Tuesday, December 16, 2014

The corporatization virus

Someone posted to our faculty discussion list this article about the president of Rensselaer Polytechnic, with her $7 million in compensation and her imperious manner.

A colleague observed that, “It's all too familiar. The corporatization of American Higher Education is, of course, only one part of the corporatization of everything, including -- perhaps most shamefully -- American politics.”

I agree, and I worry that part of why this “corporatization of everything” is happening is that, from the perspective of social evolution, corporatization has high “fitness.”

Corporatization has a built-in advantage over its opponents, which is that it can pay its foot-soldiers well. In an environment where money is not just treated as a useful tool, but celebrated as a marker of success and even virtue, that’s a really powerful advantage.

Note that when I say that corporatization is “fit”, I don’t mean that it’s “good.” In biological terms, a thing is “fit” if it survives better than other things, but that says nothing about whether it’s good. The very concepts of “good” and “bad” make no sense in an ecosystem, which simply is—or isn’t.

A thing may be so good at outcompeting everything else that it ends up destroying the basis of its own existence. But the thing itself is neither good nor bad; until it undermines itself, it’s simply fit.

In human economies, fitness is similarly just about a thing thriving relative to others, but unlike in ecosystems, we do have notions of “good” and “bad.” And while I agree with my colleague that the results of corporatization are generally bad, that’s hardly an uncontested position.

One of the cleverest tools of the corporatization virus is that it reaches into our psyches and changes the very standards by which we decide whether a thing is good. We’ve come to equate “profitable” with “good,” and the more we do that, the more we relinquish our ability to think about what we really want.

It’s like a tree that changes the chemistry in the ground around it so that nothing else can grow.

Saturday, September 20, 2014

Say what?

There's a controversy in Jefferson County, Colorado, over efforts by the school board to alter the curriculum for the Advanced Placement US history class. Conservatives are concerned that the new curriculum from the College Board presents a negative view of the country.

I haven't seen the curriculum, so I can't say whether I think the curriculum is good or not. Personally, there are parts of my country's history of which I think reflect some of the better strains in human nature--the Marshall Plan, the treatment of Germany and Japan after World War II, and the women's suffrage movement, just to name a few. There are other episodes which, while they should be studied and understood, are hardly shining moments to look back on with satisfaction.

But the school board's goal here is pretty clearly problematic:
As currently outlined, the proposed panel in Jeffco will be charged with ensuring the course is aligned to Jeffco Public Schools’ standards, and is factual and taught without bias. But the panel is also supposed to make sure materials do not “encourage or condone civil disorder, social strife or disregard of the law,” and instructional materials “present positive aspects of the United States and its heritage.”
Is the American War of Independence a good thing, or a bad thing? Because how do you study that without noting that it involved civil disorder, social strife, and disregard of the law? What about the civil rights movement? That came about because there was social strife, has as one of its central tactics a disregard for certain laws, which in turn resulted in civil disorder, partly as a result of the folks in charge not wanting to change the laws and practices to make them fair.

I understand that history is an inherently contentious subject. There are different ways of understanding the past, and which of those interpretations you go with has a lot to do with how you understand the present. So if we look at how this school board thinks the past should be taught, what do we learn about how they view the present?
School board member Julie Williams, who sponsored the proposal, said people have misinterpreted what she’s trying to do. She said she’s not trying to eliminate the facts of U.S. history but shares the concerns conservatives nationally have outlined – that AP History casts some parts of history in a negative light, such as the bombing of Hiroshima and slavery.
With Hiroshima, I get that there's a positive case to be made: horrific though the bombing may have been, it saved the lives of many US military personnel who would have died in a conventional assault on the Japanese home islands, and it may even have, on balance, reduced the number of Japanese dead by shortening the war, and that in terms of extent of damage, the destruction at Hiroshima and Nagasaki wasn't significantly different from the effect on other Japanese cities that had already been fire-bombed. So I would have an issue with a history curriculum that didn't raise those kinds of arguments. Though I'd also want students to discuss the negative aspects of the decision.

But slavery? "Conservatives nationally" have concerns "that AP History casts some parts of history in a negative light, such as ... slavery." Is there a positive light to be cast on slavery? Would Ms. Williams care to let us in on what that positive light is?

Lady, we fought a civil war over this, and the side built around the idea that slavery was good -- they lost.

