J. Bradford DeLong's Blog, page 177
May 20, 2019
Graydon: "If you're an authoritarian, you want people to ...
Graydon: "If you're an authoritarian, you want people to do what you say...
...You necessarily hate this fact-checking, quantified analysis stuff, and you want to make sure anybody who tries that shit winds up starving in a ditch somewhere. People are supposed to do what you say, not waste time and money producing creative excuses. There are no legitimate excuses. You do what you are told to do, whatever it takes. Nothing is important except getting it done and admitting the boss was right.
I sometimes wonder if academia suffers terribly from not having to work for that person.
I mean, yeah, you don't want to work for that person, and you really don't, in a social-health systemic-utility sense, want that person in charge of anything ever, but all the academic analysis I see doesn't believe in that person, and they're ubiquitous. They make a lot of decisions, about the economy and people's lives. They mostly succeed with the starving-in-a-ditch part, too...
#commentoftheday
Against Raj Chetty et al.'s belief that school quality���...
Against Raj Chetty et al.'s belief that school quality���rather than the fabric of society���is a key mechanism creating and blocking possibilities for upward mobility: Jesse Rothstein (2017): Inequality of Educational Opportunity? Schools as Mediators of the Intergenerational Transmission of Income: "Commuting zones (CZs) with stronger intergenerational income transmission tend to have stronger transmission of parental income...
... to children���s educational attainment, as well as higher returns to education. By contrast, the CZ-level association between parental income and children���s test scores is only weakly related to CZ income transmission, and is stable across grades. There is thus little evidence that differences in the quality of K-12 schooling are a key mechanism driving variation in intergenerational mobility. Access to college plays a somewhat larger role, but most of the variation in CZ income mobility reflects (a) differences in marriage patterns, which affect income transmission when spousal earnings are counted in children���s income; (b) differences in labor market returns to education; and (c) differences in children���s earnings residuals, after controlling for observed skills and the CZ-level return to skill. This points to job networks or the structure of the local labor and marriage markets, rather than the education system, as likely factors influencing intergenerational economic mobility...
#npoted
Scott Alexander: Who By Very Slow Decay: "After a while o...
Scott Alexander: Who By Very Slow Decay: "After a while of this, your doctors will call a meeting with your family and very gingerly raise the possibility of going to 'comfort care only', which means they disconnect the machines and stop the treatments and put you on painkillers so that you die peacefully. Your family will start yelling at the doctors, asking how the hell these quacks were ever allowed to practice when for God���s sake they���re trying to kill off Grandma just so they can avoid doing a tiny bit of work. They will demand the doctors find some kind of complicated surgery that will fix all your problems, add on new pills to the thirteen you���re already being force-fed every day, call in the most expensive consultants from Europe, figure out some extraordinary effort that can keep you living another few days...
...Your doctors will nod their heads and tell your family they respect their wishes. It will be a lie. Oh, sure, they will carry out the family���s wishes, in terms of continuing to provide the care. But respect? In the cafeteria at lunch, they will���despite medical confidentiality laws that totally prohibit this���compare stories of the most ridiculous families. ���I have a blind 90 year old patient with stage 4 lung cancer with brain mets and no kidney function, and the family is demanding I enroll her in a clinical trial from Sri Lanka.��� ���Oh, that���s nothing. I have a patient who can���t walk or speak who���s breathing from a ventilator and has anoxic brain injury, and the family is insisting I try to get him a liver transplant.���
Every day, your doctors will meet with your family another time, and eventually, as your condition worsens and your family has more time to be hit on the head with a big club marked ���REALITY���, they will start to relent. Finally, they will allow your doctors to take you off of the machines, and you will be transferred to Palliative Care, whose job I do not envy even though every single palliative care doctor I have ever met is relentlessly cheerful and upbeat and this is a total mystery to me. And you will die, but not quickly. It takes time for the heart to give up, for the lungs to fill with water and stop breathing, for the toxic wastes to build up. It is generally considered wise for the patient to be on epic doses of morphine throughout the process, both to spare them the inevitable pain as their disease takes their course and to spare their family from having to watch them.
