Krugman: "But it is, I think, a useful corrective to the rigorous-sounding but actually silly notion that you can’t produce more without using more energy."
Of course you can produce more while using less energy. That is what has been happening throughout history. That is the wrong question, though. The problem has to do with maintaining employment while reducing the absolute amount of energy used. Producing more with less energy doesn't solve that problem.
UPDATE: Krugman proved Mark Buchanan right: economists ARE blind to the limits of growth!
Tuesday, October 7, 2014
Monday, October 6, 2014
Problem: Kidneys Don’t Clear
The quote of the day comes from Nicholas Colas of the broker-dealer firm ConvergEx Group on the use of Google autofill to uncover economic trends: “....can the U.S. economy be doing all that well if (I want to sell a) ‘Kidney’ is a common autofill?”
The real problem, as any certified economist will tell you, is that, while “kidney” trends well on the sell side, it doesn’t show up if you type “I want to buy”. A shame, all those useful kidneys just sitting there, like a glut in the gut.
The real problem, as any certified economist will tell you, is that, while “kidney” trends well on the sell side, it doesn’t show up if you type “I want to buy”. A shame, all those useful kidneys just sitting there, like a glut in the gut.
Sunday, October 5, 2014
The Collapse of the Russian Ruble
There has been little attention to this in the western media, but the Russian ruble has suffered a major decline in the last few months. Earlier this year it was running around 25-30 to the US dollar. Now the official rate is at 40 and falling, with the rate at 50 to 1 at windows in Moscow. There is major capital and human flight going on that is attracting increasing comment in Russian sources.
Two pro-Putin economists have subtly noted problems. In English in Russia Behind the Headlines this past week, Alexander Shokhin, Director of the Union of Industrialists, has argued that the fall of the ruble will have some positive effects, particularly in the agro-industrial sector. However, he also warns that it will be damaging in the high technology sector, along with the sanctions, most notably in the nanotechnology sector, which was getting off the ground and has now come to a complete halt.
In Russian, and perhaps more importantly, Herman (German) Gref, Chairman and President of Sberbank, the largest bank in Russia and its main holdover from the Soviet era, still partly state-owned and the descendant of the old postal savings bank of the USSR, has just made a widely distributed speech in which he calls for buckling down in the face of the loss of luxury imports, but also warns that the opportunities for import substitution are greatly exaggerated and will take a long time to work in any case. He also notes the outflow of both skilled people and capital. Gref reports that the Russian central bank leaders are making desperate efforts to prop up the ruble.
It is unclear the extent to which Putin is following all of this or cares. To some extent he has used the cutoff of fancy food imports to stimulate nationalism by invoking the WW II model, which apparently many like. But it may also be that part of the reason the truce in eastern Ukraine is still more or less holding, despite an ongoing battle for control over the Donetsk airport (currently controlled by the Ukrainians), may be that he is in fact aware of the economic impacts on Russia and really does not want things to get worse.
Barkley Rosser
Two pro-Putin economists have subtly noted problems. In English in Russia Behind the Headlines this past week, Alexander Shokhin, Director of the Union of Industrialists, has argued that the fall of the ruble will have some positive effects, particularly in the agro-industrial sector. However, he also warns that it will be damaging in the high technology sector, along with the sanctions, most notably in the nanotechnology sector, which was getting off the ground and has now come to a complete halt.
In Russian, and perhaps more importantly, Herman (German) Gref, Chairman and President of Sberbank, the largest bank in Russia and its main holdover from the Soviet era, still partly state-owned and the descendant of the old postal savings bank of the USSR, has just made a widely distributed speech in which he calls for buckling down in the face of the loss of luxury imports, but also warns that the opportunities for import substitution are greatly exaggerated and will take a long time to work in any case. He also notes the outflow of both skilled people and capital. Gref reports that the Russian central bank leaders are making desperate efforts to prop up the ruble.
It is unclear the extent to which Putin is following all of this or cares. To some extent he has used the cutoff of fancy food imports to stimulate nationalism by invoking the WW II model, which apparently many like. But it may also be that part of the reason the truce in eastern Ukraine is still more or less holding, despite an ongoing battle for control over the Donetsk airport (currently controlled by the Ukrainians), may be that he is in fact aware of the economic impacts on Russia and really does not want things to get worse.
Barkley Rosser
Salmon Roasted
I confess to being shocked by the exchange between Martin Wolf and Felix Salmon in this week’s New York Times Book Review. First Salmon had criticized Wolf for using the terms “net external liability position” and “real unit labor costs” instead of “national debt” and “wages”. Wolf pointed out that the first two terms and the second two mean different things and concludes, “[if] Salmon is unaware of such distinctions...., one must ask whether he was qualified to review the book.”
Salmon’s reply actually confirms that he doesn’t understand. And this is really basic stuff, that anyone writing for a national audience ought to know. How can Salmon explain this?
When was the last time we’ve seen such an embarrassing, high-visibility economics fail?
Salmon’s reply actually confirms that he doesn’t understand. And this is really basic stuff, that anyone writing for a national audience ought to know. How can Salmon explain this?
When was the last time we’ve seen such an embarrassing, high-visibility economics fail?
Exit, Voice and American Education
Once upon a time we had Paul Goodman, A. S. Neill and widespread disenchantment with public education. It was bureaucratic, conformist, top-down and smothered creativity. If you were countercultural it was hopelessly straight; if you were from a minority community it was neocolonial. We hated it.
But what to do about it? There were two fundamental options. One was to demand to open it up, make it more democratic with local control and lots of input and accountability. This was the way of voice. The other was to give parents the option of taking their children out of schools they didn’t like and shopping around for one they did. That was exit.
Both were tried. We had showdowns over community control and much more intense politics around school board elections. And we also had a revival of home schooling and the expansion of private schools, which now not only served the elite and religious families but also those fleeing from integration and changing neighborhood patterns.
But then exit won. Educational policy was largely reframed around the concept of parental choice. Students were viewed as primarily consumers of education services, and schools were to be subjected to market discipline. The benefits of education were measured in individual student outcomes, from test scores to post-graduation earnings. Schools and the teachers they employ should compete to produce the best outcomes, with the winners rewarded and the losers driven out of business. The market model reached down into the early grades and extended upward to colleges and universities, who were now required to finance themselves through tuition—fee for services.
Maybe there is a good account of this process that explains why it turned out this way. If there is I haven’t seen it. But an adequate explanation has to take account of the larger picture, the supremacy of neoliberalism in most spheres of social and economic policy and the international dimensions of this shift.
This meditation is prompted by a story this morning about the highly successful schools labeled as “failing” under No Child Left Behind. If this were simply about methods of classification I’m sure a solution could be found. That, however, would miss the point of NCLB, which was never simply about assigning labels.
