Suggested afternoon read

Brad Delong on the upcoming translation of the Piketty book (and the recent presentations about it).  This is interesting stuff, and is very “economic historyesque” in its description.

I’d note that the general idea that we could have significant wealth accumulation leading to “impatient” groups being poorer in the long-run is accepted, and directly taught, in economics.  However, when it is down to a “preference for patience” the normative implications are not quite as clear.

Understanding these heterogeneous “preferences”, what they represent, and what they contribute within the data, is pretty exciting stuff!

QOTD: Delong on targets and the ‘great stagnation’

Golden passage from Brad Delong.  For once I’m going to put up a quote and not add my thoughts – as they’d just get in the way:

The focus on real GDP growth and its possible–or likely–slowing is a setup to panic us into making policy decisions we really do not want to make. The “great stagnation” literature as it is currently constituted seems to me at least to guide our attention in the wrong direction–and to quite possibly stampede us into making policy decisions we really would not want to make if we thought more deeply and calmly. The chain of logic is that measures to reduce inequality have a cost in terms of reducing the growth rate of the economy–that the bucket of redistribution is, in the terms of Arthur Okun’s Equality and Efficiency: The Big Tradeoff, a leaky bucket–and that when growth is slower we can no longer afford to engage in redistribution. This seems to me to be the wrong way to conceptualize it: the evidence that the bucket is leaky is weak–or, rather, there are many buckets, some very leaky, some not leaky at all, some anti-leaky–and in any event whether we should tradeoff potential growth for other objectives is not something the depends on how fast growth is. Policies that make sense if underlying GDP per worker growth is 3% probably still make sense if underlying GDP per worker growth is 1%. Policies that don’t make sense if underlying GDP per worker growth is 1% probably still don’t make sense if underlying GDP per worker growth is 3%.

But my aim here is simply to lay down a marker as far as point is concerned: to enjoin you not to get stampeded into going someplace you really do not want to go.


Religion and institutions

I see the Pope made some comments about capitalism and social justice, and a bunch of economists were unhappy with this (Mankiw, Sumner) – or were unhappy with the way economists viewed the Pope’s comments.  Note:  This piece is a good discussion.

My view is easily summarized.  Meh.  I grew up in a Catholic family, going to church every week and doing all the classes – and if there was anything I learnt from reading all the “social justice literature” it was that Catholicism as an institution likes to frame things as battles between “right” and “wrong” rather than actually trying to understand the subtle undertones of what is actually happening.  The Pope seems like a nice guy, who is well intentioned, but he relies on “common sense” views of rising injustice – rather than looking at the facts.  While this makes Catholics feel good about themselves, it is a lazy way to talk about justice and fairness – which implies that there is some truth to what he says (we should talk about these matters) but it also propagates dangerous falsehoods.

Note:  If anyone is wondering, I’m not being bitter here.  Growing up my church was filled with good people who were incredibly supportive, who gave me good life advice, and who were always kind – I have nothing but good feelings about any of this.  But the general attitude that exists in society as a whole, that there are obvious good and evil things, is dangerously naive.

Yes, many Catholics have different value judgments than wider society – with far more redistribution desired (I will of course admit to being in this direction on a personal level).  And this is cool!  But I just don’t see this as a reason to employ empty rhetoric to persuade others to introduce policies that favour your value judgments, which is what they are doing.

Of course, this brings us to the actual subject of this post – religion is an institution, an institution that fills a certain role within society and the lives of an individual.  When we think about ideas of ‘social capital’, religion offers us a lens on the type of community/social institutions we are talking about when thinking about this issue.  This is a common idea, and with the use of a little game theory we can even state that Jesus was an early applied economist.

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On studying economics

I was going to do a quote by Joan Robinson as a quote of the day – but then I realised, I’d done this before!

The purpose of studying economics is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists.

And in 2008 I made the same point I was about the make now:

Training to be an economist does not tell you the answer to any economic question – it gives you the tools with which to determine answers for yourself, given your own set of value judgments.

Although I would note “any” is a bit strong, it really depends what the question is 🙂 .  So why was I going to post this quote again? Read more

Quote(s) of the day: Keuzenkamp on controls and data mining

As I indicated here I am reading Probability, Econometrics, and Truth.  A nice outline of things, I’m enjoying it at present (I was 20% of the way through when I wrote this post over five weeks ago).

Two quotes I’d like to note down here: Read more

Isn’t Economic History grand

The discussion about Milton Friedman going on at the moment is great fun – with a bunch of people discussing whether Friedman was Keynesian and what this even means.

It all starts with Krugman attacking Friedman’s obsession with monetary aggregates.

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