���not that they always do. It can take anywhere from a day to several weeks for someone to die. Sometimes your family wants to wait at the bedside for a week. But a lot of the time they have work and things to do. Maybe they live thousands of miles away. You haven���t recognized them in years, you haven���t spoken a coherent word in months, and even if for some reason your brain chose this moment to recover lucidity you���re on enough morphine to be well inside the borders of la-la-land. A lot of families, faced with the prospect of missing work and school to sit by what���s basically a living corpse day in and day out for weeks just to watch it turn into a non-living corpse, politely decline. I absolutely 100% cannot blame them. There is a national volunteer program called No One Dies Alone. Nice people from the community go into hospitals to spend time with dying people who don���t have anyone else there for them. It makes me happy that this program exists.
Nevertheless, this is the way many of my patients die. Old, limbless, bedridden, ulcerated, in a puddle of waste, gasping for breath, loopy on morphine, hopelessly demented, in a sterile hospital room with someone from a volunteer program who just met them sitting by their bed...
#noted
It is not at all clear to me that quantum computers will ...
It is not at all clear to me that quantum computers will ever be practical devices for anything other than simulating quantum-mechanical systems, at which I agree they will have an enormous edge over classical devices. Although "simulating" is perhaps the wrong word: "mirroring" or "modeling" would be better. As Scott Aaronson rightly says, they will be useful for broader purposes only to the extent that the interference properties can be harnessed for our use, as in Childs et al.:
Scott Aaronson: Quantum Computing, Capabilities and Limits: "Every quantum algorithm is... trying to choreograph things in such a way that for each wrong answer to your computational problem... the paths... cancel each other out, whereas the paths leading to the right answer should all be ���in phase��� with each other.... If you can mostly arrange for that to happen, then when you measure the state of your quantum computer, then you will see the right answer with a large probability.... So nature... gives you a very bizarre ���hammer���....People always want to... [say] the quantum computer just tries all of the possible answers at once. Bt the truth is that if you want to see an advantage, you have to exploit... interference...
#noted
Made me want to very much read a book I had not gotten to...
Made me want to very much read a book I had not gotten to. Now I have. It's excellent. I endorse Noah's review:
Noah Smith: Book Review: The Revolt of the Public, by Martin Gurri: "Social media, Gurri asserts, has both empowered and emboldened the public, freeing it from the control of centralized, hierarchical push-media.... The public's goal is negation-denunciation of respected leaders, derailment of political programs, overthrow of parties or governments, discrediting of institutions, etc.... The usefulness of this book is in drawing parallels between a bunch of things that might seem unrelated.... If Gurri is right, these things are fundamentally about a technology-social media-and the way it changes power relations between the public and elites, then we can expect today's explosions of anger to be followed by others tomorrow, and then others the day after tomorrow, and on and on and on.��Gurri may not convince you-in fact, if he does, you're probably not enough of a skeptic-but he will give you a new framework with which to usefully think about the political chaos of the modern world...
#noted
Paul Krugman: Don���t Blame Robots for Low Wages: "Partic...
Paul Krugman: Don���t Blame Robots for Low Wages: "Participants just assumed that robots are a big part of the problem���that machines are taking away the good jobs, or even jobs in general. For the most part this wasn���t even presented as a hypothesis, just as part of what everyone knows.... So it seems like a good idea to point out that in this case what everyone knows isn���t true.... We do have a big problem���but it has very little to do with technology, and a lot to do with politics and power.... Technological disruption... isn���t a new phenomenon. Still, is it accelerating? Not according to the data. If robots really were replacing workers en masse, we���d expect to see the amount of stuff produced by each remaining worker���labor productivity���soaring.... Technological change is an old story. What���s new is the failure of workers to share in the fruits of that technological change...
#noted
I would not say that new technologies were "geared toward...