As originally proposed, schools deemed to be “failing” were to be replaced by charters, or parents would have the option of withdrawing from public schools altogether and taking their per-student money with them, or both. In other words, it was a backdoor effort to privatize public education. But this was too brazen, so it was scaled back. Instead, “failing” schools would be penalized with less funding, with the expectation that they would fail that much more, precipitating a downward spiral that would result, sooner or later, in a less- or non-public replacement. Of course, with this objective, the rules for what constitutes “failure” were written to practically guarantee that, sooner or later, every public school would qualify. (Somehow charters and private schools were exempt from this defunding ploy. Surprise.)
The problem was that, as the law was written, the rate of public school “failure” was much greater than the rate at which privatized alternatives could be created. It was chaos. So under Obama NCLB has been scaled back. Public schools can buy more time. They can institute pay and personnel policies tied to test scores to simulate market outcomes rather than subjecting schools to actual, flesh-and-blood exit. States are rewarded for gradually turning their public schools into charters. It is much more civilized, but the frame remains a service provision model in which funding exits when service quality is assessed as insufficient. Since you can’t withdraw funding from the number of schools expected to be judged delinquent, you need a sector not subject to the rules—the privatized, market-driven sector. NCLB is still predicated, in the end, on a systematic shift from the first to the second.
The irony in all this is that countries that have the best education systems, like Finland, rely principally on voice, not exit. Teachers play a central role in creating curriculum and schools are deeply embedded in their communities. The emphasis is on intrinsic motivation rather than carrot-and-stick market incentives.
Which brings us back to the main question: why, in the face of all the rather obvious arguments to the contrary, did the marketizers win in the US? Why are they on the offensive worldwide, and why does public-anything—public schools, public broadcasting, public enterprise—fight a rearguard battle?
But what to do about it? There were two fundamental options. One was to demand to open it up, make it more democratic with local control and lots of input and accountability. This was the way of voice. The other was to give parents the option of taking their children out of schools they didn’t like and shopping around for one they did. That was exit.
Both were tried. We had showdowns over community control and much more intense politics around school board elections. And we also had a revival of home schooling and the expansion of private schools, which now not only served the elite and religious families but also those fleeing from integration and changing neighborhood patterns.
But then exit won. Educational policy was largely reframed around the concept of parental choice. Students were viewed as primarily consumers of education services, and schools were to be subjected to market discipline. The benefits of education were measured in individual student outcomes, from test scores to post-graduation earnings. Schools and the teachers they employ should compete to produce the best outcomes, with the winners rewarded and the losers driven out of business. The market model reached down into the early grades and extended upward to colleges and universities, who were now required to finance themselves through tuition—fee for services.
Maybe there is a good account of this process that explains why it turned out this way. If there is I haven’t seen it. But an adequate explanation has to take account of the larger picture, the supremacy of neoliberalism in most spheres of social and economic policy and the international dimensions of this shift.
This meditation is prompted by a story this morning about the highly successful schools labeled as “failing” under No Child Left Behind. If this were simply about methods of classification I’m sure a solution could be found. That, however, would miss the point of NCLB, which was never simply about assigning labels.
As originally proposed, schools deemed to be “failing” were to be replaced by charters, or parents would have the option of withdrawing from public schools altogether and taking their per-student money with them, or both. In other words, it was a backdoor effort to privatize public education. But this was too brazen, so it was scaled back. Instead, “failing” schools would be penalized with less funding, with the expectation that they would fail that much more, precipitating a downward spiral that would result, sooner or later, in a less- or non-public replacement. Of course, with this objective, the rules for what constitutes “failure” were written to practically guarantee that, sooner or later, every public school would qualify. (Somehow charters and private schools were exempt from this defunding ploy. Surprise.)
The problem was that, as the law was written, the rate of public school “failure” was much greater than the rate at which privatized alternatives could be created. It was chaos. So under Obama NCLB has been scaled back. Public schools can buy more time. They can institute pay and personnel policies tied to test scores to simulate market outcomes rather than subjecting schools to actual, flesh-and-blood exit. States are rewarded for gradually turning their public schools into charters. It is much more civilized, but the frame remains a service provision model in which funding exits when service quality is assessed as insufficient. Since you can’t withdraw funding from the number of schools expected to be judged delinquent, you need a sector not subject to the rules—the privatized, market-driven sector. NCLB is still predicated, in the end, on a systematic shift from the first to the second.
The irony in all this is that countries that have the best education systems, like Finland, rely principally on voice, not exit. Teachers play a central role in creating curriculum and schools are deeply embedded in their communities. The emphasis is on intrinsic motivation rather than carrot-and-stick market incentives.
Which brings us back to the main question: why, in the face of all the rather obvious arguments to the contrary, did the marketizers win in the US? Why are they on the offensive worldwide, and why does public-anything—public schools, public broadcasting, public enterprise—fight a rearguard battle?
Friday, October 3, 2014
Slowly, it dawned on The Economist that there was a catch...
From a special report, "Technology isn't Working," in The Economist:
The integration of large emerging markets into the global economy added a large pool of relatively low-skilled labour which many workers in rich countries had to compete with. That meant firms were able to keep workers’ pay low. And low pay has had a surprising knock-on effect: when labour is cheap and plentiful, there seems little point in investing in labour-saving (and productivity-enhancing) technologies. By creating a labour glut, new technologies have trapped rich economies in a cycle of self-limiting productivity growth.
Fear of the job-destroying effects of technology is as old as industrialisation. It is often branded as the lump-of-labour fallacy: the belief that there is only so much work to go round (the lump), so that if machines (or foreigners) do more of it, less is left for others. This is deemed a fallacy because as technology displaces workers from a particular occupation it enriches others, who spend their gains on goods and services that create new employment for the workers whose jobs have been automated away. A critical cog in the re-employment machine, though, is pay. To clear a glutted market, prices must fall, and that applies to labour as much as to wheat or cars.Meanwhile, at Counterpunch, Alan Nasser shows how to add two and two to get four, instead of "huh?":
There is an alternative, and the only one that is capable of addressing a situation in which profits and economic growth can no longer be achieved by investing in real production and hiring workers. An overripe, industrially saturated economy can be made into one that can deliver on capitalism’s false promises. All workers can be employed, but for far fewer hours, and a just living wage can be provided to all. This is the arrangement recommended by Marx and Keynes.
The Housing Crisis in San Francisco
And not only San Francisco, but that’s the city in the news this morning. There’s a ballot initiative to impose a 24% tax on developers who eject their tenants and flip properties within five years after acquiring them. Behind this lies an explosive rise in rental prices, making the city increasingly unaffordable for all but the top few percent.
