Thursday, August 29, 2013

Department of impenetrable logic
Duncan Black calls attention to some ... interesting verbiage on Syria. Specifically, if we do take some military action, how much should it be. The source he cites gives the following edifying parameters:
One U.S. official who has been briefed on the options on Syria said he believed the White House would seek a level of intensity "just muscular enough not to get mocked" but not so devastating that it would prompt a response from Syrian allies Iran and Russia.
"They are looking at what is just enough to mean something, just enough to be more than symbolic," he said.
In his trademark style, Black just leaves it at that. But it occurs to me that the passage he quotes has reached a kind of perfection.

When you're calibrating your action so that it is "just enough to be more than symbolic," whatever action that you end up choosing will have been chosen not for what it does but for what it means. In other words, whatever action you choose will be inherently a symbol itself--a symbol that you want to do something that's more than symbolic.

Ouroboros: it's not just for medieval alchemists anymore.

Thinking outside the box

Brad deLong excerpted Paul Krugman's post The real trouble with economics, where PK makes the point (yet again, it seems) that many economists fail to discard their theories when empirical reality invalidates them.

One of the commenters at Brad's place observed:
It's pretty obvious that the optimum economy, the one that does the best job of the greatest good for the greatest number, is pretty much flat; there aren't any poor people and there aren't any rich people and there are a bunch of things that would make a profit (for awhile) that you're not permitted to do because it would break the system as a whole.
The political consequences of saying so in any kind of operational way are pretty severe. (Look at what happened to Occupy, which wasn't saying anything more than "How can this be fair?")
The reason the technocratic approach can't get to that optimal economy rests on a long history of blood and iron; the assumption of capitalism isn't natural, it's got as much crushing of dissent behind it as any other imperial movement. (There's probably a bunch of history PhDs lurking in the transition of political parties from ecclesiastical factions to financial ones.)
I contend that an economics discipline that looked at the problem from the perspective of "how did we get stuffed into this particular corner of the space of possible economies" along with "how do our institutions copy themselves into the future?" (that analog of sex; money is a fairly good analogy for eating, food, energy available to a biological system) would have much tougher problems and give much better answers than the one we now have, which mostly explains why those now successful must remain so.
What caught my attention was the image of being "stuffed into this particular corner of the space of possible economies."

Friday, August 23, 2013

Theory schmeory

Paul Krugman had a post at the beginning of August riffing on a Noah Smith's reflection on the death of theory in economics. While he says that "death" is an exaggeration, he does see "a measurable decline in the number of papers that offer theoretical innovations as opposed to empirical analysis".

Krugman may well be right, but that would be a shame, because there are some basic economic issues which I think "received theory" hasn't yet really worked out. The two I'm most aware of are:
  • the relation between environmental issues and the macroeconomy;
  • money.
Regarding the second of those, there's the whole school of "endogenous money," parts of which make a lot more sense to me than what gets passed off in textbooks as "settled theory." The University of Missouri at Kansas City is a center of one particular strain of endogenous money, that calls itself "modern monetary theory." Krugman has traded posts with Randy Wray (the author of the primer at the previous link), and they don't see eye to eye, but there are interesting theoretical investigations going on.

And there are at least a handful of people investigating the macroeconomy-environment link. The ecologist Howard Odum made some thought-provoking inroads into economics in Environment, Power, and Society. His student Charlie Hall, along with some colleagues, advanced Odum's work a ways with Energy and Resource Quality: The ecology of the economic process. Herman Daly came at the question from a more conventional background and collaborated with Josh Farley. I've dabbled in the area as well.

Thursday, August 22, 2013

What to commemorate

We've got the Fourth of July, memorializing the date we told the King where he could shove his taxes.

The Germans have German Unity Day in October, commemorating the reunification of West and East Germany after the Cold War. (It was tempting to make a big holiday out of November 9th, the day the Berlin Wall was opened in 1989, but that date had been, uh, preempted by the Nazis' tasteless use of it in 1938 to stage Kristallnacht, a giant pogrom.)

The Russians have Victory Day, celebrating the triumph over Nazi Germany.

The French have Bastille Day, commemorating that time they tore down a fortress and freed seven prisoners from a fortress that was symbolic but not of any particular real import.

And the Czechs have August 21st.

Tuesday, August 20, 2013

Standards I might like to have applied to me

On today's Morning Edition there was a story about the multiple fraud prosecutions facing J.P. Morgan in multiple countries.

They raised the argument that the bank is such a sprawling behemoth that it can’t be expected to be able to control everything it does. They did have a clip of Bill Black contending that “You can’t have this many scandals without a complete failure to set an ethical tone at the top.”