I would not say that new technologies were "geared toward maintaining the role of human labor in value creation". I would say that new technologies required microcontrollers���and the human brain was the only available microcontroller���and software 'bots to manage materials and information flows���and the human brain provided the only available 'bot hardware. Now neither of these are the case:
Daron Acemoglu and��Pascual Restrepo: The Revolution Need Not Be Automated: "For centuries after the Industrial Revolution, automation did not hinder wage and employment growth, because it was accompanied by new technologies geared toward maintaining the role of human labor in value creation. But in the era of artificial intelligence, it will be up to policymakers to ensure that the pattern continues...
...Unfortunately, the current trend in commercial AI development is toward more and more automation, with potentially disastrous consequences for society.... As automation has displaced workers in performing certain tasks, other technologies have emerged to restore labor���s central role in the production process by creating new tasks in which humans have a comparative advantage.... Agricultural mechanization... displacing a huge share of the US workforce.... But... burgeoning new industries... clerical positions... manufacturing, where a finer division of labor boosted productivity, employment, and wage growth. A similar pattern of technological change fueled employment and wage growth for high- and low-skilled workers alike in the decades following World War II. Yet, in the past three decades, the accompanying changes needed to offset the labor-displacement effects of automation have been notably absent. As a result, wage and employment growth has remained stagnant, and productivity growth anemic...
#noted
In a time of bubble, raising interest rates and restricti...
In a time of bubble, raising interest rates and restricting the lending of regulated institutions may be counterproductive if there are unregulated institutions as well. This is an old lesson. We forgot it, and relearned it yet again in the 2000s:
Itamar Drechsler, Alexi Savov, and Philipp Schnabl: How Monetary Policy Shaped the Housing Boom: "Between 2003 and 2006, the Federal Reserve raised rates by 4.25%. Yet it was precisely during this period that the housing boom accelerated, fueled by rapid growth in mortgage lending. There is deep disagreement about how, or even if, monetary policy impacted the boom. Using heterogeneity in banks' exposures to the deposits channel of monetary policy, we show that Fed tightening induced a large reduction in banks' deposit funding, leading them to contract new on-balance-sheet lending for home purchases by 26%. However, an unprecedented expansion in privately-securitized loans, led by nonbanks, largely offset this contraction. Since privately-securitized loans are neither GSE-insured nor deposit-funded, they are run-prone, which made the mortgage market fragile. Consistent with our theory, the re-emergence of privately-securitized mortgages has closely tracked the recent increase in rates...
#noted
In England, at least, if "middle class" as defined as not...
In England, at least, if "middle class" as defined as not-rich who can nevertheless expect some support from their parents and pass a nest egg down to their grandchildren, there was no real, lsubstnail, and numerous "middle class" in the twentieth century:
Neil Cummins: The Missing English Middle Class: Evidence From 60 Million Death And Probate Records: "Using a combination of old-fashioned archival research, mass scripted downloading, optical character recognition, text parsing, and sets of algorithmic programming tools, I have digitised every individual entry, 18 million records with estate values, from the Principal Probate Calendar from 1892 to 1992. To this I have added all 60 million adult English deaths.... This simple finding is quite stark: despite the great equalisation of wealth over the 20th century, most English have no significant wealth at death...
...The methodology I have applied here to constructing a new dataset can be applied to any set of images of historical records that contain consistent formatting. There are many millions of these images lying on website servers all over the world. As optical character recognition software continues to become more accurate, there is now remarkable potential for new, big data analysis in economic history...
#noted
A Year Ago on Equitable Growth: Twenty Worthy Reads from the Week Before May 24, 2018
Five Things Worthy at Equitable Growth:
Austin Clemens and Heather Boushey: Disaggregating growth: "NIPA... were a radical advance in economic measurement when they were instituted.... The lack of data on how income is distributed is especially glaring now in the face of rapidly increasing economic inequality.... Instead of revolutionizing GDP, U.S. policymakers should evolutionize it... add an explicitly distributional component to GDP..."