First, let’s clear away the bs and apply a bit of elementary economics. On one side you have a flack for the local realtors association saying, according to the journalist’s paraphrase, “the steeper tax would simply be passed along in the sale price.” On another you have supporters of the mayor touting a program to build an extra 30,000 units over a six year period. Both would do well to learn about the price elasticity of demand, which is the key piece of information for such questions. Tax increases on sellers are passed along depending on how inelastic demand is; if it’s relatively elastic they have to swallow most it themselves, which means that house prices would fall due to less lucrative development options. If you can’t flip you won’t pay as much in the first place. Meanwhile, the effect of any increase in supply on prices depends entirely on the same elasticity. (I’m assuming for convenience that the rental-to-price ratio in housing remains constant.) And what percentage increase in the housing stock does 30,000 units represent?
Do I know what this elasticity looks like in San Francisco? No I don’t, but if I were a journalist for the most influential newspaper in the country I’d take the time to find out. Message number one: journalists reporting on economic issues need to learn some economics.
(The one thing I’m pretty sure of, by the way, is that there is no single price elasticity of demand for housing in SF or anywhere else. Properties are unique, not only physically but in terms of their location, and each has its own elasticity. But averages would be OK in this situation, since we’re interested in average affordability.)
To its credit, the article discusses the issue of neighborhood stability, which is critical to any investigation of housing policy. Social capital in its many senses is an externality in the housing market and, at least in principle, justifies intervention. Whether a particular intervention does more good than harm, of course, is something that a priori theorizing is unable to answer.
If we pull back, rental price explosion in the urban core is a function of three things, geography, growth and inequality. Geography: rent gradients are unavoidable, and geographic features like being situated on a peninsula, isthmus or island exacerbate them. Growth attracts in-migration and is one of the prices cities pay for success. The third, inequality, is the hidden beast behind housing unaffordability, and it was only obliquely touched on in the article. As a society we pay a steep price for the increasing disconnect between the fortunes of the top stratum and everyone else. One is that their demand for scarce goods drives up the cost for the rest of us. Housing is perhaps the most important example.
So what to do? I’d like to see some numbers on flippage in San Francisco. My prior would be that, compared to the three factors above, it’s a minor aspect. On balance it might slow the dissolution of social capital a bit. You could go after geography by filling in the bay and turning it into high-density housing; this would have a rather larger impact, but I wouldn’t recommend it. More investments in mass transit (BARTrification) would be a better way to change the geography of housing prices and would be beneficial in other respects. That ought to be at the top of the list.
Even so, extreme inequality remains corrosive of neighborhood stability and just about every other communal value. Even Hong Kong, where about half the housing is publicly owned and deeply subsidized, has been plunged into a housing crisis due to geography, growth, but especially the shift to development aimed at the super-rich. Cities can’t solve this problem on their own.
First, let’s clear away the bs and apply a bit of elementary economics. On one side you have a flack for the local realtors association saying, according to the journalist’s paraphrase, “the steeper tax would simply be passed along in the sale price.” On another you have supporters of the mayor touting a program to build an extra 30,000 units over a six year period. Both would do well to learn about the price elasticity of demand, which is the key piece of information for such questions. Tax increases on sellers are passed along depending on how inelastic demand is; if it’s relatively elastic they have to swallow most it themselves, which means that house prices would fall due to less lucrative development options. If you can’t flip you won’t pay as much in the first place. Meanwhile, the effect of any increase in supply on prices depends entirely on the same elasticity. (I’m assuming for convenience that the rental-to-price ratio in housing remains constant.) And what percentage increase in the housing stock does 30,000 units represent?
Do I know what this elasticity looks like in San Francisco? No I don’t, but if I were a journalist for the most influential newspaper in the country I’d take the time to find out. Message number one: journalists reporting on economic issues need to learn some economics.
(The one thing I’m pretty sure of, by the way, is that there is no single price elasticity of demand for housing in SF or anywhere else. Properties are unique, not only physically but in terms of their location, and each has its own elasticity. But averages would be OK in this situation, since we’re interested in average affordability.)
To its credit, the article discusses the issue of neighborhood stability, which is critical to any investigation of housing policy. Social capital in its many senses is an externality in the housing market and, at least in principle, justifies intervention. Whether a particular intervention does more good than harm, of course, is something that a priori theorizing is unable to answer.
If we pull back, rental price explosion in the urban core is a function of three things, geography, growth and inequality. Geography: rent gradients are unavoidable, and geographic features like being situated on a peninsula, isthmus or island exacerbate them. Growth attracts in-migration and is one of the prices cities pay for success. The third, inequality, is the hidden beast behind housing unaffordability, and it was only obliquely touched on in the article. As a society we pay a steep price for the increasing disconnect between the fortunes of the top stratum and everyone else. One is that their demand for scarce goods drives up the cost for the rest of us. Housing is perhaps the most important example.
So what to do? I’d like to see some numbers on flippage in San Francisco. My prior would be that, compared to the three factors above, it’s a minor aspect. On balance it might slow the dissolution of social capital a bit. You could go after geography by filling in the bay and turning it into high-density housing; this would have a rather larger impact, but I wouldn’t recommend it. More investments in mass transit (BARTrification) would be a better way to change the geography of housing prices and would be beneficial in other respects. That ought to be at the top of the list.
Even so, extreme inequality remains corrosive of neighborhood stability and just about every other communal value. Even Hong Kong, where about half the housing is publicly owned and deeply subsidized, has been plunged into a housing crisis due to geography, growth, but especially the shift to development aimed at the super-rich. Cities can’t solve this problem on their own.
Thursday, October 2, 2014
France, Germany and the Politics of “Reform”
A showdown appears to be shaping up between France and Germany. France’s new budget openly defies the “Stability and Growth” (sic) limits on fiscal deficits and debt as a percent of GDP, and German officials have been making public statements that the limits need to be adhered to. On the face of it, if Germany wants, France could be found in breach by Brussels and assessed significant fines. But this is about politics, not money: the threat is to the two-country alliance at the heart of the entire European project.
France is not the only violator, of course, only the largest and most essential. If Greece, Spain and other severely distressed economies transgress they can be written off as exceptions; if France ignores the rules the rules are over. Clearly a common currency cannot survive without macroeconomic coordination, so rules are needed, but Germany has thus far resisted any move to rewrite them.
Since the pivot to austerity, a compromise has governed EU politics: distressed economies are given more time to run deficits, but they are supposed to implement “reforms” that make their economies more competitive and permit them to grow their way out of the red. As politics, it works, sort of. It buys time and gives the creditor countries, mainly Germany, a sacrificial offering. As economics it is pure illusion.
