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There was once a collection put together of 100 Authors Against Einstein, meant to criticize his theory of relativity. Einstein’s reaction is wonderful:

Why 100 authors? If I were wrong, one of them would be enough!

One conditions to not get angry or depressed by the myriad vapid, unsubstantiated and ad hominem-type remarks in nearly every book you pick up. This is especially the case in my two areas of “expertise” – environmental economics and the economics of higher education. Here is an example from the latest, The Big Ratchet, by Ruth DeFries:

Aberrant weather may have precipitated the hatchets that fell in northern Europe’s fourteenth-century famine and England’s late eighteenth-century food riots, but weather was not the only force at play. Markets and politics combined to escalate the crises. Due to markets and politics there was not enough surplus for these populations to make it through the lean times, and often no way for the hungry to get the food that was stored. (wintercow emphasis added)

And of course, what follows is page after page of thoughtful analysis and illustration of that point. From what I know of markets, admittedly very little, there was no such thing as a market economy in the 14th century. Europe was mired in feudalism, and any excess grains grown on the feud merely enabled the children of the nobles to draw some pictures and mold some clay. As far as the foot riots in Britain, they indeed were spurred on by horrible weather, but also there was this tiny matter of a War with France and an inability to import grain from other parts of the world. Note that this does not in itself exonerate markets, especially in England when rapid industrialization and the enclosure movement made it very difficult for the new urban poor to sustain themselves particularly when hard times struck, but at least it is the beginning of an explanation. But in today’s world we can just say stuff like, “markets and politics” did stuff, and we all shake our heads in affirmation.

If someone had told two years ago that one party was going to run a ticket with two ex-governors who were regarded as competent and scandal-free while another party was going to run Trump, which would you have guessed would be the mainstream party and which would you have guessed would be the wacko third party?

Between now and November, could the mainstream media take notice of this? How would it affect the race if the media started to take the — ticket seriously?

I took out one word from the original quote, to drive the point home a bit more. Of course Arnold is hallucinating. “The media” will not take it seriously, and most people get their jollies off by saying they are a Team Reebok member or Team Nike member. So it will be a long, cold day in hell when something changes.

Can This Be True?

In revisiting my class discussions on the economics of public goods, I came across a paper from the OECD that incredibly I had never been aware of. One of the major results in the paper is shocking.

RDGrowth

Now the sample size, as with all cross-country analyses, is small, and there are the usual caveats about causality, interpretation, and so forth. But that this table is showing you is something rather remarkable. If you look at R&D expenditures as a share of GDP and correlate how important they are for economic growth, you find, perhaps not surprisingly, a strong impact of R&D on economic growth. Phew, good thing!

However, when you look at regressions that separate out WHO does the Research and Development, and then examine the influences on economic growth, you find the following. It is exclusively the R&D that is performed by private businesses that drives economic growth. In fact, R&D funded and provided by the government has a negative impact on growth. Now, I am sure there are all kinds of explanation for why the public result is negative (e.g. they focus on loss-leading basic research that doesn’t produce immediate returns, thought that is an unproved conjecture), but can you imagine if the results were reversed? It would be front page news. We’d be inundated with “Vox-splainers” telling us why this is not a surprise. We’d be told that, EVERYTHING you were taught about private R&D is wrong. You’d be told that this evidence is yet more ammunition for the need of a systematic overhaul of our short-term focused hypercapitalistic consumption driven society.

Please, do, tell me if you think I am wrong.

Why the heck had I not seen this paper? Why is this paper not common knowledge? Where are the follow-up studies of this paper? I mean, if it had been thoroughly debunked, wouldn’t we see lots and lots of the clerisy proudly pronouncing that too?

Once can only imagine how these results would change when we look at the last 10 years of data, with so much of our public R&D being funneled toward climate change studies. In the meantime, this paper’s result suggests that science itself does not require public funding, that it may suffer from it. A look at the history of the Age of Wonder may be informative here. The Royal Society, once much more highly esteemed, was an aristocratic endeavor, and its work and focus took a sharp turn when it became professionalized in the mid-19th century. I really highly recommend this book.

