J. Bradford DeLong's Blog, page 89

Note to Self Tippy-Top Incomes: At the start of the 1970s...

Note to Self Tippy-Top Incomes: At the start of the 1970s the top 0.01% of American workers���then some 8000���had incomes, including capital gains, of about 12,500 times the average. Figure, with an average inflation-adjusted income of about 200/day (and a typical income of about 150 per working day), 2,500,000 (that's 2.5 million) inflation-adjusted dollars per day for the top 0.01%. Today that multiple is not 12,500 but rather 50,000, and the gap between average and typical is larger. So while typical incomes have risen little (to perhaps 200/day), the 15000 workers in the top 0.01% of income this year receive an average of 24,000,000 (that is 24 million) dollars a day. Investment firm Citadel founder Ken Griffin bought the most expensive residence we are aware of last January: the penthouse of 220 Central Park South in New York for 240 million. If he were receiving the average income this year for the top 0.01% (which he may not be), that expense would soak up what he receives in 100 working days.

#inequality #notetoself #2019-12-01

Happy Thanksgiving!

Note to Self: One take on how we can learn better:Andy...

Note to Self: One take on how we can learn better:

Andy Matuschak and Michael Nielsen: How Can We Develop Transformative Tools for Thought? https://numinous.productions/ttft/: 'It���s difficult not to be disappointed, to feel that computers have not yet been nearly as transformative as far older tools for thought, such as language and writing.... We believe now is a good time to work hard on this vision again. In this essay we sketch out a set of ideas we believe can be used to help develop transformative new tools for thought...

Andy Matuschak: Why Books Don���t Work https://andymatuschak.org/books/: 'Books are magical! Human progress in the era of mass communication makes clear that some readers really do absorb deep knowledge from books... the people who really do think about what they���re reading.... Readers must learn specific reflective strategies... run their own feedback loops... understand their own cognition.... These skills fall into a bucket which learning science calls ���metacognition���.... It���s challenging to learn these types of skills.... Worse, even if readers know how to do all these things, the process is quite taxing...

Andy Matuschak and Michael Nielsen: Quantum Computing for the Very Curious https://quantum.country/qcvc: 'Presented in a new mnemonic medium which makes it almost effortless to remember what you read...

#books #berkeley #cognition #notetoself #2019-11-27

Smith, Marx, Keynes: Cement Your Knowledge

Knowledge system and cognitive science guru Andy Matuschak writes a rant called Why Books Don���t Work https://andymatuschak.org/books/, about big, difficult books that take him six to nine hours each to read.... [His] points have strong relevance for students in U.C. Berkeley���s Econ 105: History of Economic Thought: Do we live in a Smithian, Marxian or Keynesian World?. The core of the course is an assisted reading of three big books that are d���-ably difficult.... To assist you in this process, we have compiled 150 questions-and-answers���50 about Smith, 50 about Marx, and 50 about Keynes���that we think you should review and learn as part of your active-learning incorporation of the thought of these three authors into your own minds.... For those of you reading this who are in the intended audience of Econ 105 students in the fall of 2019, here is an incentive.... Some of these questions will be on the exam...

https://www.icloud.com/pages/0yyHboa030OEohMkflwYE1u5w

#books #cognition #highlighted #history #historyofeconomicthought #publicsphere #2019-11-27

Science fiction and fantasy publisher Baen Books is publi...

Science fiction and fantasy publisher Baen Books is publishing some truly totally weird batshit these days. Far beyond Fox News totally weird batshit. Perhaps the weirdest:

Perhaps the most outrageous, and certainly most damaging for our civilization is the campaign of ���women���s liberation,��� male-bashing, "role-reversal,��� or whatever you care to call it. Again, as most of these epidemics are at the beginning, it seems to be far more vicious in America and Britain than in the rest of Europe. Yet, all the signs are in evidence that the infection is rapidly spreading, particularly through the electronic media, invaded as it is by the images of glamorous, bright, articulate, hyper-energetic and.super-successful women executives...