I am not referring to the fact that these reforms are more talked about than adopted. Nor do I think that reforms of various sorts wouldn’t be beneficial. France, for instance, is greatly overcentralized; too many decisions are made in Paris, which is stultifying both politically and economically. My point is that the reforms deficit countries are supposed to adopt have almost nothing to do with why they run deficits or how they can escape them.
There are lots of ways to show this, but let’s take the simplest. Germany and France are both in economic stall, although Germany is in better shape, with minimal public deficits and much lower unemployment. So the solution is for France to reform its economy to be more like Germany, right?
Well, consider one such reform, opening up the professional labor market to competition. There’s a story on this in today’s New York Times. The French government has passed a law allowing pharmaceuticals to be sold in stores other than pharmacies. Of course, the pharmacists have gone on strike, and there’s a photo of a group of them demonstrating against the plan. This is exactly the sort of liberalization that the Germans are demanding, and the article cites Merkel as telling the French they need to make even “bolder changes” in how their economy operates.
But try to buy aspirin in Germany.
The German economy is one of the least liberal, most rule-bound on the planet. You need all sorts of approval to start a business. If a company wants to fire a worker it has to deal with the (mandatory) works council. Entry into professions is tightly controlled, and professional associations wield immense power. The majority of bank assets are held in public or cooperative banks, and credit is allocated on an openly political basis. Actually, I like a lot of this and think the social dimension of the German economy should be developed, not shrunk. But for now it is enough to see that the “failure” of Germany to “reform” has not prevented it from running big external surpluses, and that the economic map of Europe simply does not correspond to its various shades of liberalism.
The politics of “reform” is driven by symbolism and superstition, not economics. Since the politics are asymmetric, you don’t have to look hard to see the hypocrisy.
France is not the only violator, of course, only the largest and most essential. If Greece, Spain and other severely distressed economies transgress they can be written off as exceptions; if France ignores the rules the rules are over. Clearly a common currency cannot survive without macroeconomic coordination, so rules are needed, but Germany has thus far resisted any move to rewrite them.
Since the pivot to austerity, a compromise has governed EU politics: distressed economies are given more time to run deficits, but they are supposed to implement “reforms” that make their economies more competitive and permit them to grow their way out of the red. As politics, it works, sort of. It buys time and gives the creditor countries, mainly Germany, a sacrificial offering. As economics it is pure illusion.
I am not referring to the fact that these reforms are more talked about than adopted. Nor do I think that reforms of various sorts wouldn’t be beneficial. France, for instance, is greatly overcentralized; too many decisions are made in Paris, which is stultifying both politically and economically. My point is that the reforms deficit countries are supposed to adopt have almost nothing to do with why they run deficits or how they can escape them.
There are lots of ways to show this, but let’s take the simplest. Germany and France are both in economic stall, although Germany is in better shape, with minimal public deficits and much lower unemployment. So the solution is for France to reform its economy to be more like Germany, right?
Well, consider one such reform, opening up the professional labor market to competition. There’s a story on this in today’s New York Times. The French government has passed a law allowing pharmaceuticals to be sold in stores other than pharmacies. Of course, the pharmacists have gone on strike, and there’s a photo of a group of them demonstrating against the plan. This is exactly the sort of liberalization that the Germans are demanding, and the article cites Merkel as telling the French they need to make even “bolder changes” in how their economy operates.
But try to buy aspirin in Germany.
The German economy is one of the least liberal, most rule-bound on the planet. You need all sorts of approval to start a business. If a company wants to fire a worker it has to deal with the (mandatory) works council. Entry into professions is tightly controlled, and professional associations wield immense power. The majority of bank assets are held in public or cooperative banks, and credit is allocated on an openly political basis. Actually, I like a lot of this and think the social dimension of the German economy should be developed, not shrunk. But for now it is enough to see that the “failure” of Germany to “reform” has not prevented it from running big external surpluses, and that the economic map of Europe simply does not correspond to its various shades of liberalism.
The politics of “reform” is driven by symbolism and superstition, not economics. Since the politics are asymmetric, you don’t have to look hard to see the hypocrisy.
All I need to know about Iraq
Cullen Murphy's 2007 book entitled 'The New Rome - The fall of an empire and the fate of America' includes some challenging observations about the behaviour of Americans in the Iraqi Green Zone after the US-led invasion in 2003.
"Bureaucrats and civilian experts representing scores of government agencies, oblivious to culture or history, were brought in to create an embryonic version of American government for the Iraqis to adopt as their own. Americans were enlisted to help draft a new constitution. They drew up scores of new American-inspired laws to address even the least urgent matters, such as patents and copyrights and other kinds of intellectual property. They created shadow ministries of agriculture, education, electricity, human rights, oil, trade, youth and sports, and more. Monday night seminars were held to teach prominent Iraqis the basics of a free-market economy..."
One department, Murphy writes, sought to impose a 15% flat tax - "this in a nation where taxes had neither been levied nor paid."...
Cullen Murphy gives other examples of what is portrayed as a disrespectful subjugation of the Iraqi people. He warns about the phenomenon of 'blowback' that was likely to arise years hence from the American attempt to "create a preconceived template on an evolving reality".
I wonder whether the Iraqi people will want to maintain the pretense of participation in this western-imposed experiment. Or will America's empire fracture into autonomous regions and fall like that of the ancient Roman version - as "an imaginative experiment that got a little out of hand". [*]
* Walter Goffart quote.
"Bureaucrats and civilian experts representing scores of government agencies, oblivious to culture or history, were brought in to create an embryonic version of American government for the Iraqis to adopt as their own. Americans were enlisted to help draft a new constitution. They drew up scores of new American-inspired laws to address even the least urgent matters, such as patents and copyrights and other kinds of intellectual property. They created shadow ministries of agriculture, education, electricity, human rights, oil, trade, youth and sports, and more. Monday night seminars were held to teach prominent Iraqis the basics of a free-market economy..."
One department, Murphy writes, sought to impose a 15% flat tax - "this in a nation where taxes had neither been levied nor paid."...
Cullen Murphy gives other examples of what is portrayed as a disrespectful subjugation of the Iraqi people. He warns about the phenomenon of 'blowback' that was likely to arise years hence from the American attempt to "create a preconceived template on an evolving reality".
I wonder whether the Iraqi people will want to maintain the pretense of participation in this western-imposed experiment. Or will America's empire fracture into autonomous regions and fall like that of the ancient Roman version - as "an imaginative experiment that got a little out of hand". [*]
* Walter Goffart quote.
