Monthly Archives: September 2012

The Libyan Consulate

Clearly this a tragic situation.

If Romney and other conservatives ultimately think that it is critical ultimately that we use force against some one in the Mid-East, at the least I think we should  try to make that response surgical and focused on those responsible.

The previous administration, or at least parts of it, I think basically believed that it was important to ‘show the Muslim world who was boss’ after the 9/11 of 2001.  To do so:  start and win a war against a Mid-Eastern country.  I’m not sure it mattered who, as long as we showed we were strong and not to be trifled with. 

Hence we attacked a nation nominally to disarm it of weapons it proved not to even have.  To a lot of those most critical of the Obama administration, I don’t think this mattered, we showed we were not to be messed with; the Muslims hate us and we need to show them they still have to fear us, and by God we did; or so the Bush administration hoped.  I’d  characterize that response as blunt with abundant collateral damage to innocent by standers that may have spawned a new generation of terrorists.

In fact, 9 years later, it isn’t clear to me that we’ve cowed our enemies and potential enemies given this tragic incident.  So has Obama’s charm offensive failed or the earlier attempt to intimidate the entire mid-east? 

I’m inclined to think this is at least partially blow-back from our use of force rather than failure by the Obama administration.  In the end we likely shouldn’t let this go unanswered, but I hope we at least make the response focused on bringing the actual perpetrators to justice, not just punishing Muslims and the Mid-East in general.  Whatever we do, I don’t think it should be an act in the emotions of the moment, or that exaggerates what force can accomplish.

"[W]hen libertarians reacted to moral dilemmas and in other tests, they displayed less emotion…"

It must be the Vulcan DNA.

“… less empathy and less disgust than either conservatives or liberals.”

They appeared to use “cold” calculation to reach utilitarian conclusions about whether (for instance) to save lives by sacrificing fewer lives. They reached correct, rather than intuitive, answers to math and logic problems, and they enjoyed “effortful and thoughtful cognitive tasks” more than others do.

The researchers found that libertarians had the most “masculine” psychological profile, while liberals had the most feminine, and these results held up even when they examined each gender separately, which “may explain why libertarianism appeals to men more than women.”


“[W]hen libertarians reacted to moral dilemmas and in other tests, they displayed less emotion…”
noreply@blogger.com (Ann Althouse)
Sun, 30 Sep 2012 02:48:00 GMT

WordPress’s evolution as a web publishing platform

Sent to you by Bruce via Google Reader:

WordPress’s evolution as a web publishing platform

via Digitopoly by Joshua Gans on 9/30/12

WordPress powers this blog. That isn’t surprising as WordPress began with the goal of providing a powerful and, indeed, free blogging platform. To be sure, it earns money from premium services but, compared with its predecessors, WordPress is an open platform that gave users and developers the power to slash, hack and design.

But now WordPress has evolved beyond just blogging. According to Forbes:

Today WordPress powers one of every 6 websites on the Internet, nearly 60 million in all, with 100,000 more popping up each day. Those run through its cloud-hosted service, which lets anybody create a free website online, attract 330 million visitors who view 3.4 billion pages every month.

Thus, WordPress now has incredible scale.

To give you an idea of how important WordPress has become let me recount personal experience over recent time. Regular readers may have noticed that I have a new book coming out next week. That meant it was time to update my personal and book sites from their old Parentonomics focus. After all, I was competing for attention with both JK Rowling and Stephen Colbert, so I needed some spiffy web presence.

Previously, I had used Apple’s iWeb for this purpose. It was dead easy but it suffered from two problems. First, it was tied to the computer so I couldn’t update it on the fly. Second, it was no longer supported by Apple and so would continue to fall behind. So I reviewed a bunch of other options including SquareSpace and Weebly and others like them. Each had advantages but, in each case, there was some annoying feature lacking. Reluctantly, I was forced back to iWeb because it was just easy to do and still allowed a website that was satisfactory.

I was going to continue down that path when I read the Forbes article and it occurred to me that I, like those in the articles, should stop viewing WordPress as just about blogging. Now I had just finished creating a new website — Contribution Economy — that was part blog but mostly other stuff for our research project on the Economics of Knowledge Contribution and Distribution. I was pleased with how that came out. Thus, I realised that I could use WordPress to similarly power my personal and book sites.