Just what is the grift here? Who is the target audience for this? How dumb do the editors think the people who buy their books are?

Just saying:

Vladimir Bukovsky (1992): Judgment in Moscow: "Epilogue.... There are much more far-reaching consequences of the West���s failure to win the Cold War.... From the collapse of the world order to the bankrupcy of welfare state, and from the crisis of representative democracy, abused and besieged by power-hungry 'minorities', to degeneration of our cultural life-these all are direct results of the collectivist egalitarian dream which reigned supreme since French Revolution.... The case of Bosnia is probably the most illustrative.... God only knows why did they decide, in their wisdom, to make an independent state governed by a Muslim minority (43.6% by the 1991 census) out of a Yugoslav province.... Serbs, constituting��� the largest "minority" (31.2%) particularly objected to any attempts at separating them from Serbia proper.... The Serbs in Bosnia have suddenly woke up one nice morning in an ���independent" Muslim-governed state. Small wonder they have taken to arms.... The ensuing civil war, barbaric as it usually is between peasants fighting for their land, has been cleverly termed the "ethnic cleansing.��� Ethnic? Since when did "Muslim" become an ethnicity?... Most of the main culprits in Yugoslavia-the leaders of "ethnic communities"-have routinely committed similar crimes for the past few decades in.their former capacity as the communist bosses. But, no, no one is going to judge them for those crimes. And if they continued to murder capitalists and kulaks, priests and "reactionaries,��� no one would have dared to condemn them. Our moral indignation must be reserved only for the mythical "ethnic cleansing���...

...Meanwhile, in the Western world itself the utopian concept of welfare state has finally come to fruition. Practically every country of the industrialized world has either bankrupted itself by trying to fulfill this lofty dream, or will be bankrupt early next century.... And yet, poverty, crime, illiteracy, lack of medical care have not diminished; in some countries they have actually grew in a direct proportion to the growth of welfare. Worse still, there is a welfare-dependent underclass growing almost in every large city, with many families drawing some kind of state benefits for three generations. And there are good reasons to believe this dangerous development is deliberately encouraged by those who need such a constituency in order to stay in power....

Any small but vociferous group of freaks seems to be able to change a law, or a policy of a state, or even those of international community pretty much against the wishes of the tired majority. Common sense, logic, science are no obstacle: there may be not a shred of scientific evidence to support the doomsday scenario of the "greenhouse effect"; yet the governments are forced to compete in cutting down the ���greenhouse gas" emission even at the expense of economic development. We are yet to find out what is a function of the ���ozone holes" in our geosystem because there was not enough time since their discovery to study them properly: but the governments are already obliged to launch expensive programs in order to fight them. And what can we expect from the feeble politicians if every means of propaganda are used to whip up public hysteria? Even my dictionary boldly states: ozone hole n. An area of depletion in the ozone layer, especially over Antarctica, largely caused by industrial gases, and posing a threat to the well-being of the planet and its inhabitants. Never mind that the industrial gasses, emitted mainly in the Northern hemisphere, cannot possibly cause ozone depletion over Antarctica, since the gas exchange between the hemispheres is about 10%. Who could care about such insignificant details if the "world summit" of all sorts of green freaks has decided otherwise, and the mass media presented this as a fact?...

Similar complaints one can hear from those studying effects of pollution and, in particular, the effects of so-called "passive" or "secondary" smoking. Although dozens of studies did not show any harmful effect at all, the one which did has been instantly singled out, its results "doctored" and used in a vicious world-wide campaign for a "smoke-free society.��� At present this campaign became so hysterical, so absurd as to turn us, law-abiding, taxpaying smokers into a persecuted minority for no apparent reason. After all, despite the smoke-screen concern for ' our health, we are ���consenting adults��� and entitled to decide for ourselves.

Mind you, all of this happens at the time when the other establishment-designated "minorities" are gaining privileges and preferential treatment. While homosexuals can serve in the army, and women can become priests, we cannot have even a tiny smoking compartment on the publicly subsidized trains we pay for through (among other means) growing "sin" taxes on cigarettes. Thus, all means of public transportation-planes, trains, even.buses-are suddenly denied to us in a case of most blatant discrimination. My local bus service was one of the last to succumb to the international pressure....