Is Daesh (aka "ISIS/ISIL/Islamic State") Salafist, Wahhabiist, Both, Something Else, And Does It Matter?
A conundrum before I disappear for awhile to have eye surgery.
So, "Daesh" is what most Arabs call this group that Anglophones seem to be having a silly argument over what to call, with most saying "ISIS" even as President Obama and some others insist on calling it "ISIL," with the "L" standing for "Levant," a politically incorrect term for the eastern Mediterranean from the French for "rising sun," although some political scientists have recently been trying to revive the term with one of them apparently getting the ear of the White House crowd. Anyway, I am for now going to go with what their fellow Arabs call them, "Daesh."
So, I have recently read several perfervid columns by various folks, coming on very strongly as if they if they know their asses from a hole in the ground, and full of vituperative ranting and raving about Daesh, with some of these charging them with being "Salafist" and some charging them with being "Wahhabist" while doing so, as if being either of these justifies the vituperation. Now, while I am going to ridicule these people for being ignorami, I am not going to defend Daesh at all. They are about as bad as any group we have seen in the Middle East, or anywhere else for that matter, for quite a long time. I shall also come down with that it may be that Daesh is either some combination of both of these categories, which have some overlap at least, or that they are simply some new awful thing that is beyond either of them. Anyway, I shall at least attempt briefly to lay out a bit about their respective histories and how they have come to overlap to some extent, leaving it to readers to figure out on their own just how accurate either term is for Daesh.
The older of the two terms is the one that has genearally been viewed until recently as an insulting term used by outsiders. That would be Wahhabist. The term has a very specific historical meaning and context. It refers to Mohammed ibn Wahhab, who in around 1740 met with a tribal sheikh under a palm tree in central Saudi Arabia near present day Riyadh named Mohammed ibn Saud. That is, the first guy was Mohammed Son of Wahhab and the second was Mohammed Son of Saud. They formed an alliance that remains to this day, between their two families, with the Wahhab family over time coming to be known as the al Sheikhs. Of the wives of the founder of modern Saudi Arabia, Abdulaziz, the one from the al Sheikhs provided him with by far the smartest and most revered of his 43 sons, the late King Faisal, who was assassinated in the 1970s by a crazed nephew. His sons are among the most powerful people in Saudi Arabia, with one of them, Saud al Faisal, serving as Foreign Minister since the late 1970s, making him the longest serving person in such a position in the world. It is he more than any other who has pulled together the group of Sunni nations backing the US "war on Daesh." In any case, the descendants of Mohammed ibn Saud would become the modern Saudi royal family, named for the father of this man who allied with Mohammed ibn Wahhab, from whom the name "Wahhabist" came.
So, Mohammed ibn Wahhab was an advocate of imposing the strictest of the four Sunni sharias (legal codes) upon the world, the Hanbali code, which only recognizes sayings from the Qur'an and a limited set of Hadith, or reported sayings of the Prophet Muhammed, as being the basis for laws, no use of precedents or judicial reasoning as allowed in the other three sharias: Hanafi, Melki, and Shafi, with the Hanafi generally viewed as the most "liberal" and the one dominant in the Ottoman Empire and its successor states. This very strict code is in place in Saudi Arabia and also in Qatar and is both very anti-Sufi, meaning against worshipping saints or grave sites, with the destruction of these something that Daesh has been known for, as well as being very anti-Shi'i, something else Daesh has been known for. However, even while the Saudis have spread Wahhabist philosophy through madrassas (schools) they have funded in many places, including in Pakistan and Afghanistan, where the Taliban were heavily influenced by their views, which are also very strict about what women can do (who are not allowed to drive in Saudi Arabia), the current Wahhabist Saudis are now opposing Daesh because Daesh opposes them and calls for their overthrow so that the Caliph, Abu Bakr al-Baghdadi, can rule the holy cities of Mecca and Medina.
BTW, while now some in central Saudi Arabia have begun to accept being called "Wahhabist," they have long preferred to be called "Muwahideen," which is usually translated as "Unitarian," although "strict monotheist" would probably be more accurate and avoid the amusing comparison with the highly liberal religious group that carries that name in English speaking nations.
Curiously, the Salafis originally were a somewhat liberal group, appearing in Egypt in the mid-19th century with a goal to reform Islam so that it could deal with the modern world. Its initial enemy was the decaying Ottoman Empire, which ruled Egypt at the time, and some of its early leaders included Jamal al-Din, Muhammed Abduh, who long taught at Cairo's al-Azhar University, and Rishda Rida, who founded a newspaper, al-Mana, which he edited until his death in 1935. In this early period it encouraged accepting much of modern science, such as evolution, and so on, and had much influence in Libya and Tunisia, as well as some other areas. It differed from Wahhabism in not accepting any particular Sunni sharia. However, it also used much rhetoric that encouraged going back to the earliest days of Islam for pure interpretations, and "Salaf" refers to the original generations of Muslims. It also had an anti-Sufi and anti-Shi'i bias, making it potentially an ally of the Wahhabis.
It was during the mid-20th century that Salafism in Egypt became more fundamentalist and less liberal, largely under the influence of Sayyid Qutub, also a leader of the Ikhwan, the Muslim Brotherhood, although today these are two distinct political currents, with Salafist parties in Egypt more radical and fundamentalist than the Ikhwan, who won an election after the overthrow of Mubarak, only to be later overthrown by the military, now in power again. Anyway, it was opposing the original military leader of modern Egypt, the pan-Arab nationalist socialist Nasser, that pushed Qutub and Egyptian Salafis towards a more fundamentalist position.
The link with Wahhabism came during this period when Nasser was in conflict with the Saudis during the 1960s. Many Salafis fled to Saudi Arabia, including Qutub's brother, where many became school teachers, the Saudis sorely lacking in educated people able to do this. This led to a Salafist influence in Saudi Arabia, as well as a counter influence from Saudi Wahhabism on those Salafis, which would get carried back to Egypt and in to other areas of the world. It is this that leads some to simply declare that the two are one and the same, despite their distinct historical roots and some remaining differences between them in different places.
I shall note that one view is that Wahhabism is now a branch of Salafism, the latter now the broader category, with at least a dozen different groups around the world identifying themselves as Salafi, with a majority of these officially pacifist. Needless to say, this latter does not apply to Daesh.
I would also note that beheadings occur in Saudi Arabia. However, these occur only as punishment for specific crimes, particularly murder, as laid out in the Hanbali sharia. Daesh seems to like to behead people just for propaganda purposes or whatever.
Anyway, that is all I have to say for now, folks.