Or at least I thought that's who lost, but there have been more and more incidents that make me wonder whether that's true.

Anyway, I think Ms. Williams has shown us which side of that war she would have been on. And I guess she would be happy to be able to invoke her proposed standards to be able to cast the civil rights movement as a bad thing.

But it's depressing. How are we supposed to have a meaningful discussion about anything if we can't even start from a common understanding that slavery was bad? How are you supposed to share a democracy with people who pine for the days when it was legal to own other people?

Sunday, June 22, 2014

Stop calling it insurance

My sister sent me a link to an op-ed by Henry Paulson, which got me thinking about an old pet peeve of mine, which is the framing of climate-change policy as a matter of insurance, as for example here.

It’s an understandable temptation. With insurance, you pay a modest amount each year so that, in case something bad happens, you’ll be OK. With climate change, the idea is that we should pay a modest amount each year (take actions that cost the economy something) so that we’ll be OK.

But insurance isn’t actually what we’re talking about, and I wonder if thinking about climate policy in terms of insurance misleads us in a dangerous way.

The key is the difference between insurance and risk reduction.

Insurance doesn’t reduce the chance that a particular bad thing will happen. Instead, it puts together a bunch of people who are vulnerable to that same bad thing, but whose risks are (to some extent) independent, or uncorrelated. What that means is that one person having a bad year doesn’t make it more likely that someone else is also having a bad year.

When you have those two properties—a bunch of people with the same kind of risk, and their risks being independent—an amazing thing happens, which is that the risk for the group as a whole basically goes away.

Say each of you has a house worth $200,000, and you each face a small chance of your house burning down, something like 0.1% (a one-in-a-thousand chance). For you as an individual, the cost of fire will almost certainly be $0. But there’s a small chance that it will be $200,000. But for the group of you, the average cost of fire is right around $200.

As an individual, the only way you can prepare financially for fire is to have an extra $200,000 stashed away. If that’s beyond your means, then you have no way to prepare financially. But as a group you can each pay a mere $200 per year. When someone’s house burns, they’ll still have the emotional loss and the inconvenience of having their house destroyed, but they can be sure that they will be financially protected. Premiums from the people whose houses didn’t burn this year provide the means for financially compensating the few whose houses did burn and nobody in the group faces any financial risk at all.

But remember that the insurance doesn’t reduce the risk that houses will burn. What it does is ensure that when a bad thing happens, you’re not financially ruined by it.

Climate change isn’t like that at all.

Wednesday, June 4, 2014

My last joke

I know how lame it is to tell people about “this dream I had last night,” but bear with me.

I was in a hospital or clinic, and was sent to one room and another and so on, and finally back to a bed where I’d been before, and I was in my hospital gown and everything, and there was a nurse moving around the bed as she fussed with various necessaries. And a few feet beyond the foot of the bed and to the left there was a man in a lab coat holding a clipboard.

He indicated that there was some paperwork on the table by the bed that I needed to fill out. And I don’t remember if they told me, or if it was in the paperwork the man had pointed to, but that’s when I realized that I was being put to death.

At first it was more like a medical thing, like when you have a pet put down for its own good, but then it morphed and it was more like an execution.

Wednesday, May 28, 2014

A gun query

In the wake of last week’s shooting out in California, the father of one of the people murdered aimed some understandable vitriol at politicians who refuse to buck the NRA.

Samuel Wurzelbacher had some words of his own for the parents of people killed in shootings, whether young children as at Sandyhook or young adults as last week: “Your dead kids don’t trump my consititutional rights. … Mr. Martinez and anyone calling for more restrictions on American’s rights need to back off and stop playing into the hands of the folks who merely capitalize on these horrific events for their own political ends.” (I won't post the link; you can find it yourself if you search on that first sentence I quoted.)

Which raises a couple of questions, but it's hard to say exactly who those questions are meant for.

They’re not for gun owners in general, because there are people who own guns who also support some form of more effective rules than we currently have. Presumably their answer to the first question is “No,” and their answer to the second question is whatever form of gun rules they already support.

These questions also aren’t for people who could be considered “2nd-Amendment abolutists” (or who even consider themselves that way), since if you’re really an absolutist, your answer to the first question is “Yes,” and then the second question is moot.