Sachs on Sanders

Not a shocker that Jeff Sachs has come out to endorse Bernie Sanders. However, I am trying to make sense of the following:

On health care, Sanders’s proposal for a single-payer system has been roundly attacked as too expensive. His campaign (for which I briefly served as a foreign policy adviser) is told that his plan will raise taxes and burst the budget. But this attack misses the whole point of his health proposals. While health spending by the government would go up in the Sanders health plan, private insurance payments would disappear, generating huge net savings for the American people.

If I am at all thinking about this correctly, either Sachs/Sanders are adherents of “trickle down economics” or they are advocating enormous cuts in the well-being of medical professionals throughout the country. How so?

(1) Sachs as trickle-downer: if today we spent 18% of our income on health care, and, say, the new Medicare for all would end up having us spend 10% of our income on it, if you take the AD models seriously then you would be horrified that these reduced expenditures would crush American economic growth. No one of course thinks this when it comes to health care spending, which seems to indicate to me that they are simply cherry-picking AD arguments when it suits their political preferences. With that said, if you think that nationalized health care would not hurt doctor and nurse salaries, yet there would be tremendously lower spending by every American on health care, I can only imagine that the Sanders-crowd thinks that all of this extra money in the pockets of me and you would end up being spent elsewhere, and that this spending would therefore benefit everyone else, raise wages elsewhere and so on. Isn’t this the “discredited trickle-down economics” that everyone talks about so much?

(2) Sachs as enemy of doctors: if in fact we are going to be spending half-as-much on health care in the future as today, then doctor and nurse pay are going to have to fall precipitously, no? Just think of how many more college graduates are going to end up taking a shot at Wall Street instead of medical school? Already a shockingly high number of my own graduates pursue careers on Wall Street, and almost all of them openly admit that they are only doing it for the money – none of them wakes up in the morning going, “I can’t wait to more efficiently allocate capital throughout the economy today!” More of them will, when opportunities to make large dollars in medicine are diminished.

These two points are not mutually exclusive of course.

Read the whole piece from Sachs, it is horrifying, and in my view immoral. Yet most readers would applaud it, and give it the moral high ground it most surely does not deserve. It is no better argued and thought out than what you can expect from students in a freshmen writing class. It seems our economists have long since left the world of science and are nothing more than advocates. It makes it very hard for the general public to take seriously any ideas we may have when this is the stuff they are inundated with.

 

 

From an old NY Review of Books review by Freeman Dyson (What Price Glory?):

… several historic battles in which foot soldiers defeated cavalry. In spite of these repeated calamities, the knight on his horse remained the emblem of military virtue throughout the long centuries of the Middle Ages. Kings and emperors spent their fortunes and gave land to their feudal depends to pay for knights and horses. In times of peace, the knights and horses exercised their military skills by competing with one another in splendid tournaments. The display of fine armor and equestrian skill became an end in itself, pursued by knights and armorers without much regard for military effectiveness. Making a grand spectacle in tournaments was more important than winning battles against peasants armed with bows and arrows. According to the customs of the Middle Ages, a knight who survived a defeat by peasants could usually return home without dishonor, after paying a ransom appropriate to his rank in the feudal hierarchy. The ransom might ruin his feudal estate but would not ruin his military career.

By the way, in other (totally unrelated readings of course) reading this week we learn that a great deal of gratitude should be paid by American revolutionaries to disease carrying parasites – which are very likely to have made a serious contribution to the British defeat by Yorktown. Of note as well, slavery was eliminated in England in the 1830s, and not until the 1860s in the States. Just sayin’

 

This morning, two different people sent me these two links:

  1. What the hell is going on?
  2. What the hell is going on?

To answer Tyler’s question at the end of (1), I think we are going to find out.

