Morning Ed: Economics {2017.05.03.W}

John Cochrane argues that economists need to express more humility. (This is true of a lot of people, almost in inverse relationship to how much humility they are actually showing at the moment.)

A look at poverty in the world.

Syed Kamall argues that the best way to help the poor is to lend them money.

Never mind happiness, James Pethokoukis wants economic growth.

Madsen Pirie raises the banner of neoliberalism, while George Monbiot says that it’s creating a loneliness that is wrenching society apart.

Ryan Khurana wonders why the UK is so hostile to innovation.

Buying 100% French appears to be really difficult.

For Sale: Communism for Kids. (I dunno, seems like a pretty dark story for children…)


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Will Truman is a former professional gearhead who is presently a stay-at-home father in the Mountain East. He has moved around frequently, having lived in six places since 2003, ranging from rural outposts to major metropolitan areas. He also writes fiction, when he finds the time. ...more →

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98 thoughts on “Morning Ed: Economics {2017.05.03.W}

  1. Neoliberalism might be creating the loneliness that is driving society apart but hell is other people. Loneliness does seem in the uptake and it is crushing many humans because we are very social animals. Most people also don’t have the mental equipment to handle loneliness to. Yet, people bounded together in the past just as much for survival as for the fact we are social beings. One reason why people married relatively quickly was because to be single was guaranteed poverty for most, especially if you had young kids via dead spouse. People had to endure some very bad situations like domestic violence or simply being hitched to a person that drove you bonkers because of the economic need for social union.

    In our wealthier world, more people can live alone and not have to endure these horrible situations. Social Democratic Sweden as the highest percentage of people living alone in the world. This is seen by the proponents of social democracy as a good thing because it makes social bonds voluntary. The problem is that humans are rigged to be social and loneliness crushes you.

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    • The “loneliness” article is a trainwreck though. For example:

      Is it any wonder, in these lonely inner worlds, in which touching has been replaced by retouching, that young women are drowning in mental distress? A recent survey in England suggests that one in four women between 16 and 24 have harmed themselves, and one in eight now suffer from post-traumatic stress disorder. Anxiety, depression, phobias or obsessive compulsive disorder affect 26% of women in this age group. This is what a public health crisis looks like.

      Perhaps, but this is what “throwing a pile a shit at the wall and hoping some sticks” looks like. To make his case, he would need to draw some kind of causal link between “selfies” and “retouches” and “lonely inner worlds.” Speaking for myself, I grew up with much anxiety, and I’m fairly certain I experienced undiagnosed CPTSD. But I wouldn’t have been visible in these kinds of statistics, because no one ever asked.

      It seems plausible that loneliness is a problem. It seems plausible that our society is more disjoint. Fine. But if the author wants to make that point, he should make it, instead of confusing it with a confusing litany of “all that ails us,” with no evidence connecting these supposed social ills.

      After all, selfie apps are fun. I share selfies with my friends. They share theirs with me. We enjoy each other. This author, on the other hand, seems like a disagreeable scold.

      Maybe he needs to get out more. Friends might help.

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      • It also seems plausible that a lot of these problems that seem to be “increasing” may just be more-diagnosed now (they are beginning to say that about autism) or people are more willing to cop to “Yeah, I’m lonely and feel like crap” than they were sixty years ago.

        I dunno. I’m a single person and most of the time I’m pretty content. I’m busy; I have friends at work and at church and elsewhere. My bigger complaint is not having enough time to do the stuff I want to do….

        I feel lonely sometimes but doesn’t everyone? I mean, isn’t that kind of one of the downsides of sentience? And I know people who are in the middle of big and loving families who complain of feeling lonely, so compulsorily coupling the single does not seem to be the solution there.

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      • Agreed, the loneliness article is pathetic. All these measures that we only started measuring in recent times are higher than when we didn’t measure them in the past. Blame neoliberalism!
        Speaking for this homo at least I am extremely confident that there’re a lot of us who’re a hell of a lot happier now than ever before.

        -But- in fairness at the end the author notes that this doesn’t require a policy change but rather a rethinking of everything people consider important.

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    • It’s also the case that the social sanctions against solitary life have been relaxed, if not eliminated entirely. It’s certainly the case that up until the mid-70s there was a great deal of pressure on women in their early 20s to Get Married Now and a great deal of loveless arrangements resulted from that, but it did give you someone to talk to in the evenings.

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  2. Good news everybody. Authorities have acted on the Daddyofive family and removed the kids from the home. The kids other biological parents have been given custody.

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    • You got to put it in the context of the % of foreign born population of the US (13%), the % of prison population that is federal vice state & local (10%) and the non-US citizen population of state & local incarcerations (4%)

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        • And you can cherry pick numbers to make things look worse than they are.