Perhaps the most outrageous, and certainly most damaging for our civilization is the campaign of ���women���s liberation,��� male-bashing, "role-reversal,��� or whatever you care to call it. Again, as most of these epidemics are at the beginning, it seems to be far more vicious in America and Britain than in the rest of Europe. Yet, all the signs are in evidence that the infection is rapidly spreading, particularly through the electronic media, invaded as it is by the images of glamorous, bright, articulate, hyper-energetic and.super-successful women executives. If we see men at all, they are usually wimps, good for-nothing failures, whose sole purpose of appearance is to be lectured and ordered around by the above-described women, while bleating every five minutes: "I am sorry..." ���Sorry, darling..." Alternatively, they are the enemy: beasts, abusers, dictators, rapists and child-molesters. In fact, the only positive image of a man one can encounter in the present-day television and films is that of a gay, preferably suffering from AIDS. But even in this field preference goes to the other side, with the all-time winner being a black handicapped lesbian with a drug problem.... Legal blackmail became a norm: each and every organization, public or private, is forced today to have a quota of women in every position of power lest it be accused of "discrimination.��� As if this was not disgusting enough, further abuse of legal system has brought us such pearls like "sexual harassment,��� "date rape,��� "child abuse" and other assorted means of intimidation, which completely poisoned relations in the society....

Sadly, we did not use the golden opportunity the death of communism has offered us: we did not finish them off, did not expose their crimes, did not discredit their "dreams" and, above all, did not learn to resist this modern plague. Being incurable believers in appeasement, we twist our tunges and mutilate our speech by trying to pronounce: "he-she-it,��� "Mizzz, Misss,��� ���vertically challenged,��� "ozone friendly.��� But even if we manage to be green, blue and color-blind, all at once, we still will not buy peace and live happily ever after, because they care about their "minorities" no more that the communists cared about proletarians. Those are just vehicles for attaining ultimate power to dictate, to control, to destroy our inner self....

There is nothing on God���s earth that can justify this course of events. All that is given to me now���is to treasure this evidence until Judgment Day....

#noed #sciencefiction #2019-11-26

Comment of the Day: Graydon https://www.bradford-delong.c...

Comment of the Day: Graydon https://www.bradford-delong.com/2019/10/note-to-self-we-hear-a-lot-about-the-military-revolution-at-the-end-of-the-sixteenth-century-we-hear-about-gustaf-adolf.html?cid=6a00e551f0800388340240a4e53f05200b#comment-6a00e551f0800388340240a4e53f05200b: 'Yup. Suleiman has a unified state; Suleiman has a sort of post-classical central bureaucracy able to make and sustain policy. Suleiman has a professional army. (And a less professional army.) And yet Suleiman couldn't quite take Vienna or make the conquest of Hungary stick; the result is not stable control of Hungary, but a hundred and fifty years of conflict which the Ottoman Empire eventually loses. This isn't the pattern Brad's talking about with Babur; that's an example of someone able not so much to achieve victory as to change the local rules of warfare in the process of achieving victory. Afterwards, the things which conferred power no longer do so. (Napoleon isn't usually thought of as an example but would be one.) Suleiman specifically and the Ottomans generally can't do that in Hungary; they're using the same rules the various European powers are using. They start with a significant advantage in application, but not a sufficient advantage; they haven't got the ability to change the rules...

...What's going on with Suleiman might be as simple as poor choice of objectives; a wiser commander would have attacked, not Vienna, but the reasons for a wider hinterland to defend Vienna. (It's an intersection of trade routes. If they're not effective trade routes, well. Give it some time, and things become much simpler.) It might be as simple as just not having a mechanism of legitimacy; there's no way to defeat people who can't give up. And destruction turns out to be much more work.