Hold it! Why does the spread of Microsoft Office shift workers away from "non routine analytic" and toward "routine cognitive and routine manual" tasks?: Enghin Atalay et al.: New technologies and the labor market: "Most new technologies are associated with an increase in nonroutine analytic tasks, and a decrease in nonroutine interactive, routine cognitive, and routine manual tasks.... Through the lens of the model, the arrival of ICTs broadly shifts workers away from routine tasks, which increases the college premium. A notable exception is the Microsoft Office suite, which has the opposite set of effects..."
And I do think that grappling with the work and legacy of John Kenneth Galbraith is a very important but rarely operated railway line within economics. So I put a signpost to it here: Brad DeLong: Galbraithian economics: Countervailing power edition | Equitable Growth
Is this a worthwhile and successful way of doing something roughly aligned with but substantially different from not only Mark Thoma but also Liz Hipple: Weekend Reading: a weekly post... with links to articles that touch on economic inequality and growth...? Brad DeLong: Worthy reads on equitable growth, May 10-17, 2018
Jacob Robbins: How the rise of market power in the United States may explain some macroeconomic puzzles: "Surprising... facts about... growth and rising... inequality.... 1. Financial wealth has increased... despite no real increase in... investment.... 2. The financial value of many firms now is permanently higher than the cost of their assets.... 3. These more valuable firms haven���t invested more.... 4. The average rate of return on capital has stayed steady while interest rates have dropped. 5. The share of income going to labor... has declined.... The driving force behind them is an increase in monopoly power together with a decline in interest rates...
Fifteen Things Worthy Not at Equitable Growth:
Once again, from the University of Oregon, Mark Thoma's Economists' View continues to be the single best link aggregator in economic policy and theoretical economics: read him, and the things he links to, and in addition read:
If you are in search of a very shrewd and informative take on the global tech industry, you ought to be reading���and perhaps subscribing���to the extremely sharp: Ben Thompson: Stratechery: "On the business, strategy, and impact of technology..."
Interesting notes on how http://twitter.com has degraded the quality of the public sphere because of (1) the addictive immediacy of its call-and-response, parry-and-thrust; (2) its counterproductive extreme brevity; and (3) its failure to invest in proper twitter aggregation tools can be found as asides in Paul Krugman: Opinion | Monopsony, Rigidity, and the Wage Puzzle...
Women's and Children's Liberation Front Edition: These effects are remarkably large. Yugely large. And they have held u- to everything statistical that has been thrown at them: Martha Bailey: More Power to the Pill: The Impact of Contraceptive Freedom on Women's Labor Supply: "The release of Enovid in 1960, the first birth control pill, afforded U. S. women unprecedented freedom to plan childbearing and their careers. This paper uses plausibly exogenous variation in state consent laws to evaluate the causal impact of the pill on the timing of first births and extent and intensity of women's labor-force participation. The results suggest that legal access to the pill before age 21 significantly reduced the likelihood of a first birth before age 22, increased the number of women in the paid labor force, and raised the number of annual hours worked..."
Ralph Atkins and David Crow: Top Novartis lawyer quits after payments to Trump aide: "Felix Ehrat to ���take personal responsibility��� for agreement with Michael Cohen.... Mr Jimenez said. 'We should have considered the reputational risk over the financial risk, and we should have just ended the contract right then, pretty much no matter what it was going to cost us. But we didn���t do that'..."
Daniel Schneider, Kristen Harknett, and Matthew Stimpson: What Explains the Decline in First Marriage in the United States? Evidence from the Panel Study of Income Dynamics, 1969 to 2013: "Us[ing] individual and contextual measures of employment and incarceration to predict transitions to first marriage in the Panel Study of Income Dynamics (1969���2013)... [we] find that men's reduced economic prospects and increased risk of incarceration contributed... although these basic measures... cannot explain the entire decline...
I need to understand China. Martin Wolf tries to help: Martin Wolf: How the Beijing elite sees the world: "Seven propositions our interlocutors made to us..."