So there’s a middle group, people who in some sense aren’t absolutists, but who in practice seem to be against pretty much any form of gun restriction that comes up.

The first question is, Do you agree with Mr. Wurzelbacher (aka Joe the Plumber)?

Second, If you don't agree with him, what actions would you support that would separate you from Mr. Wurzelbacher, not merely in word but in deed?

There’s actually a third question, and this one is for anyone who would like to see a change in how our laws treat guns:
What have you done, or what will you do, to try to bring about the change you support?
Perhaps you have a U.S. senator or two and/or a Representative who voted to oppose the will of about 90% of the public on a measure as simple as background checks. If that’s the case, one thing you could do is take those first two questions, put 'em in your own words if you want, and send them along to the folks who purport to represent you in Washington.

And keep asking until you get an answer.

Friday, May 23, 2014

Guest post: Obama's non-visit to Cooperstown

President Obama was in our neighborhood yesterday, promoting tourism with a speech at the Baseball Hall of Fame, which is celebrating its 75th anniversary.

A big local issue is hydraualic fracturing—or “fracking”—of shale to extract natural gas. Supporters see it as economic salvation for beleaguered farmers and upstate communities that have been stagnating or losing population for years. Opponents see it as an existential threat, likely or certain to have a drastic impact on the local environment and the health of the area’s residents; a few people will make some money, and everyone else will lose a lot, including many livelihoods.

The modern version of fracking hasn’t come to New York state yet: the last two governors have held off on finalizing the necessary regulations, thus creating a de facto moratorium. Many local groups and invidividuals have been working for years to get that de facto moratorium turned into an explicit one, or a ban.

Fracking opponents seized the opportunity of Obama’s visit to try to make him aware of sentiment in the area (Obama supports fracking). They managed to get something like 200 people there, the basic message being that fracking and tourism are incompatible. Well, you can read below to what extent people managed to get“there” ...

One of those local groups working to keep fracking out is Sustainable Otsego. Adrian Kuzminski, the moderator of that group, was at yesterday's gathering, and this morning he sent out a reflection. I thought it was worth sharing, and with his permission I’m posting it here.


Obama's non-visit to Cooperstown
Adrian Kuzminski, Moderator of Sustainable Otsego

The most fascinating thing to me about Obama's visit to Cooperstown and the Baseball Hall of Fame was the weird emptiness of it all, which I think says a lot about our current public political culture, or the lack thereof. The organizers of the anti-fracking rally I was part of anticipated (hoped for) large crowds, and worried in advance about off-street parking and other relevant contingencies.

If you picked up the special editions that day of the local papers celebrating Obama's visit, and read them at face value, you would anticipate a festive, popular occasion, with lots of local pride on display, supported by the testimony of copious open letters and commentary welcoming the president, seasoned with respectful criticism regarding fracking and other national issues. We are all in this together with you, was the story line; we live in a common community, was the presumption.

The reality was nothing like that, and a lot more bizarre.

Sunday, May 11, 2014

The Wanderer

I had the pleasure and the privilege to help organize Hartwick’s seventh annual Student Showcase, which was this past Friday. Over 300 students gave talks, presented posters, showed their art, gave short performances, did readings, …

There were the predictably interesting pieces of work: a geology student who mapped the outcroppings behind the science building, translating the layers there into a history of streams and deltas; a nursing student who had studied a more effective way of conducting prenatal education for pregnant women, studies on the chemicals used in fracking, examinations of post-war U.S. policy in Afghanistan, a consideration of fetishistic imagery in Alfred Hitchcock’s Rope.

The big surprise for me was a group of five students who had worked with Prof. Lisa Darien to translate the Old English poem “The Wanderer.” And when I say “old,” I mean Saxon, sometime before 1000 AD. (Here's someone else's translation.)

The students put a piece of the poem up on the screen, the original saxon on the left (complete with those strange characters “þ” and “ð”) and their translation into modern English on the right. With the text before us, they’d read the Saxon as we followed along, then read their rendition into familiar words, words where we could understand the meaning, but where a certain music was absent. They followed up with discussion of choices in translation, and rhythms, and what was behind some of the words, and what we could learn about the mental world of the person who would write such a poem. It was fascinating stuff.