Armies get better by fighting; a good ruler doesn't want that. A strong central ruler must not allow that. Any conquest on the borders must be deliberate and carefully managed; successful, popular generals are a structural threat. The fragmented nature of Europe, the increasing importance of the New World, and the sheer lack of mediation mechanisms mean that the Europeans fight incessantly. They get better; they don't always get better at applicable things, but sometimes.

The Roman rise is an example of this, too; generations of warfare in the italic peninsula result in military capability not so much in arms (though there might be that, too; torsion catapults count) but in common understanding of war as an economic activity, a career, and a social norm. Export that and individually superior fighters lose. Caesar conquers Gaul.

#commentoftheday #2019-11-26

Convergence

Introduction

Outside of the charmed magic circle of western and central Europe, North America, and the other Anglo-Saxon settler colonies, few indeed are the economies that have managed successful economic development in the sense of convegence: materially closing any significant fraction of their productivity and living standards gap vis-a-vis the world's economic leaders. The Northeast Asian Pacific Rim, now including China; further south, Malaysia, Thailand, Indonesia, and Vietnam; India and Sri Lanka; elsewhere, Turkey, Chile, Botswana, Mauritius, and Cabo Verde. That is all. And with perhaps one or two exceptions, those few have followed the particular economic development path of using low-wage manufacturing exports to nurture their domestic communities of engineering practice���a path that is now closing.

It has long been easy to see the glass half-full with respect to global economic growth: technologies and organizational forms can be imitated and adopted, do diffuse, and even the poorer parts of the globe are much richer than they were two or one or even half a century ago. It has been much harder to see the glass half-full with respect to convergence: the catching-up and closing of the gap vis-a-vis the world's industrial leaders. Why have so few countries been able to walk the path? And what are our prospects for the future? With the prospective closing of the standard parth for convergence, seeing the glass half-full is becoming harder: perhaps there will be no glass at all.

But by now you have three questions:

What, since the start of the industrial revolution, has been the standard path to successful economic convergence?

Why is this path now closing?

What might the alternatives be?

Let us tackle these in order. But, first, the elevator summary:

Since the start of the industrial revolution, successful convergers have possessed functioning property-rights systems and markets with reasonably honest governments, and have succeeded in teaching citizens, in building infrastructure, in mobilizing savings and directing it productively via banking, and in implementing smart industrial policies. What are "smart industrial policies"? They have been, historically, those that borrow the global middle class as a source of demand for domestically-produced manufacturing and as a way of judging which domestic producers are effective, and on that foundation build the communities of engineering practice essential to transfer knowledge of how to produce using industrial technologies.

Historically, walking this path has been possible because industrial manufacturing has required enormous amounts of low-wage labor in addition to capital and engineering expertise. Thus the free-market production cost disadvantage of poor economies in the "low end" of modern machine-made industrial products has been modest, and modest well-designed tariffs coupled with affordable subsidies for successful machine-made manufacturing exports can tip the balance and allow this borrowing of the global middle class as a source of demand and of judgment. The successful path to development and convergence has thus led through nurturing infant industries in low-end machine-made manufactures. But now robots and software 'bots mean that industrial manufacturing no longer requires much unskilled labor; the cost disadvantage at world market prices is no huge; and the path is rapidly closing.

We do not yet know what the new path will be, or even if there will be a new path. So what we need to do is to explore, as rapidly and as thoroughly as possible, possible new paths. And then we need to reinforce success.

 

The Historical Pattern of Convergence

The standard estimates you will find in places like http://gapminder.org tell us that, measured in today's dollars, the geometric mean income per capita in the world in 1800 was about 1000 of today-value dollars a year���3 dollars a day. By 1870, perhaps 1300; by 1945, roughly 2300; and today, roughly 10000, more or less Egypt now. That is enormous progress: a tenfold jump in a little over two centuries. But look at the top tenth of the world: it goes from 1800 to 3600 to 10000 to 45000 dollars of real annual income per capita from the year 1800 to 1870 to 1945 to today. And it is composed of about the same economies throughout���Japan, South Korea, and Taiwan have joined; Middle East oil-producers have joined; Argentina, Uruguay, and Venezuela have dropped out; but that is about it. The top tenth as a multiple of the geometric mean has thus gone from 1.8 to 2.8 to 4.3 to 4.5: divergence. Convergence to the world's economic frontier has been a rarity. Growth but growth that leaves the non-rich economies further behind in relative terms has been common.