Barkley Rosser
So, "Daesh" is what most Arabs call this group that Anglophones seem to be having a silly argument over what to call, with most saying "ISIS" even as President Obama and some others insist on calling it "ISIL," with the "L" standing for "Levant," a politically incorrect term for the eastern Mediterranean from the French for "rising sun," although some political scientists have recently been trying to revive the term with one of them apparently getting the ear of the White House crowd. Anyway, I am for now going to go with what their fellow Arabs call them, "Daesh."
So, I have recently read several perfervid columns by various folks, coming on very strongly as if they if they know their asses from a hole in the ground, and full of vituperative ranting and raving about Daesh, with some of these charging them with being "Salafist" and some charging them with being "Wahhabist" while doing so, as if being either of these justifies the vituperation. Now, while I am going to ridicule these people for being ignorami, I am not going to defend Daesh at all. They are about as bad as any group we have seen in the Middle East, or anywhere else for that matter, for quite a long time. I shall also come down with that it may be that Daesh is either some combination of both of these categories, which have some overlap at least, or that they are simply some new awful thing that is beyond either of them. Anyway, I shall at least attempt briefly to lay out a bit about their respective histories and how they have come to overlap to some extent, leaving it to readers to figure out on their own just how accurate either term is for Daesh.
The older of the two terms is the one that has genearally been viewed until recently as an insulting term used by outsiders. That would be Wahhabist. The term has a very specific historical meaning and context. It refers to Mohammed ibn Wahhab, who in around 1740 met with a tribal sheikh under a palm tree in central Saudi Arabia near present day Riyadh named Mohammed ibn Saud. That is, the first guy was Mohammed Son of Wahhab and the second was Mohammed Son of Saud. They formed an alliance that remains to this day, between their two families, with the Wahhab family over time coming to be known as the al Sheikhs. Of the wives of the founder of modern Saudi Arabia, Abdulaziz, the one from the al Sheikhs provided him with by far the smartest and most revered of his 43 sons, the late King Faisal, who was assassinated in the 1970s by a crazed nephew. His sons are among the most powerful people in Saudi Arabia, with one of them, Saud al Faisal, serving as Foreign Minister since the late 1970s, making him the longest serving person in such a position in the world. It is he more than any other who has pulled together the group of Sunni nations backing the US "war on Daesh." In any case, the descendants of Mohammed ibn Saud would become the modern Saudi royal family, named for the father of this man who allied with Mohammed ibn Wahhab, from whom the name "Wahhabist" came.
So, Mohammed ibn Wahhab was an advocate of imposing the strictest of the four Sunni sharias (legal codes) upon the world, the Hanbali code, which only recognizes sayings from the Qur'an and a limited set of Hadith, or reported sayings of the Prophet Muhammed, as being the basis for laws, no use of precedents or judicial reasoning as allowed in the other three sharias: Hanafi, Melki, and Shafi, with the Hanafi generally viewed as the most "liberal" and the one dominant in the Ottoman Empire and its successor states. This very strict code is in place in Saudi Arabia and also in Qatar and is both very anti-Sufi, meaning against worshipping saints or grave sites, with the destruction of these something that Daesh has been known for, as well as being very anti-Shi'i, something else Daesh has been known for. However, even while the Saudis have spread Wahhabist philosophy through madrassas (schools) they have funded in many places, including in Pakistan and Afghanistan, where the Taliban were heavily influenced by their views, which are also very strict about what women can do (who are not allowed to drive in Saudi Arabia), the current Wahhabist Saudis are now opposing Daesh because Daesh opposes them and calls for their overthrow so that the Caliph, Abu Bakr al-Baghdadi, can rule the holy cities of Mecca and Medina.
BTW, while now some in central Saudi Arabia have begun to accept being called "Wahhabist," they have long preferred to be called "Muwahideen," which is usually translated as "Unitarian," although "strict monotheist" would probably be more accurate and avoid the amusing comparison with the highly liberal religious group that carries that name in English speaking nations.
Curiously, the Salafis originally were a somewhat liberal group, appearing in Egypt in the mid-19th century with a goal to reform Islam so that it could deal with the modern world. Its initial enemy was the decaying Ottoman Empire, which ruled Egypt at the time, and some of its early leaders included Jamal al-Din, Muhammed Abduh, who long taught at Cairo's al-Azhar University, and Rishda Rida, who founded a newspaper, al-Mana, which he edited until his death in 1935. In this early period it encouraged accepting much of modern science, such as evolution, and so on, and had much influence in Libya and Tunisia, as well as some other areas. It differed from Wahhabism in not accepting any particular Sunni sharia. However, it also used much rhetoric that encouraged going back to the earliest days of Islam for pure interpretations, and "Salaf" refers to the original generations of Muslims. It also had an anti-Sufi and anti-Shi'i bias, making it potentially an ally of the Wahhabis.
It was during the mid-20th century that Salafism in Egypt became more fundamentalist and less liberal, largely under the influence of Sayyid Qutub, also a leader of the Ikhwan, the Muslim Brotherhood, although today these are two distinct political currents, with Salafist parties in Egypt more radical and fundamentalist than the Ikhwan, who won an election after the overthrow of Mubarak, only to be later overthrown by the military, now in power again. Anyway, it was opposing the original military leader of modern Egypt, the pan-Arab nationalist socialist Nasser, that pushed Qutub and Egyptian Salafis towards a more fundamentalist position.
The link with Wahhabism came during this period when Nasser was in conflict with the Saudis during the 1960s. Many Salafis fled to Saudi Arabia, including Qutub's brother, where many became school teachers, the Saudis sorely lacking in educated people able to do this. This led to a Salafist influence in Saudi Arabia, as well as a counter influence from Saudi Wahhabism on those Salafis, which would get carried back to Egypt and in to other areas of the world. It is this that leads some to simply declare that the two are one and the same, despite their distinct historical roots and some remaining differences between them in different places.
I shall note that one view is that Wahhabism is now a branch of Salafism, the latter now the broader category, with at least a dozen different groups around the world identifying themselves as Salafi, with a majority of these officially pacifist. Needless to say, this latter does not apply to Daesh.
I would also note that beheadings occur in Saudi Arabia. However, these occur only as punishment for specific crimes, particularly murder, as laid out in the Hanbali sharia. Daesh seems to like to behead people just for propaganda purposes or whatever.
Anyway, that is all I have to say for now, folks.