And then Prof. Peter Wallace asked what they had betrayed in their translation. He explained that another student had done an honors project in which she’d translated some Spanish poetry and then written a paper about the process, titled “Translation as betrayal,” getting at the idea that when you translate, you inevitably commit some betrayal of the original text, because of the things that you have to leave behind, the things you can’t manage to port over into the new version. What did these students feel they’d betrayed?

They had no problem answering. In the course of studying Saxon and reading numerous poems, they’d reached the point where they could understand what they were reading, they could feel both the music and the meaning in the words, without being able to to see how they would render all of that into our English.

I was struck by the glow in their eyes as they described this sensation of having reached into a foreign world and found things there they couldn’t bring back.

This was education in its purest sense.

When you allow the worldview of an exiled Saxon warrior to insinuate itself into your mind, it’s hard to imagine how you’re qualifying yourself for some particular activity in the hard-nosed “real world.” but for these students it had obviously been a profound experience. And for all the ease with which we dismiss such pursuits as “academic” or a cultural luxury, it seems to me that if a student can stretch her mind to a task as strange as this, if she can be alive to and engaged in something so foreign, it’s a fair bet she’ll bring that same creative, critical mindset to other things she does. Which would actually make her really valuable in the “real world.”

That’s what the liberal arts is supposed to be about.

Wednesday, May 7, 2014

Meet the new boss

The subject of this post has been percolating in the back of my head for a while—it relates to a workshop we had last spring, about managing difficult employees. I was invited to go in my role as department chair, though the people I "manage" are my three colleagues in economics, and the secretary who assists the academic departments in our building, and none of those people is the least bit difficult to deal with. So in a sense I was there as an amateur anthropologist, observing the customs of some foreign tribe.

In general, it was an interesting and valuable workshop, even for someone in my position of having no difficult management issues on the horizon. The emphasis was on responding to workplace problems by listening, finding out if there's some underlying issue, and looking for win-win solutions. I can get behind all that.

But the facilitator had an example late in the day that, uncharacteristically, got under my skin, and I found myself getting a little bit indignantly testy at her. She had a scenario where the employee wants, say, a 4% raise. Her advice was to ask if there might be something else you could provide to the employee, something that would leave them satisfied, but something that wasn't money—or at least, not a 4% raise. In other words, a win-win solution.

And it just crossed a line for me.

Sunday, March 23, 2014

A "Polish fate" for Ukraine?

(Update, 3/24: Britské listy has corrected itself on the post below that was the prompt for this post of mine. Zhirinovsky has not been the vice-chair of the Duma since 2011, and he wrote in the capacity of a regular member of the Duma, not in any way on behalf of the body as a whole, as was implied in the original Britské listy and in the Polish TV report from which Britské listy took its cue. The full correction is below.)

The website Britské listy has an arresting piece, The Russian State Duma plans a Polish fate for Ukraine.

They cite this report from Polish TV (which also produced the map below, titled “Map showing Zhirinovsky’s proposal,” Zhirinovsky being the vice-chair a member [see update above] of the Russian Duma (the legislature)).
from http://www.tvp.info/14506221/duma-do-polskiego-msz-podzielmy-ukraine
Russia would get all of southeast Ukraine, including the entire Black Sea coast.

Sunday, March 9, 2014

You've got to believe!

In the context of the unfolding nightmare in Ukraine, a British commentator laid the mess at the feet of … NATO’s withdrawal from Afghanistan. The piece is a model of the diplomatic doctrine of “credibility,” the idea that there are certain things you need to do in order for other actors on the world stage to understand that there are certain things you will do.
Each Russian soldier in Crimea is lessening the chance of a united Ukraine emerging unscathed and without a civil war. They are 'proving’ to our Eastern allies that Nato is a paper tiger and to our Western friends that this is a pointless struggle. That is President Putin’s real goal.
He has tried it in the past, first with the cyber attack on Estonia in 2007 that closed down the government. At that moment, though, Nato was clearly credible – after all, it was fighting in Afghanistan and off the Horn of Africa.
Tugendhat doesn’t claim there’s some desirable goal that could actually be achieved by staying in Afghanistan. Rather, he seems to think that we need to fight in one place so that Putin will believe we’ll fight somewhere else, which in turn would mean that Putin would think twice before invading Crimea.