Far more interesting, though, was Dick Bovet’s defense. “Is J.P. Morgan a well-run bank or not? We constantly hear this statement that it’s too big to be managed. Alright, J.P. Morgan makes more money than any other bank in the world other than the four big Chinese banks. It’s also making more money than 99.99% of the companies that function in the United States.”

The reporter then continues, “Bovet says that suggest the bank is being run pretty darn well.”

Well, OK then.

It’s not as if the bank were being accused of crimes that make it lose money. Its (alleged) bribery and fraud were precisely in the service of making more money. So if you point to how much money they’re making, you could just as well be measuring the extent of their criminality as how well managed they are.

I think Shakespeare had something to say about that …

Monday, August 19, 2013

Seeing what you know is true

Brad DeLong had an interesting take on technological change, productivity, growth, and Malthusian dynamics. As is often the case at Brad's place, the comments provide a significant portion of the value added. Occasionally, of course, it's value subtracted, as with the case with this comment.

The commentor is objecting to the idea that greater wealth will lead to lower fertility. Part of his concern is that the automatic fertility reduction from increased wealth won't be nearly enough to prevent problems, a concern I agree with:
Even the (few) countries in the world with falling populations have those falling SLOWLY. We're already using up all our seed corn.
Everyone saying there isn't a problem never gives the numbers. They tell us that in some tiny number of countries the population growth rate has gone (very slightly) negative and this is supposed to, what, I don't know, be proof that the rest of the world is going to go negative voluntarily , and soon enough for it to matter?
 But in between those two excerpts, he goes off the rails:

Saturday, August 17, 2013

Default assumptions

(I recently stumbled across this on my computer. It looks like it was an email I was writing, and then decided to copy the  text and stick it in a Word document to come back to "later." Judging from the time-stamp on the file, that was in 2005. I have no idea who my correspondent was. I've stripped out the extraneous stuff from the email.)

I’ve been shifting my basic sense of where markets belong in the firmament of economic theory. In preparing my “Hunger and Excess” course for this fall, certain inadequacies of markets have impressed themselves upon me with renewed force, leading to an epiphany of sorts, which expressed itself as two contradictory facts and a reconciliation. The contradictory facts are, on the one hand the manifest faults of markets (expressed for me particularly in terms of food and environmental issues) and, on the other, the abject failure of the “non-market” of the Soviet system. The reconciliation is a recasting of why markets are good, what they’re good for, and a reassessment of their place in society.

A sensible food culture would promote moderate portions and healthy ingredients, as well as good body image, health through reasonable exercise and diet (not neuroticized forms of exercise and diet) rather than medicalizing the problem. Instead, we have market forces pushing oversized portions of undernutritious food; unrealistic body ideals; and pharmaceutical solutions to problems that are better addressed through changes in behavior. In this instance and others (most prominently the environment), the market is not merely missing the optimal outcome, it’s actually taking us away from it.

Thursday, August 15, 2013

Is it enough?

In response to yesterday’s post, Anonymous liked the analogy, but added, “What I don't like is how you admit to NOT doing your part. And all after doing research and writing such a post! Stranger than fiction...”

Of course, the easiest out would have been to have lied, but I don’t think that’s what Anonymous had in mind.

Here’s the thing. While I’m almost certainly above the 2,000-Watt line that I referenced in the first post, I’m also significantly below the level of energy use for someone in a household with my income.

We have one car for a household with two drivers. Granted, we have it easier than some, since I live 1.2 miles from work and can bike or walk, leaving the car available for my wife if she needs it. But it’s still not an entirely trivial decision, as we learned when the city closed our boys’ elementary school. It had been on the way from our house to Hartwick College, and it was a few blocks from the YMCA where they sometimes have after-school lessons, so walking/biking with them was easy. Now it’s 1.6 miles. We bike sometimes in nice weather. They take the bus sometimes (though the route means it can take almost an hour to get home). We do drive them sometimes. And when the weather’s not safe for biking and one of them has something at the Y after school, my wife and I engage in some car balet to make the day work.

Wednesday, August 14, 2013

Scales of morality

About ten years ago I was on the edge of a conversation involving a few people of my parents' generation (though not my parents themselves). David McCullough's biography of John Adams had recently come out, and the people in the heart of the conversation had all read it. They were marveling at how moral the Founding Fathers were, and how our politicians today are nothing like that.

And of course the folks in this conversation were right. For one thing, nobody on the contemporary American political scene owns slaves (though with a few of them you wonder if they don't kinda miss the old days ... certainly some of their constituents think slaves had a good deal).

I'm not trying to engage in cheap delegitimization here. The fact that many of the founders were slaveholders doesn't invalidate their work in setting up our system of government. And besides, many people in their day considered slavery to be normal.

At the same time, full-on moral relativism doesn't cut it, either.