Barkley Rosser
Wednesday, October 1, 2014
Public Infrastructure Investment: IMF v. Mankiw
Abdul Abiad, David Furceri, and Petia Topalova report on a new analysis and sensibly state:
Many advanced economies are stuck in a low growth and high unemployment environment, and borrowing costs are low. Increased public infrastructure investment is one of the few remaining policy levers to support growth. In many emerging market and developing economies, infrastructure bottlenecks are putting a brake on how quickly these economies can grow.Greg Mankiw responds:
The IMF endorses the free-lunch view of infrastructure spending. That is, an IMF study suggests that the expansionary effects are sufficiently large that debt-financed infrastructure spending could reduce the debt-GDP ratio over time. Certainly this outcome is theoretically possible (just like self-financing tax cuts), but you can count me as skeptical about how often it will occur in practice (just like self-financing tax cuts). The human tendency for wishful thinking and the desire to avoid hard tradeoffs are so common that it is dangerous for a prominent institution like the IMF to encourage free-lunch thinking.Did Mankiw miss the memo? We are far below full employment and monetary policy alone has not restored full employment. Even if fiscal stimulus is not self financing, the IMF case is still solid. Funny how times change. Back in 2001 Mankiw was endorsing all sorts of budget busting fiscal stimulus on the grounds that we were below full employment. And back then we were not in a liquidity trap so using monetary policy alone was a more viable option.
Tuesday, September 30, 2014
On CORE
I’ve finished perusing the first ten units of introductory economics posted by CORE, an initiative funded by the Institute for New Economic Thinking, among others. A large team of well-regarded economists has collaborated to produce an online, open-access textbook, with other materials promised to come. You can view their handiwork here.
As you can imagine, being the author of a pair of introductory textbooks (here and here), I was eager to see what the CORE corps came up with. As it happens, their approach is quite different from mine. I think that’s a good thing: instructors should have a wide range of materials and approaches to choose from. More is better. (And I do hope there will be more.)
In this post I’d like to share my reactions to this new CORE-iculum. In the process I’ll indicate where their strategy differs from mine, but my main purpose is to describe and situate their text so you can consider whether it’s right for you.
The first thing to say is that, based on these first ten units, CORE has made a fundamental decision about how to respond to the call for new thinking in the teaching of economics: they have come to an understanding among themselves about what economics should look like, and they use their textbook to get it across. This has three consequences. (1) They include material not commonly found in introductory economics courses, for instance the Ricardo/Marx perspective on economic growth and the extended treatment of the evolutionary basis for prosocial behavior. (2) They exclude (at least up to this point) material commonly found in standard textbooks, like detailed treatment of elasticities or the role of transaction costs. (3) Their tone is generally authoritative: this is how it is. In this last respect, of course, they are similar to most other texts. (I have tried to deviate from this.)
Second, while the level of difficulty varies from one unit to another, much of their presentation is geared to students who will continue in economics. Here is an example: they make use of iso-profit curves in market analysis, rather than the usual reliance on marginal revenue and cost curves. Now of course these are all the same; the iso-profit curves are derived from MR and MC, so nothing substantive is at stake. The way I see it, becoming familiar with profit functions and their mapping on two-dimensional price and quantity space prepares students majoring in economics for the greater formalism that lies ahead. On the other hand, I doubt that most students reading this text will find iso-profit curves as intuitive as MR and MC, despite a paragraph or two in which the derivation of these curves is described. Similarly, much of the material in the first several units is presented at a level of formalism that goes beyond what is necessary for non-majors to get the point, but which will undoubtedly be useful for the next cohort of economics devotees. See, for instance, unit 5, which consists entirely of a long, detailed and precisely constructed two-person bargaining problem to illustrate Pareto Optimality, rent/surplus, and fairness. (My chapter on bargaining is less abstract and draws a few simple conclusions from Nash and Rubinstein.)
Third, most of the assumptions made by economists are off the radar. In a sense, this follows from the first point, since the main purpose of making assumptions explicit is to draw attention to their limitations. As an example, like other texts (but not mine), this book largely takes for granted the welfare interpretation of opportunity costs and willingness to pay—in other words, the treatment of market demand and supply curves as conveying welfare information. There is a bit of backpeddling in unit 10, but only well after the fusion of positive and normative analysis at the market level is a done deal. I will be the first to admit, however, that it is a judgment call as to whether the advantages of dwelling on assumptions outweigh the disadvantages. In my own teaching I take up a lot of time examining assumptions, but many students would prefer that I just get on with it. Others find this the most compelling aspect of my courses. As always, one size doesn’t fit all.
Now on to a few notes I took on specific units:
Unit 6 covers the theory of the firm. Surprisingly, most of the material is Marshallian. There is a passing mention of Coase and no coverage at all of Austrian perspectives—the role of entrepreneurship, discovery, etc. Also, this chapter does not reach out to management theory, which I see as a lost opportunity. Finally, there is hardly any reference to the public debates over corporate organization or strategy that draw many students to the study of economics. For me, this was probably the least effective unit.
Unit 8 does a fine job of introducing students to the experimental literature on market games. It’s much more extensive than my treatment, and I recommend it.
I found unit 9 to be the strongest of the first ten. It covers a number of topics in market dynamics and goes well beyond the rather thin coverage one typically finds in intro texts. It opens with a powerful story about how the blockade of southern cotton exports during the US civil war triggered a series of economic adjustments in England, India and elsewhere. Very nice! On the other hand, those who have followed the evolution of Austrian thinking will notice that this unit gives us the “old” knowledge argument of Hayek (complexity and fragmentation of knowledge) and not the “new” (the role of discovery through rivalrous trial and error). Both are in his classic essay, but attention has shifted toward the discovery process, which is more radical in its wider implications. There is a very lengthy treatment of the order process in financial markets which some students will find useful but is not integrated with the rest of the unit. The discussion of bubble dynamics in asset markets is extensive and quite effective, although I personally find asymmetric incentives (better to go with the herd) especially compelling and develop the argument in my macro text. Finally, the unit develops monopolistic competition as a framework for understanding short run sticky prices and quantity adjustment, presumably laying the ground for macro arguments to come—back to the 30s!
Unit 10 is a fairly standard treatment of market failure, primarily externalities and public goods, with a loose discussion of morality and fairness appended at the end. This leaves out multiple equilibria, which is my own obsession and which I develop at some length in my micro text, but instructors habituated to the approach commonly found in conventional textbooks will not experience a sense of loss. My two main suggestions to CORE would be to move at least some treatment of market failure forward so that students encounter these ideas at the same time they are being lectured on the welfare-enhancing virtues of the market, and also that more space be given to a presentation of key environmental issues—especially climate change.
As you can see, I found a lot to appreciate. I’m sure this text, which will get broader and deeper as more units are added on, will appeal to many instructors. The real test, of course, is the classroom, and I wonder what CORE folks are planning in the way of feedback channels and upgrade cycles.