But what exactly would non-withdrawal from Afghanistan be expected to prove? Does he really think that NATO would or should have sent troops into the country of Georgia in 2008? Or that that would have been a good idea? Does he think we should be sending troops to Ukraine today?

The obvious alternative explanation for NATO’s withdrawal is that we’re leaving because we realized there was no objective we could accomplish without permanent occupation, and permanent occupation was an insanely high price to pay for those objectives, so it was time to go. In this case, staying in Afghanistan wouldn’t prove we were tough; it would prove we were too stupid to know when we were engaged in a futile exertion of force.

One of the beautiful things about love is that it grows with the practice of it: when you act lovingly, you experience love in return, and become more capable of loving. Tugendhat thinks that military force works the same way: When you act militarily, you experience submission in return, making you even more capable of militariness.

It’s true, there are too many naïve people who think that when you act militarily, you don’t just inspire fear and sullen obedience, but resistance as well—covert at first but growing bolder over time. And you set people on a search for means of effective response.

Naïve people also think that military action is constrained by physical factors, and by finance, and by the realities of domestic politics, so that when you act militarily you don’t multiply your power but instead tie down some of your forces in one place, making them unavailable for military action somewhere else.

And naïve people may think that if you can see the pointlessness of continuing a particular war, then people in other countries can see the pointlessness as well. And that if they see you continuing a pointless war, they’ll see that you’re weakening yourself militarily, and they’ll understand that you’re too stupid to make good policy decisions to keep your country safe, and so they’ll be emboldened to act against your interests.

Tom Tugendhat knows better. According to the article linked above, he runs a strategy consultancy, so he must be right that when you persist in a futile war, you display your awesome credibility, and then everyone backs down in front of you because you’re so awesomely credible, and they let you run the world just the way you want.

Credibility theory: the misplaced conviction that everyone else is as stupid as you are.

Monday, February 24, 2014

The man who met Papa Masaryk

In some recent tidying up, I came across a piece of paper scribbled with some notes. It was the quick recollections of a chance conversation in Stromovka, the large park near our apartment in Prague. The notes were on the back side of a printout of items that were checked out to me from the Prague City Library on my card. As best I remember, that’s the paper I used because it’s what I could find to get down some of the details of the conversation before I forgot them.

The date on the printout was June 6, 2011, and we left Prague on July 1, so that puts a reasonably tight window on when the conversation happened.

I’m writing them down here in case they might be of interest to someone, and so I can throw out the piece of paper.
from http://theblaguefromprague.blogspot.com/2010/09/stromovka-zip-line.html
We’d gone down to Stromovka to play on the zip line and stroll around, and I don’t remember how, but I got into a conversation with an elderly gentleman who was there.

He said his grandfather had been a park warden in Stromovka.

Sunday, February 23, 2014

The wrong symmetry

Morning Edition had an interview on Friday with Marcia McNutt, described as "one of the country's most influential scientists. A former opponent of the Keystone XL pipeline, she's now come around to support it. Her arguments were interesting and had a certain amount of sense in them, but she wrapped up with a couple of statements that strained reason, and one of them would get an "F" on a logic exam.

The argument against the pipeline is that it's being built to bring the Athabascan tar sands to market, and that we need those tar sands to stay in the ground if we're going to have any chance at all of preventing run-away climate change. McNutt observed that the tar sands are moving to market anyway, just by truck and by rail, and those means of transportation use a lot more energy than would a pipeline.

People have also raised concerns about the safety of the pipeline, and several recent spills and/or explosions have increased those fears. But truck and rail transport are also prone to accidents, as has also been recently demonstrated. McNutt argued that environmentalists would do better to cooperate, relinquishing opposition to the pipeline in return for (among other things) advanced safety features to make the pipeline really safe.

Those seem to me like serious arguments that are worth weighing in a discussion of Keystone, but other parts of her argument undercut her credibility. She observed that transport by pipeline is much cheaper than alternatives, and suggested that in this "austere" time there might be a way to use those savings as a source of funding for alternative energy sources.

Well, sure, in principle. From an aggregate perspective if the economy is saving money through cheaper transport of gas, it should have more means available for other things, like investments in green energy. But the oil companies were planning to pocket those savings, or maybe split them with consumers, so—again from an aggregate perspective—redirecting some of those savings toward green energy would be tantamount to a tax on tar sands extraction.

Look at the political situation today.