Best shadow graduation speech I have seen in quite a while: Simon Kuper: My life tips for graduates: embrace your ignorance: "You are graduating almost entirely ignorant. This isn���t your fault...
David Glasner: On Equilibrium in Economic Theory: "F. A. Hayek... first articulated the concept... three noteworthy, but very different, versions... (1) an equilibrium of plans, prices, and expectations, (2) temporary equilibrium, and (3) rational-expectations equilibrium.... Hicks���s concept of temporary equilibrium... provides an important bridge connecting the pure hypothetical equilibrium of correct expectations and perfect consistency of plans with the messy real world in which expectations are inevitably disappointed and plans... revised.... Temporary-equilibrium... provide[s] the conceptual tools with which to understand how financial crises can occur and... be propagated.... The Lucasian idea of rational expectations... simply assumes away the problem of plan expectational consistency with which Hayek, Hicks and Radner and others who developed the idea of intertemporal equilibrium were so profoundly concerned..."
Ann Marie Marciarille: The Future of Freestanding ERs: "We have some 500 freestanding ERs... 80... in Texas, predominantly in urban areas.... Freestanding ERS come in... hospital-affiliated and non-hospital affiliated. The latter are not bound by federal EMTALA.... Why not have a freestanding��hospital-affiliated ER in such close proximity to a hospital based ER?��Customers will prefer the easier access of the satellite ER and, eventually, sort themselves by severity between the two ERs, leaving a distorted severity mix and payor mix.��And hospital affiliated ERS will not like being left only with the more demanding, though not necessarily more richly reimbursed, cases..."
Brad DeLong (2007): A Teaching Note: The Gordon Equation, Earnings Yields, and Stock Returns: For ��=0���when there is no difference between the market and the internal rate of return���then simply: r = E/P. For ��=1���when there are no retained earnings���then simply: r = E/P...
Why the Trump administration is wrong in thinking our trade deficit with China means we would "win" a trade war: Paul Krugman: Why a Trade War With China Isn���t ���Easy to Win���: "It goes without saying that Trump is wrong about the economics of bilateral trade imbalances. But he���s also wrong about the political economy.... The political economy of trade is... mercantilist... driven largely by producer interests.... The genius of the postwar international trading system was that it harnessed this special-interest reality.... [But] in an era of complex international value chains... producers should care about... not how much they export but how much income they derive from exporting..."
Very good people working hard to explain Germany today. But put me down as suspecting strongly that not stressing the benefits of joining the euro at an undervalued parity leads this effort to be a Hamlet without the Prince of Denmark: Dalia Marin: Explaining Germany���s exceptional recovery: "Germany has transformed itself from�����the sick man of Europe��� to an ���economic superstar���,��accounting for almost 8% of world exports. This column introduces��a��new VoxEU eBook that explores how Germany���s extraordinary recovery came about. The contributors to the eBook find that changes in the labour��market institutions and in firms��� business models as a result of trade liberalistion with Eastern Europe after the fall of communism��explain Germany���s��exceptional export performance.��They also explain why Germany��absorbed the 'China shock' more easily than other countries and why��globalisation did not contribute to the rise in voting for the far right��in Germany..."
The person who may well be the leading candidate for the next president of the Federal Reserve Bank of San Francisco (although I would prefer Christie Romer: being dead-on right in public in 2009-2010 should get you promoted to something): Mary Daly: Economics is falling behind Stem on diversity: "The discipline must stop treating women as if they were rare birds..."
Mark Thoma sends us to Michael Strain telling businesses that if they want to hire more and better quality workers, they need to raise wages: Michael Strain: Don���t Fall for Employers��� Whining About a ���Skills Gap���: "Wage growth is picking up, but it is lower than what many economists expect in light of overall economic conditions, and it is not soaring for specific industries.��Simply put, if businesses can���t find workers... they should raise their wage offers.... So unless wage growth picks up, the warnings about labor shortages will fall flat..."
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