          The BOP site says there’s 189K total federal inmates. Which means 47K foreign born inmates – out of a population of 41 million people (who skew younger than the overall population, at that), so like a little over 1%

          The only people that think all the problems in the US are about the 1% are dirty commies. You’re not a dirty commie, are you?

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      • Context? What a novel idea.

        US population overall:
        324 million people
        87% local born X 324,000,000 = 281,880,000
        13% foreign born X 324,000,000 = 42,120,000

        US prison population:
        2.3 million people
        10% federal inmates X (75% local born + 25% foreign born)
        + 90% state & local inmates X (96% local born + 4% foreign born)

        =
        7.5% + 86.4% local born
        + 2.5% + 3.6% foreign born

        =
        93.9% local born X 2,300,000 = 2,159,700
        5.1% foreign born X 2,300,000 = 117,300

        Foreign born incarceration rate
        117,300 / 42,120,000 = 0.278%

        Local born incarceration rate
        2,159,700 / 281,880,000 = 0.766%

        So, the incarceration rate among the US-born is 2.75 times that among the foreign-born?

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          • Of course they mean nothing – they support a conclusion other than the one you’ve already drawn.

            I mean, you could do further research, check my numbers (I grabbed those from what Kolohe quoted plus a real quick google search – they could be off, or I could be misinterpreting them. I wasn’t going to spend all morning on this.)

            Or you could just roll with what you already “know”.

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            • The only reason I didn’t go further with the state numbers like you did was that the state numbers were listed as ‘not US Citizen’ vice ‘foreign born’ (4%, so I think we looked at the same links). All ‘not US citizens’ are foreign born, but not all foreign born are ‘not US citizen’ (i.e. naturalization)

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              • And the reason notme’s source didn’t go further with state numbers is that the selecting only federal numbers skews the result to make a compelling point, even if they don’t actually reflect useful reality.

                As always, beware of data sets with arbitrary-looking categories our boundaries. I still say we need some sort of basic numeracy and skepticism training in our primary schools.

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              • Oh, I just went with your figures for inmate citizenship and federal vs. non-federal place of incarceration – but missed the citizenship vs. place of birth distinction. I looked up total prison population and gen-pop.

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          • If you still think your stat means something useful, I have to ask: Why are you more concerned with federal crimes specifically than with federal + state crime overall? Is there something particularly bad about federal crimes?

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        • Clearly the conclusion to draw from those numbers is that foreigners are committing tons of crimes and they’re better at not getting caught than the natives. This is indeed an emergency.

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  3. Neoliberalism and society: “girls and young women routinely alter the photos they post to make themselves look smoother and slimmer. Some phones, using their “beauty” settings, do it for you without asking; now you can become your own thinspiration.” Yeah, ’cause of capitalism and our consumerist societies. Sure. Nothing to do with evolutionary biology. Please….

    I guess I’m an outlier. I don’t care about the pack, as long as the pack isn’t coming to my house with pitchforks and torches. I can go weeks without social interaction, excluding work. I’m fine on my own. This article seems to be conflating crapping economic stagnation with all the problems in society. Those problems existed before……

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      • Maybe not “dumb,” maybe “irrationally hopeful”?

        Just like the eons of women who married a guy saying “I’ll change him” when the reality is he won’t change unless he darn well wants to (or has an exceptionally good reason to, which is sometimes the same thing)

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        • filly,
          Men are making judgments about reproductive fitness based on paint.
          The dumber the guy, the more likely he is to be attracted to girls merely and simply because of how they look (and not what they actually look like).

          It’s alpha male behavior, the type that gets trophy wives and cheats with a mistress. “I get the prettiest.”

          Women developing makeup has done a lot to make alpha males a lot dumber than they were previously (This is not to say that all women that wear makeup are dumb, certainly).

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  4. The economic growth over happiness essay is sort of my problem with economics in a nutshell. What’s the point of growth if people are emotionally drained and miserable?

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        • Exactly, it’s the emotional equivalent of FDR’s observation that a necesitous person is not a free person. Like I noted above, people endured some very abusive or bad marriages in the past because of the need for survival.

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          • Define ‘struggle’. There’s? a difference between spending everyday working to find food & water & making/maintaining protection from the elements, and what we do in the deveoped world.

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            • Well that’s a good point. But really in the spectrum of struggle it distills to what is a tangible gain, coupled with what is work, and in the modern or undeveloped world are the terms so different?

              My other point that if needs of life are provided and not pursued, what kind of world are you developing?

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              • I was making a specific claim about the utility of “money” with regard to the utility of pursuing happiness.