Saturday, January 25, 2014

The beer game

In my intro class this week I had the students play the beer game.

The good news is, we got fun results.

The sad news for them is that it involved no consumption of beer. After all, the class is from 9:30 to noon.

It is true that when I lived in Plzeň in 1991-92, the workers on the early shift at the Škoda factory would have a beer on their break at 10am, but the canteen only served the reduced-alcohol variety of Plzeňský prazdroj (aka Pilsner Urquell), and the workers were only making electric locomotives and nuclear reactors, so it wasn't that important to have a clear head. Drinking while learning macroeconomics would be far more dangerous.

You have four links in a supply chain:
  1. A brewery
  2. A distributor
  3. A wholesaler
  4. A bar
Everyone starts with some inventory. They have to order new product from the company above them in the supply chain. They try to satisfy orders from below them in the chain.

There's a series of delays built into the system:

Gimme an "L"!

The December jobs report came out, and while the unemployment rate is down significantly ("Yay!"), the portion of the population with jobs didn't budge from November (in other words, the number of jobs grew just about as fast as the population).

That means that the reason for the improving unemployment rate isn't that lots more people are finding jobs. It's that more people are giving up, or finding their way to early retirement, or making it onto disability, or perhaps slipping away into the informal sector, where they have an income but don't show up in the employment statistics (though this paper disputes the importance of that last factor).

It's been this way for four-and-a-half years. From December, 2007 to June, 2009, jobs fell away like limbs getting lopped off the Black Knight in Monty Python's Holy Grail. Since then, we've basically moved sideways. The unemployment rate has come down from 10% to 6.7%, while the portion of the population with jobs has stayed at the low level it reached in 2009.
Civilian employment-population ratio --
the percentage of the civilian adult population that is employed
(from Bureau of Labor Statistics)

We've managed to keep more limbs from falling off, but we're making basically no progress on growing new ones.

How long is this going to go on?

My colleague Jason Antrosio sent me to a post by Kaushik Basu about the possibility of an L-shaped recovery.

In the good old days (the first several recessions after World War II), recessions were V-shaped: the economy contracted quickly, a lot of jobs were lost in a short time, but then it rebounded quickly. Many of the job losses were layoffs rather than firings: "We don't have enough work for you for at least the next three months; we'll call you back when we need you." And after several months, people would be called back, and the economy would go along it's merry way as if nothing had happened.

In 1980-1982 we had a W-shaped recession, with a relatively small dip at the end of Carter's presidency, a brief recovery, then a deep second dip early in the Reagan years.

Our next two recessions were shallow U-shaped affairs: the total job losses weren't that high, but it took a long time to get down to the bottom of the job market, then a long time to get back.

Now the concern is that this will be an L-shaped recession: the economy falls, and it doesn't get back up for ... a long time.

I can see a case for an L, but I probably build my case on different foundations than most people who worry about L's.

There's a menu of common reasons that economists point to in looking for an explanation:
  • The article talks about the incorporation of huge labor forces from developed countries into the global economy and how that's a drag on rich-country economies.
  • There's also a passing reference to the need for "structural reforms" in Japan.
  • Some people talk about demographic shifts, with rich countries having older populations and a smaller share of people in their prime working years.
  • There's the inequality thread: wages have stagnated for most people while productivity has risen strongly, and that's keeping demand low. (This Jared Bernstein paper actually ranges much wider than that, but it includes that argument. There's also a literature that cites lower levels of initial inequality as a factor allowing some poor countries to grow out of poverty faster than others.)
  • The inequality is feeding disproportionate political power, which in turn locks us into policies that benefit a few but damage growth.
  • Fast-advancing technology replacing more and more labor, faster than the economy can come up with new things for the displaced labor to do (and get paid for).
I'd say all of those have some merit (though the "structural reforms" thing seems to me more of a symptom—if growth were good, the fiscal drag of current policies would largely go away; the other problems on the list aren't magically solved by growth itself).

But there's a big factor omitted from all mainstream discussion, which is that resource constraints are making it harder for economies to grow. Putting it in rather simple terms, cheap energy can support widespread high-paying jobs, while expensive energy can only support a small number of high-paying jobs; if there are going to be lots of jobs, they can only be low-paying. So even though the working-class is generally stagnating in the rich countries, their wages are still too high for the energy regime we've been in for about 10 years now; and since laws and expectations and fairness all make it hard to reduce wages in rich countries, we're stuck with slow growth. In poor countries, wages are higher than they were, but still a lot lower than here, and thus low enough for employment to expand even when energy is expensive.