  1. Just because something is popular … you know, over 58% of my students favor eliminating studying as a requirement to do well in college; over 58% of the children in my kids’ school think Reeses Pieces are an essential part of a quality diet; over 58% of Catholics want the rest of the world to be Catholic; over 58% of Americans believe that food with DNA in it should be labeled …
  2. Cleaning up a Superfund site (i.e. a federally designated toxic waste site) improves educational outcomes. Given that the research on Superfund demonstrates that toxicity of sites does not dictate which sites get cleaned, and the little to no health benefits of the cleanups, this is a bit surprising (well, science should be surprising). I think their causality checks are decent, after all they only look at families that had kids before and after site cleanup, so the selection effect of residential sorting would not seem to be at play. My sense is that this would not replicate. In addition, to really make a policy claim here, we’d want to know what the total costs of Superfund cleanup are per unit of educational improvement. Note that the researchers are testing whether site cleanup is correlated with the probability of students repeating a grade and whether they are suspended from school. First, we’d want to see whether anything else would be driving those changes based on location, and second, I would love to see the impact of location on ALL of the possible educational outcomes. You would think that statistically you would find “significance” in some outcomes. How many showed significance?
  3. How have efforts to recruit and support low-income, high-achieving students worked in Texas?
  4. In another paper by Cornell scholars, did the expansion of Medicaid under the PPACA improve patients’ receipt of preventive care? What about helping patients adopt healthier lifestyles?
  5. Does environmental regulation reduce employment? These authors find the answer, perhaps surprising to many, of “no.” I can go in two directions here. First, I can feel sympathy for the authors wasting their time on a study like this in response to misguided public rhetoric about jobs and green policy. Or, I can move further into the land of being uncharitable and suggest that if one of my intro students sent me a paper like this they would not pass the class. Whether regulation creates, destroys, or does nothing to jobs is a complete head-fake. That is not what is at issue. Any decent economics student understands two things. First, jobs are a cost. Second, whether a policy is a good idea or not is crucially dependent on the net benefits of the program. Would you call innovations in tractor technology a bad thing because the net impact on employment in the “affected” sector as compared to the “other” sector has been negative? In other words, I do not think the rise in manufacturing jobs offset the loss of farm jobs over the 20th century. In fact, any economic change is going to change the composition of jobs. When we learn how trade seems to work, even if you have a dire view of foreign trade, we understand that trade changes the composition of jobs, at a first pass it will not change the number. So pointing to the fact that the number of jobs is not changed when we impose environmental regulations tells us nothing about whether those regulations are sensible or cost-effective. When the US imposes a tariff on Chinese tires, and Chine responds by imposing a tariff on American nylon manufacturers, what we see is more tire jobs in the US and less nylon jobs, and more nylon jobs in China and fewer tire jobs – so unemployment, by “looking at the big picture” would seem to be unchanged. But of course, what you should recognize is that both the US and China are made worse off by the tariffs.
  6. Interesting – housing field experiments demonstrating discrimination seem to replicate even if the face of selection error corrections. Field experiments on labor markets demonstrating discrimination are not as robust to reexamination. Note, that if you want to play tribal politics here, you would not have guessed who one of the authors was. I am sure that when he is talking about and researching about the minimum wage people will understand this. Not.
  7. They see it as “ineffective price regulation” and I see it as not allowing enough competition. After all, is there any reason to believe that well-drilling has huge natural monopoly characteristics? Is it not the case that there is not free and open entry into fracking?
  8. Both homo-economicus and homo-ethicus? Why do children take care of their elderly parents?
  9. How long until someone writes that communities should therefore want to get hit by natural disasters?

You want to get depressed?

(1) See how the “Food Babe” is abusing the FOIA to smear, antagonize and intimidate Dr. Kevin Folta of the University of Florida’s Horticulture Department.

(2) See the latest in the Krugman Chronicles. 

Classy world we live in. Did anyone ever learn manners?

Quote of the Week

Arnold Kling has it, and yes, I am close to just tuning out the rest of the world and decaying quietly into my old age …

Everything written by, for, or against Krugman over the past 15 years is a waste of time. That includes this post as well as Adler’s. It includes various attempts by Henderson, Cowen, and Sumner to engage with Krugman. They try to treat him as if he had some sense of decency. Instead, he is Joe McCarthy with a Nobel Prize.

And this in a blog with the subtitle, “Taking the MOST charitable view of those who disagree” …

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