the question of what kind of science (if any) is economics. What bothered me in reading the original piece was how badly the biology was mangled (which doesn't give me much hope for economics). Let's go to Roberts (italics mine):
I have often said that economics, to the extent it is a science, is like biology rather than physics.…
mikethemadbiologist | March 17, 2011I've written before about the tyranny of double-entry bookkeeping when it comes to budget deficits: decreasing public debt requires either an increase in total private debt or a decrease in the 'trade deficit' (current account balance). Rotten Apple has a very clear explanation of how this works. First, the (very simple) math:
Private Sector Balance + Government Sector Balance - Current Account Balance = 0
Where:
The private sector balance is the excess of savings over expenditure for businesses and households.
The government sector balance is government tax revenues less spending.
And…
mikethemadbiologist | March 9, 2011A while ago, I was pleasantly suprised--and stunned--to read a Marketwatch columnist (the online market site for The Wall Street Journal) point out the obvious, yet rarely recognized, reality that we are no longer on the gold standard. As I noted:
One of the key innovations of the last century--and unappreciated, not to mention unknown, by most--is fiat currency: we are not on the gold standard anymore. The total amount of money we can have isn't fixed by how many shiny pebbles we can pull out of the ground. If we need to print more money so we [can] eliminate idle capacity (human and…
mikethemadbiologist | March 8, 2011I like constancy. Knowing that, come spring, the forsythia will bloom is a good thing. But I don't like knowing that, when Newsweek columnist Robert Samuelson writes something about Social Security, it will be error-filled and disingenuous. Sadly, this too is a constant. A few years back, Samuelson inspired me to invent the Samuelson Unit, which, like the Friedman unit, is a period of time, X units in the future, at which point something will happen. Like Zeno's Paradox, we never seem to reach that point, which, even given the past couple of years, is still 27 years away*.
Well,…
mikethemadbiologist | February 22, 2011I'm pleasantly surprised by this column at MarketWatch. Actually more like gobsmacked. I realize the post's title is a wee bit obscure, so some background is order. One of the reasons I write about budget deficit hysteria all the time is that the belief that WE MUST REDUCE TEH DEFICITZ! NAO! is used by the forces of evil to cut important things...like science funding (a few people 'round these parts might care about that). And Pell Grants. And heating for poor old people. And food for poor children. And... Well, you get the idea. Mysteriously, deficits never seem to be a problem when…
mikethemadbiologist | February 21, 2011By way of Mark Thoma, we come across these two figures about wages. First, with the exception of workers near the top of the wage scale, things have pretty much flat-lined for three decades:
Women at the 50th percentile have seen an improvement, but keep in mind that they still lag considerably behind men in absolute terms. But the relationship between educational attainment and wage increases is stunning:
According to the Bureau of Labor Statistics, only 35% of workers has a college degree or higher. Basically, two-thirds of U.S. workers haven't seen any economic gains in thirty years…
mikethemadbiologist | February 19, 2011A while ago, I discussed the limits of the deductive approach in economics (and, for that matter, in anything). Basically, one can be really clever and derive how the world could or should work. This might or might not have anything to do with how the world actually works.
Robert Waldmann takes Matthew Yglesias to task for deducing, when he should be inducing about the effects of state income taxes on the decision by rich people to leave that state:
You specifically write "The tax competition issue is real, but limited, and the further you get from New Jersey the less real it becomes." "…
mikethemadbiologist | February 17, 2011One of the justifications for outsourcing (firing productive U.S. workers and shipping the jobs overseas) is that it will lower costs. Then there's reality, in which firing productive U.S. workers and shipping the jobs overseas actually costs more. Consider this from the CEO of Boeing about their new plane, the 787:
One bracing lesson that Albaugh was unusually candid about: the 787's global outsourcing strategy -- specifically intended to slash Boeing's costs -- backfired completely.
"We spent a lot more money in trying to recover than we ever would have spent if we'd tried to keep the key…
mikethemadbiologist | February 14, 2011I've often discussed on this blog how the advantage of having a fiat currency is that one can deficit spend when you need to (think of it as being on the gold standard, except that you can mine as much gold as you need, when you need it)*. Of course, if you deficit spend when there is no idle capacity (human or mechanical) in the real economy, this can lead to inflation. Likewise, if you flood a sector or group of people with dollars when they don't need it, this also will lead to inflation and price distortion, and can result in socially undesirable outcomes (e.g., rampant income…
mikethemadbiologist | February 13, 2011One of the annoying claims by the so-called fiscally responsible is that we can't "print prosperity"--that is, we can't deficit spend in order to help the real economy. It's derided as unrealistic and 'ideological' (whereas fiscal austerity is implied to be 'common sense'). Peter Cooper explains how it is fiscal austerity--the worship of deficit reduction--that elevates ideology over real-world consequences (italics mine):
The phrase "print prosperity" is shorthand for the common message board accusation that MMT [modern monetary theory] ignores real resources and gets bamboozled by money…
mikethemadbiologist | February 11, 2011Dean Baker wins the internet today. The set up:
The Wall Street Journal ran a piece on how some companies are unable to fill positions even when more than 14 million workers are unemployed....
All the people used as sources for the article complained that they were unable to find qualified workers. For example, Josh Williams, the chief executive of Gowalla, a social networking start-up, is quoted complaining that: "most people we want are employed somewhere already. We don't get a lot of applications coming in."
And the snark:
The way employers are supposed to deal with this situation is to…
mikethemadbiologist | February 8, 2011Unless a shortage is defined by a 0.1% decrease. Paul Krugman, with whom I often agree, has been crying hither and yon that rising food prices are a result of food shortages and not market speculation. This hasn't made much sense to me. First of all, we saw similar spikes in agriculture futures prices in 2006 that were clearly the result of financial speculation. First of all, as Alice Cook notes, we're producing historical high levels of wheat:
Curse those stupid fucking natural history facts! But there is a predicted decrease in supply of about five percent. Cook argues that this…
mikethemadbiologist | February 3, 2011Mind you, I'm not talking about 'framing', but simply the justification for the policy (I'll the propaganda for another time). I'm encouraged that Matthew Yglesias, who writes for the Center for American Progress, a progressive outfit, has stumbled into modern monetary theory (italics mine):
Does anyone seriously deny that there's something these people could be doing that would be more useful than being unemployed? Now ask yourself this. Suppose you had more money. Would you buy more goods and services? I would. And if more people were buying more goods and services, then wouldn't firms…