(And look at one of the counterarguments to the concern about robots: Sure, machines will reduce labor's share of income, but once we remove the expense of labor for producing things, we'll be living in a world of abundance, so the median person will nonetheless have more access to stuff than today. Without the merest consideration of the idea that providing medical care, driving people around, growing their food is still going to take energy and other resources, and there are tougher limits on replacing that than on replacing human labor.)

So, yeah—maybe an L-shaped non-recovery.

But even that is implicitly asking the wrong question, by assuming that recovery means return to GDP growth rates that were normal in the post-WWII era. If you take resource constraints seriously (not just "Are there limits on how much we can get our hands on?", but, "Are there limits on how much we can burn without ending up really, really sorry?"), then you're led pretty quickly to a very different question. Not, "How do we get the economy growing again?", but, "How do we arrange a decent standard of living for as many people as possible in a system that feels basically fair to most people, while limiting our ecological impact?"

That may sound like a sustainability question or an environmental question, because of the last clause. But it's also a deeply economic question. We have the technological ability to do less in total and still have enough for a decent material standard of living for all. But markets aren't good at answering the question of how to do that, and reliance on the state has its pitfalls, too.

So I don't have an easy answer, but I think it would help if more economists were asking the right question.

Monday, January 20, 2014

IV.2: The circular-flow model

This turns into something pretty much like the standard circular-flow model that's in any mainstream macroeconomics textbook, but it starts from the view developed earlier in the book of payments for value added being grounded in physical processes. And at the end, it draws on the mechanics of banking from Part I to explain how the circular-flow model can account for variations in aggregate demand, and even generate them itself.

Video here.

Thursday, January 16, 2014

III.16 Physical causes of growth

(from the larger project of an introductory approach to Ecological macroeconomics)

Part I described the economy as a physical process with a social structure that coordinates the operation of the physical structure.

Part II introduced some of the basic tools for measuring the economy (NIPA, inflation, unemployment) as well as the conceptual tools of supply and demand on the micro level and aggregate supply and aggregate demand on the macro level.

Part III ties all that together to create an explanation of how growth happens over the long run.

Video is here.

Monday, January 13, 2014


(from the larger project of an introductory approach to Ecological macroeconomics)

Part I was all about how the world works, something that seems inherently interesting to me, a giant puzzle to work out.

Part II gets into much more conventional terrain for economics:
  • how unemployment is defined and measured, and what our experience with it has been;
  • how inflation is defined and measured, and what our experience with it has been;
  • the workings of supply and demand (familiar to almost anyone who's had an economics class, and to many people who haven't, though the presentation here does set it in a physical context);
  • the concepts of aggregate supply and aggregate demand.
But the first part is an introduction to the National Income and Product Accounts, or NIPA. This is about how we track the economy. It may not be inherently as exciting as "how does the world work," but it's important to know if we're going to go beyond mere theorizing. And I try to ground it in the models from Part I.

The video is again in two pieces, part a and part b.

Saturday, January 11, 2014

Is caring enough?

Everybody knows the story of the Lorax, right? The furry little creature who speaks for the trees? The powerless opponent of the wonderfully named Once-ler.
The Once-ler is the guy who shows up, samples the local Truffula trees, and figures out how to make the tufts of the trees into ... well, it's not clear what they are, but they're called "thneeds," and as the Once-ler tells the Lorax, "A Thneed's a Fine-Something-That-All-People-Need!"

In other words, he creates an economy of mass consumption, complete with desires that are driven by marketing in order to soak up productive capacity, rather than production that improves in order to meet pre-existing needs.

As a card-carrying person-concerned-about-the-environment, I know I'm supposed to love this story, or at least like it. And I did as a kid ... at least I think I did. But I know that when I re-encountered it as an adult reading it to my own kids, I found it deeply unsatisfying.

What's the message here? (Again, I put myself to the harrowing test that Ted Cruz so spectacularly failed: can I comprehend a book written for children.) Dr. Seuss has the Once-ler lay it out pretty explicitly at the end: "Unless someone like you cares a whole awful lot, nothing is going to get better. It's not."