                Personally I think there is a psychological/emotional value in working towards meeting basic survival needs, but the ideal amount of work that provides that value is not only highly variable amongst a population, it is also highly variable with time & societal development (& probably a half dozen other variables, like education, family, etc).

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                • This is true, but it appeared to me in the claim there was no regard to associate effort/struggle/work into the utility. I suppose it could be considered without that parameter.

                  In that, I may have jumped to a waypoint too far ahead to be obvious, but in this relation between the utility of money, or the provisioning it can buy, is it ok to seperate the parameters of struggle from happiness?

                  If we used automation/robotics to mandatory provision for every human need/want/desire, would humans be happy? Would the human species even survive the experience? According to some ideologies that would be a perfect freedom.

                  I would say the even minor achievements that folks make in there pursuit of gain have a lot to do with happiness. Whether it’s the folks gathering sticks to build a hut or some future space pirate that fixes a hole in his house that occurred from some unfortunate accident.

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                  • I guess also to be consistent to what I mentioned in the past, I think happiness has much to do with the subjective value of the individual means of production one is engaged in, and what is available.

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                    • I think that even if automation could satisfy Maslow, people would find labors to satisfy that emotional need (even if it is something as simple as preparing meals). The question is do we require that some percentage of those labors benefit the community, or can they all be solely for the self with no regard for society at large.

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                      • I am very much with you there, and have a very parallel question.
                        Is happiness a individual construct?

                        I haven’t reached very concrete conclusions. I think for some happiness can be solely a individual construct. Others it may be a individual construct but require engagement and interaction with society to fully realize it. For some I suppose it could manifest solely as a social construct.

                        That last one I have no understanding of, yet I would wager that those people exist. That their happiness would only exist when they are around other people.

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                  • I wonder how well this generalizes. One of life’s necessities is oxygen. Am I being deprived of the opportunity for true happiness since I can just stand here and breathe without having to pay someone for the privilege? Are asthmatics inherently happier than the rest of us when they struggle to draw breath?

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    • That article included about thirty arguments, some good, some bad. The strongest one is that happiness indices only measure how people rate their happiness on a scale, not their actual happiness. He also makes the valid point that we’ve seen declines in absolute poverty at the same time we’ve seen growth at the upper end.

      But he just keeps dumping points into the article without thinking them through. So he never addresses the possibility that increased economic growth over a certain threshold doesn’t increase happiness for those earners.

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    • The point is that nobody really understands how reliable this happiness survey data is, or what it actually means. It’s self-reported data, asked of people in countries with different cultures and different languages. Do cultural expectations of what you’re expected to feel or say affect how people answer questions? Do subtle connotational differences in the different translations of the questions affect how people answer them? Why is it that the countries with the highest self-reported happiness also have high suicide rates?

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  5. We (or at least I) haven’t heard much about microfinance since whatshisface won his Nobel Prize. And even back then, there were criticisms.

    I’m not sure that microfinance is all that feasible for developped world would-be entrepreneurs currently in poverty (and with limited social capital as well). The capital requirements to get most businesses off the ground to self sustaining are much much higher than they are in the developing world – it’s practically the definition of the difference between the developed world and developing.

    Though of course, there’s plenty of entrepreneurship in immigrant communities in the US. But a big factor in that is social capital (and powering through a generation that won’t see much in return, but their kids will)

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      • Well, like I said, I think it goes to the very features that make an economy ‘developed’. When you have an economic system with high productivity and high efficiency, it takes either an enormous amount of capital to compete with existing businesses in an established market (notionally at some meta stable equilibrium) or it takes something really ‘disruptive’ in tech or business model or both to create a new market (and/or one with a new meta stable equilibrium)

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          • A while ago I thought it would be interesting if somebody had a “cute puppies visit your office” type of business, but then I realized that after years of competition and consolidation, the end result would probably be a couple of big, vertically integrated companies that churn out puppies in puppy mills and then grind them up to sell as fertilizer as soon as they’re too grown up to serve the cuteness rental function.

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  6. Re: happiness

    Now that I have a bit more coffee in me. I agree with what everyone wrote above and that economic growth does produce the ability for people to get food and water, shelter, clothing, etc and it is impossible to be happy without those things.

    Still I am enough of a lefty to believe that corporations can do use the threats of misery and starvation to keep people subservient. I wrote an essay for this for OT but my experience in doing employment law and intakes is a lot of people out there believe that they are overworked and underpaid (this doesn’t mean they have a valid claim for a wage & hour violation but that they believe their salary does not match the time spent at work).