To be sure, WordPress is harder to use than iWeb but once you have designed things and set stuff up, it is really easy to manage after that. So, world, I present to you the new Joshua Gans site, my research site and book sites for Parentonomics, Core Economics for Managers and the new book. Some are more interesting than others but that is because I was going for simplicity with some of them. The point is that WordPress allowed me to give the sites a consistent backbone as well as look and feel. In many respects, it is another big datapoint that open platforms can evolve in unexpected and important ways.

[And yes, much of the point of this post was to announce those new sites!]

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"New Justice Department Documents Show Huge Increase in Warrantless Electronic Surveillance."

 

The ACLU reports on “documents, handed over by the government only after months of litigation.”


“New Justice Department Documents Show Huge Increase in Warrantless Electronic Surveillance.”
noreply@blogger.com (Ann Althouse)
Fri, 28 Sep 2012 00:50:00 GMT

Television will kill you!!!

Sent to you by Bruce via Google Reader:

Television will kill you!!!

via The Incidental Economist by Aaron Carroll on 9/28/12

Did that get your attention? That was the intent of this story, entitled, “Study: One Hour Watching TV = Shorter Life By 22 Minutes”. It refers to an upcoming manuscript in the British Journal of Sports Medicine, entitled, “Television viewing time and reduced life expectancy: a life table analysis“:

Background Prolonged television (TV) viewing time is unfavourably associated with mortality outcomes, particularly for cardiovascular disease, but the impact on life expectancy has not been quantified. The authors estimate the extent to which TV viewing time reduces life expectancy in Australia, 2008.

Methods The authors constructed a life table model that incorporates a previously reported mortality risk associated with TV time. Data were from the Australian Bureau of Statistics and the Australian Diabetes, Obesity and Lifestyle Study, a national population-based observational survey that started in 1999–2000. The authors modelled impacts of changes in population average TV viewing time on life expectancy at birth.

Let’s be clear. This is not a randomized, controlled trial. This is an analysis to see if there is a correlation between TV watching and life expectancy at birth. There are any other of a gazillion variables that may confound the analysis. The most obvious, of course, is that people who tend to watch more TV may also engage in unhealthy activities, such as sitting on your butt, not exercising, and eating Cheetos. But here are the results and conclusion:

Results The amount of TV viewed in Australia in 2008 reduced life expectancy at birth by 1.8 years (95% uncertainty interval (UI): 8.4 days to 3.7 years) for men and 1.5 years (95% UI: 6.8 days to 3.1 years) for women. Compared with persons who watch no TV, those who spend a lifetime average of 6 h/day watching TV can expect to live 4.8 years (95% UI: 11 days to 10.4 years) less. On average, every single hour of TV viewed after the age of 25 reduces the viewer’s life expectancy by 21.8 (95% UI: 0.3–44.7) min. This study is limited by the low precision with which the relationship between TV viewing time and mortality is currently known.

Conclusions TV viewing time may be associated with a loss of life that is comparable to other major chronic disease risk factors such as physical inactivity and obesity.

I watch more TV than almost anyone else I know. No joke. But I do it while I’m doing other things. I also exercise regularly and watch what I eat. Does anyone actually believe that it’s the watching TV itself that is shortening your life? From the text of the manuscript:

If these [hazard ratio]s are confirmed, and shown to reflect a causal association, TV viewing is a public health problem comparable in size to established behavioural risk factors.

Really? TV is itself causal? How? Do tell.

I have no problem believing that too much TV is bad for you, in that it can serve as a replacement for an active life, a substitute for good parenting, or as a gateway to unhealthy eating or drinking. But before you can give me a reasonable reason why TV might actively and directly cause you to die earlier, I wish people wouldn’t go there.*

*Note this applies to any number of studies that substitute causation for correlation.

@aaronecarroll

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To Journey through time or space??

I’ve often heard that this recession is different (that is worse) because it grew from a financial crisis, as opposed to fighting inflation and actions of the fed.  The idea has its critics (more on that in a moment) but here’s some evidence to back the idea up.

Josh Lehner of the Oregon Office of Economic Analysis has a great post up on his blog that looks at US job losses in comparison to other financial crises (a opposed to previous US recessions).  It is a great post and has been picked up by The New York Times.  Go to Josh’s post for the full story (and the NY Times for their take) but here are two provocative graphs.
The first is the now familiar job losses in this recession compared to post WWII recessions in the US courtesy of the NY Times:

Looks pretty grim, and it is, but you might be tempted to think we have done a pretty terrible job managing this crisis (and before you get partisan, both the Bush and Obama administrations, along with the non-partisan Fed chief, have managed this crisis), but if you compare our performance to other financial crises in the world you get a different picture.  Here is Josh’s graph:

Fascinating stuff Josh.