Which economies have managed to break the mold? What are the economies that are unexpectedly very rich today���the economies that have been the surprise big winners in economic growth and development in the three quarters of a century since World War II? They are: Japan, Singapore, South Korea, Taiwan, and Hong Kong. That is all the surprise winners: all the other of today's rich countries either had lots of oil and small populations; or as of 1945 were in the prosperous "North Atlantic", with institutions, markets, and trade and cultural connections that meant they would be lifted by the rising tide, and so their success does not come as a great surprise.

What are the countries that are unexpectedly middle-income today���the countries that were much poorer, relatively, back in 1945 but that now are doing quite well in global perspective? They are: Turkey, Chile, Malaysia, Botswana, Thailand, of course China, and Mauritius���a relatively small island of 800 square miles. That is all.

What are the countries that are still poor today, but that are unexpectedly much less poor than would have been predicted back in 1945? They are: Indonesia, Sri Lanka, India, Bangladesh and Cabo Verde���ten small islands totalling 1600 square miles. That is all.

Otherwise���with the important exception of the "converging" North Atlantic���countries' economies have either sharply declined in relative terms, or stayed where they were, with the proportional gap between their labor productivity and that of the United States not much less than it was in 1945.

Call these 18 economies���Japan, Singapore, South Korea, Taiwan, Hong Kong; Turkey, Chile, Malaysia, Mauritius, Botswana, Thailand, China; Indonesia, Sri Lanka, Vietnam, India, Bangladesh and Cabo Verde���and call them the "convergers": those that have figured out how to take advantage of the global economy and society to become rich, or richer. On the upper left hand the glass is half empty: these are only 18 of some 180-odd middle- and low-income developing economies and emerging markets worldwide. On the lower left hand there is barely any water in the glass at all: of even those countries that are converging, only a fourth have attained North Atlantic levels of prosperity and productivity. On the lower right hand the "convergers" may be only 18 economies, but they account for half the population of the earth. And on the upper right hand the experience of the "convergers" breaks a trail and provides examples for other still-poor nations to follow.

Or does it?

I am here to tell you that���in all likelihood���it does not. The pattern of human work is changing, rapidly. And the pattern of human work is changing in a way that is closing off the standard path to economic development and prosperous productivity that Bangladesh has started to walk, that the others up to Japan are walking or have walked since World War II���and that others like Germany and the United States had walked previously���is now closing. How fast it will close, and what alternate trails still-poor economies can walk, is up for grabs. But the standard path is closing.

 

The Changing Pattern of Human Work

[An here I have run out steam for the moment...]

#economicdevelopment #economicgrowth #economics #globalization #notetoself #riseoftherobots #2019-11-26

Adam Smith & Inequality: Inequality Generated Outside the Market

2.5) Adam Smith & Inequality: 2.5.1. Inequality Generated Outside the Market: Smith���s first way of minimizing the importance of inequality���or at least minimizing the responsibility of the market and of the economy for fighting inequality���is to argue that inequality springs from politics and sociology rather than from market economics. Inequality arises from the role that hierarchy and command-and-control play in the mixed-up processes that are human society. The society of England becomes more unequal because William the Bastard from Normandy and his thugs with spears���300 families, plus their retainers���kill King Harold Godwinson, and declare that everyone in England owes him and his retainers 1/3 of their crop. The society of England becomes more unequal because Queen Elizabeth I Tudor grants a monopoly over trade with America to Sir Walter Raleigh. Why? Because he had successfully flirted with her. These are not economic processes. These are not closely connected with the ���system of natural liberty��� than is the market economy.