    So I do think there is something (but perhaps the French go too far) to the idea of shutting down at a certain time and that working 60-80 hours a week is going to lead to less productivity in the long run. I’ve seen people make a lot of silly mistakes because they are under rested and have too many things on your plate at once.

    But as Americans we seem to think that long hours are naturally good and I think the essay “economic growth over happiness” is part of the problem. There was a “Do you want to be in the workhouse?” Victorian sneer to the essay. Plus I consider paid punditry to be a lightweight job of often hectoring morality.

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    • Oh, ye of little imagination.
      I mind not the corporation that scoops up the most desperate to work for it.
      I mind the corporation that actively destroys in order to create people desperate enough to work for it.

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    • I take heart that companies are starting to see the value in not overworking their employees and that younger companies are experimenting with different work cultures to find a better work-life balance.

      Now that I work for the big German S-Corp, I am enjoying a more European set of attitudes regarding time off (Oh, you are taking two weeks to go to Maui, awesome! Here’s what we need before you leave, & no, we don’t expect you to be available during the trip.)

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  7. The pure political cynicism being expressed by the House GOP is absolutely astounding. Leadership is trying to push thru a bill which had 17% popular support and was projected to kick 24 million Americans off their coverage plans by making it worse via the inclusion of a provision allowing states to eliminate community rating for folks with pre-existing conditions. The new bill hasn’t been scored by the CBO and in fact hasn’t even been written. All premised on the desire to show they know how to govern back-stopped by the full expectation the Senate will gut it. Unbelievable.

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    • This bill is highly imperfect, imperfect, okay? There’s no doubt about that,” Rep. Mario Diaz-Balart said after supporting the legislation.

      The Florida Republican — who represents a competitive district — waited until the last 24 hours to come on board. He cited conversations with senators who vowed to address his concerns about how to handle the tens of thousands of his constituents who are signed up for the ACA insurance exchanges.

      “Is this bill good? No, I don’t like it,” Diaz-Balart said. But he suggested that voting for the bill would allow him to be part of future negotiations: “So my decision was, how do I stay involved?”

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  8. @joe-sal

    I agree that there is value to work and that there is a lot of subjectivity in what is and what is not happiness.

    Yet I think that there are parts of American society that make it hard to get along if one’s definitions of happiness involves less work while still living decently.

    We’ve discussed it before. The bankers in the article DragonFrog linked to are paid well and that might be what they want but I also think they are probably overstressed and under slept and take it out on others.

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    • Imagine how much more we could achieve politically? if people could just focus on realizing their own happiness instead of feeling compelled to concern themselves with how others find happiness (with the obvious do no harm caveat).

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    • American society is not an island anymore. I know working less and still living decently is a desire, and we had a pretty good run during the cottage industry era, but trade went much more global. Our markets are no longer isolated locally.

      To compete in the global labor market means competing with various global wage rates. To compete with automation requires something entirely different than participation in the global-automated production market. To survive people will have to reinvent direct trade. They will have to find a way to revive base capitalism.

      I know you and Lee have a strong desire to see a type of democratic socialism. Even in that model if you socialized all the corporations and firms overnight, you would still have the same problem inherent in the modern corporate-state capitalism. A terrible rate of capital formation at the base level, and a huge number of barriers to individual means of production.

      You could pick the meat off the bones for awhile, but eventually you have to kickstart base capital formation again. Things aren’t really going to recover for commoners or even the slightly better of than the rabble, until that happens.

      It’s hard to tell what is going on with those bankers. There may be some preference for them to stay, even at risk to there life. They may be at a particular point in time where they had a ‘opened the treasure chest and are scooping gold coins into their accounts’ scenario going on.

      Without knowing more, it is hard to parse if they are workaholics or opportunists in a slice of time.

      Just know you are not alone. Much of the country is feeling the squeeze. Managers taking it out on others is nothing new, I have been around all kinds of settings, industrial, commercial and civil, there tends to be one of those managers everywhere. It is almost a blessing when you find a place that doesn’t have one.

      What is supposed to be a virtue of free markets, is that spontaneous order and attraction is supposed to reward the good manager and inflict demand destruction on the jerk manager. Rigid unfree markets don’t often work that way, and the timescales to displace one of those characters can be decades.

      Also keep in mind just because someone works a lot doesn’t mean they are within the context of what you may think is workaholicism. You appear to be a man of the arts. I know in design things new and artful, inspiration can hit you at anytime, and you have to let the ideas and art run its course. If that takes twenty hours, it takes twenty hours. It can be far from a beast of burden condition.

      When my 3D printer arrived, I spent about four weeks in a design art storm. Barely resting and 3D modeling to an extreme. It was a thrilling experience, but I had to slow down or risk burning out.

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