And as with the previous installment, about Horton and the Whos, I'm on board in principle. My concern is that the book misses the heart of the problem.

In general, the reason we have environmental damage is not that people get up in the morning and say to themselves, "Today's a great day to trash a piece of the planet." That's generally not what happens.

(There is the disturbing study from last year that found some people became less likely to buy a money-saving compact fluourescent lightbulb if it was labeled as being "good for the environment." But that seems to be an exception.)

Rather, people get up and ask themselves, "How can I make my life a little bit better?" And so they head out the door and grow food or make things, for themselves or to sell to others. Or they invent new things, or new ways of making things. And all the massive envrionmental damage we see around us is merely the byproduct of that blameless intention.

"But ... corporate greed!" Well, sure, there is that whole business about ALEC, which corporations fund to try to reduce our already inadequate efforts at protecting and improving the environment (see here, here, here, here, ...). (Actually, of course, it's not really "corporations" but "the people who run corporations deciding to use the group's assets" to fund ALEC.) But their goal is not environmental destruction. Their goal is reducing the cash cost to their corporation of producing things they think people want, or things they think they can convince people to want. As the Once-ler tells the Lorax, "You never can tell what some people will buy."

It's possible to read The Lorax as saying the same thing. The Once-ler isn't cutting trees just for the sake of making a wasteland; he's cutting them in order to make his thneeds. And the thneed is a reasonable stand-in for modern consumption in general: most of what we consme is useful or enjoyable on its own terms, the question is merely whether the use and pleasure are worth the corresponding ecological havoc.

And I suppose if we cared enough (or rather, "a whole awful lot"), we'd give up some of those terribly convenient thneeds and preserve reproductively viable stands of Truffula trees here and there.

But if we focus on needing to care, we sweep under the rug the likely necessity of reducing consumption. And if that's what we have to do, then "caring" has to be more than merely "keeping in mind," or "wishing well," or "thinking it's important." The necessary "care" has to be embodied in action, and that action is a lot harder to carry out than the book suggests.

(For the record, I have no beef with The Grinch ... except for the improbable physics of that little dog pulling that giant sled up that snowy mountain!)

On deck: Babar!

(Previous installment: Horton Hears a Who)

Wednesday, January 8, 2014

I.9 Government

(from the larger project of an introductory approach to Ecological macroeconomics)

This is a discussion of ways of thinking about the proper role of government in the economy, as well as an overview of the different kinds of taxes and the various types of spending undertaken by the different levels of government in the U.S.

Video is Part a and Part b.

Monday, January 6, 2014

A further numbers puzzle

Back in November I wrote about some weird numbers from the generally very useful FRED data site, run by the St. Louis Federal Reserve. That problem is still there, and I've discovered another one.

Here's a chart I made in Spring, 2013 (the last data point seems to be 2012, 4th quarter). It shows a particular measure of whether the government is running a surplus (negative numbers on this chart) or a deficit (positive numbers on the chart). I've added the red line at zero to make it easier to distinguish surplus (below the line) from deficit (above the line). The denominator is the nominal potential GDP, so that the more recent numbers don't overwhelm the early ones merely by being the product of a much larger economy with higher prices.

Here's the same chart, produced this evening. The FRED site sets the vertical scale for you in order to accommodate the data, so the lines look quite similar, but I've again added a red line, and some differences are clearly visible. In general, the later line seems to have been shifted upward by a couple of percentage points in the earlier part of the data, and half to a full percentage point in the later.

My earlier data puzzle concerned the nominal GDP and the nominal potential GDP, and because my original chart there only showed the difference between the two, I couldn't tell which of those two data series had changed, only that at least one of them had (either the figures for nominal GDP had been made larger, or the figures for potential GDP had been made smaller).

The charts for this new puzzle also include nominal potential GDP, so the first obvious possibility is that this is the culprit in both, but that actually doesn't fit the facts. Potential GDP is strictly in the denominator here, so making it smaller wouldn't have the effect of shifting everything up. More specifically, if you compare the two charts I've presented here, you can find data points that are negative on the earlier chart and positive on the later one. That means that there has to be a problem in the numerator: government current expenditures are now recorded as larger, or government current receipts are now recorded as smaller.

Either way, it's a new problem, not just another occurrence of the same problem as before.