POSTSCRIPT: Much of my reaction to CORE could be summed up this way: I imagine that there were deep and fascinating discussions within the team about what was wrong with the content of undergraduate economics teaching and what they would do about it. I'd love to have videos of them. But I don't get the sense that they talked much about what's wrong with the teaching of economics at the bottom rungs; their text uses conventional methods to deliver new material. If any of you were on the team and think I'm wrong about this, please correct me. I'm just going on impressions.
As you can imagine, being the author of a pair of introductory textbooks (here and here), I was eager to see what the CORE corps came up with. As it happens, their approach is quite different from mine. I think that’s a good thing: instructors should have a wide range of materials and approaches to choose from. More is better. (And I do hope there will be more.)
In this post I’d like to share my reactions to this new CORE-iculum. In the process I’ll indicate where their strategy differs from mine, but my main purpose is to describe and situate their text so you can consider whether it’s right for you.
The first thing to say is that, based on these first ten units, CORE has made a fundamental decision about how to respond to the call for new thinking in the teaching of economics: they have come to an understanding among themselves about what economics should look like, and they use their textbook to get it across. This has three consequences. (1) They include material not commonly found in introductory economics courses, for instance the Ricardo/Marx perspective on economic growth and the extended treatment of the evolutionary basis for prosocial behavior. (2) They exclude (at least up to this point) material commonly found in standard textbooks, like detailed treatment of elasticities or the role of transaction costs. (3) Their tone is generally authoritative: this is how it is. In this last respect, of course, they are similar to most other texts. (I have tried to deviate from this.)
Second, while the level of difficulty varies from one unit to another, much of their presentation is geared to students who will continue in economics. Here is an example: they make use of iso-profit curves in market analysis, rather than the usual reliance on marginal revenue and cost curves. Now of course these are all the same; the iso-profit curves are derived from MR and MC, so nothing substantive is at stake. The way I see it, becoming familiar with profit functions and their mapping on two-dimensional price and quantity space prepares students majoring in economics for the greater formalism that lies ahead. On the other hand, I doubt that most students reading this text will find iso-profit curves as intuitive as MR and MC, despite a paragraph or two in which the derivation of these curves is described. Similarly, much of the material in the first several units is presented at a level of formalism that goes beyond what is necessary for non-majors to get the point, but which will undoubtedly be useful for the next cohort of economics devotees. See, for instance, unit 5, which consists entirely of a long, detailed and precisely constructed two-person bargaining problem to illustrate Pareto Optimality, rent/surplus, and fairness. (My chapter on bargaining is less abstract and draws a few simple conclusions from Nash and Rubinstein.)
Third, most of the assumptions made by economists are off the radar. In a sense, this follows from the first point, since the main purpose of making assumptions explicit is to draw attention to their limitations. As an example, like other texts (but not mine), this book largely takes for granted the welfare interpretation of opportunity costs and willingness to pay—in other words, the treatment of market demand and supply curves as conveying welfare information. There is a bit of backpeddling in unit 10, but only well after the fusion of positive and normative analysis at the market level is a done deal. I will be the first to admit, however, that it is a judgment call as to whether the advantages of dwelling on assumptions outweigh the disadvantages. In my own teaching I take up a lot of time examining assumptions, but many students would prefer that I just get on with it. Others find this the most compelling aspect of my courses. As always, one size doesn’t fit all.
Now on to a few notes I took on specific units:
Unit 6 covers the theory of the firm. Surprisingly, most of the material is Marshallian. There is a passing mention of Coase and no coverage at all of Austrian perspectives—the role of entrepreneurship, discovery, etc. Also, this chapter does not reach out to management theory, which I see as a lost opportunity. Finally, there is hardly any reference to the public debates over corporate organization or strategy that draw many students to the study of economics. For me, this was probably the least effective unit.
Unit 8 does a fine job of introducing students to the experimental literature on market games. It’s much more extensive than my treatment, and I recommend it.
I found unit 9 to be the strongest of the first ten. It covers a number of topics in market dynamics and goes well beyond the rather thin coverage one typically finds in intro texts. It opens with a powerful story about how the blockade of southern cotton exports during the US civil war triggered a series of economic adjustments in England, India and elsewhere. Very nice! On the other hand, those who have followed the evolution of Austrian thinking will notice that this unit gives us the “old” knowledge argument of Hayek (complexity and fragmentation of knowledge) and not the “new” (the role of discovery through rivalrous trial and error). Both are in his classic essay, but attention has shifted toward the discovery process, which is more radical in its wider implications. There is a very lengthy treatment of the order process in financial markets which some students will find useful but is not integrated with the rest of the unit. The discussion of bubble dynamics in asset markets is extensive and quite effective, although I personally find asymmetric incentives (better to go with the herd) especially compelling and develop the argument in my macro text. Finally, the unit develops monopolistic competition as a framework for understanding short run sticky prices and quantity adjustment, presumably laying the ground for macro arguments to come—back to the 30s!
Unit 10 is a fairly standard treatment of market failure, primarily externalities and public goods, with a loose discussion of morality and fairness appended at the end. This leaves out multiple equilibria, which is my own obsession and which I develop at some length in my micro text, but instructors habituated to the approach commonly found in conventional textbooks will not experience a sense of loss. My two main suggestions to CORE would be to move at least some treatment of market failure forward so that students encounter these ideas at the same time they are being lectured on the welfare-enhancing virtues of the market, and also that more space be given to a presentation of key environmental issues—especially climate change.
As you can see, I found a lot to appreciate. I’m sure this text, which will get broader and deeper as more units are added on, will appeal to many instructors. The real test, of course, is the classroom, and I wonder what CORE folks are planning in the way of feedback channels and upgrade cycles.
POSTSCRIPT: Much of my reaction to CORE could be summed up this way: I imagine that there were deep and fascinating discussions within the team about what was wrong with the content of undergraduate economics teaching and what they would do about it. I'd love to have videos of them. But I don't get the sense that they talked much about what's wrong with the teaching of economics at the bottom rungs; their text uses conventional methods to deliver new material. If any of you were on the team and think I'm wrong about this, please correct me. I'm just going on impressions.
Monday, September 29, 2014
Jeff and Charles
One little bit jumped out at me from an interview with former Amazon exec John Rossman in today’s New York Times. (Rossman has just written a book about what other companies can learn from Amazon.)
Amazon employees are paid relatively little. All the upside is in the stock. If the stock is flat to negative for a long period of time, that is going to make it a challenge to retain top talent.It never occurred to me before that you could have a Ponzi personnel strategy. I guess you learn something new every day.
Friday, September 26, 2014
media, this post is for you.
Please list, in a comment, all of the people who you "were never a fan of." Anyone else who wants to add their "I was never a fan" confessions is welcome to comment, too.
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