Indeed, the system of natural liberty is only one way you can organize society. Societies can be organized as ones of feudal lords and peasants, as priests and worshippers, robbers bands and their victims. But these ways of organizing society are impoverishing and, Smith claims in his very naming of his system the ���System of Natural Liberty������unnatural. Dugald Stewart quotes from one of Smith���s lectures that, at least in the lecture hall at Glasgow in 1749, Smith was blunt:

Little else is required to carry a state to the highest degree of affluence from the lowest barbarism but peace, easy taxes, and a tolerable administration of justice; all the rest being brought about by the natural course of things���

I believe that the later Adam Smith would note that ���tolerable administration of justice��� covers a lot of ground: the later books of An Inquiry into the Nature and Causes of the Wealth of Nations are very long indeed: Book III on how the historical development of Europe has let it to deviate from the System of Natural Liberty is 43 pages, Book IV on errors being made in 1776 by the governments of Europe is 273 pages, and Book V on what governments should and should not do is 276 pages���a total of 592 pages on what governments should, should not, and have unfortunately done, with only a total of 346 pages laying out Smith���s analytical system and its conclusions, among them that:

All governments which thwart this natural course, which force things into another channel, or which endeavor to arrest the progress of society at a particular point, are unnatural, and, to support themselves, are obliged to be oppressive and tyrannical���

As Heilbroner puts it:

The great enemy to Adam Smith's system is not so much government per se as monopoly���in any form. ���People��� meet[ing] together��� [and] the conversation ends in��� some diversion to raise prices.������ If the working of the market is trusted��� anything that interferes��� lowers social welfare. If, as in Smith���s time, no master hatter anywhere in England could employ more than two apprentices or no master cutler in Sheffield more than one, the market system cannot possibly yield its full benefits���. If, as in Smith's time, great companies are given monopolies of foreign trade, the public cannot realize the full benefits of cheaper foreign produce.��Hence, says Smith, all these impediments must go���

Here the full files are���unfinished: https://www.icloud.com/pages/0howtV7CndvjkSCCLmtjmq_SA

And the course slides:

https://www.icloud.com/keynote/0osOOsPvSrTaiK4__D5MghPVA

#books #highlighted #history #historyofeconomicthought #moralphilosophy #politicaleconomy #2019-11-23

Michael Kades: "Kodak https://twitter.com/Michael_Kades/s...

Michael Kades: "Kodak https://twitter.com/Michael_Kades/status/1185290953483079683 invented the Digital Camera in 1974. You know who did not want to develop it and bring to market for fear it would canabalize their film monopoly? Yup, Kodak. https://businessinsider.com/this-man-invented-the-digital-camera-in-1975-and-his-bosses-at-kodak-never-let-it-see-the-light-of-day-2015-8 My guess is Kodak made the right choice to maximize its profits. That is why competition is important for innovation.... Actually Kodak did anticipate it. They just realized they were better off sucking every last dollar out the film monopoly and delaying the digital revolution as long as possible. Also, I would not call a near century of dominance ephemeral.... Isn't the question whether Kodak's decision to milk its existing monopoly was more profitable than pursuing a digital camera. I tend to think Kodak knew what it was doing. Even a couple of years up front of large monopoly rents >> a long tail of competitive profits...

#noted #2019-11-26

I agree with Arvind and Dani here: It is quite puzzling t...

I agree with Arvind and Dani here: It is quite puzzling that financial globalization still has as many strong advocates as it does among policymakers and their ilk: Arvind Subramanian and Dani Rodrik: The Puzzling Lure of Financial Globalization https://www.project-syndicate.org/commentary/financial-globalization-neoliberalism-discredited-by-arvind-subramanian-and-dani-rodrik-2019-09: "Although most of the intellectual consensus behind neoliberalism has collapsed, the idea that emerging markets should throw their borders open to foreign financial flows is still taken for granted in policymaking circles. Until that changes, the developing world will suffer from unnecessary volatility, periodic crises, and lost dynamism...

'

#noted #2019-11-26