The Crisis in Comparison
Patrick Emerson
Wed, 26 Sep 2012 15:44:00 GMT

 

You can get a different perspective though if you compare not across nations with financial panic induced recession, but far back in history to the financial panics in the US.  John Taylor in his blog in writing about this recession (that he blames on misguided attempts to ease the recession actually making it worse notes of the current recession:

Some say that recoveries from deep U.S. recessions–or from financial crises–are usually slower, but this is simply not true. Below are similar charts from the 1893-94 recession

and from the 1907 recession,

both associated with severe financial crises. You can see the sharp rebounds, nothing like the terrible recovery we have seen recently. This does not imply that the period after these recoveries was smooth; indeed a double dip followed the recovery in the early 1890s.

An additional point of interest is the idea that financial crisis or panic makes for a longer recession is often asserted, but the reason why isn’t clear.  See this for example.

Who pays taxes

 

Check it.

 


A federal income tax was imposed on several occasions in the 1800s. However, in response to a court case which determined that income from property was required to be imposed in proportion to states’ population, Congress proposed the Sixteenth Amendment. Thus in 1913, the modern income tax system was born. In 1913, 358,000 returns were filed which was 2% of all households. While the top tax rate was 7% on incomes above $500,000 ($10.9 million in 2010 dollars), the first $3,000 ($65,331 in 2010 dollars) was exempt from the the income tax for single persons.

In 1918, 4,425,000 returns were filed which was 20% of households. Now the exemption was $1,000 ($14,352 in 2010 dollars) while the top rate of 77% was now applied on income over $1,000,000 to pay for World War I ($14.3 million in 2010 dollars). There was high inflation during and right after the war so by the peak in 1923 almost 40% of households were being taxed due to bracket creep. This was fixed in 1925.

In 1942, 36,619,000 returns were filed and the exemption had been dropped to $500 for single persons ($6,613 in 2010 dollars). For the first time the number of income tax returns filed exceeded the number of households.

And for something completely differnt

The Gettysburg address using power point.

Misc: Richmod Fed Mfg Survey Improves, Consumer Confidence increases

 

Catching up on a few earlier releases …
• From the Richmond Fed: Manufacturing Activity Ticked Up in September; New Orders Turned Positive

In September, the seasonally adjusted composite index of manufacturing activity — our broadest measure of manufacturing — gained thirteen points to 4 from August’s reading of −9. Among the index’s components, shipments rose eight points to 9, new orders picked up twenty-seven points to end at 7, and the jobs index held steady at −5.

This expansion followed three months of contraction in this index and was better than expected.
• From the Conference Board: Consumer Confidence Index® Increases in September. Index Improves Nine Points

The Conference Board Consumer Confidence Index®, which had declined in August, improved in September. The Index now stands at 70.3 (1985=100), up from 61.3 in August.

This was above expectations.
• From the FHFA: FHFA House Price Index Up 0.2 Percent in July

U.S. house prices rose 0.2 percent on a seasonally adjusted basis from June to July, according to the Federal Housing Finance Agency’s monthly House Price Index. … For the 12 months ending in July, U.S. prices rose 3.7 percent.

Earlier on house prices:
Case-Shiller: House Prices increased 1.2% year-over-year in July
House Price Comments, Real House Prices, Price-to-Rent Ratio

Misc: Richmod Fed Mfg Survey Improves, Consumer Confidence increases
Bill McBride
Tue, 25 Sep 2012 20:06:00 GMT

Hard Times Come Again Once More?

 

I keep a couple of books on the shelf above my desk to remind me of how much things have changed over the past hundred years. One is Only Yesterday: An Informal History of the 1920s, by Frederick Lewis Allen, which first appeared in 1931. The other is The Great Leap: The Past Twenty-Five Years in America, by John Brooks, published in 1966. Some crackerjack journalist is surely working today on a similarly successful treatment of the as-yet hard-to-characterize years since 1966. In the meantime, The Good Life and Its Discontents: The American Dream in the Age of Entitlement 1945-1995, by Robert Samuelson, takes the story forward.

The really interesting question, though, has to do with what to expect in the next twenty years.

One thing that Yesterday and Leap have in common, a characteristic that in all likelihood will be shared by the book that eventually joins them, is that there are hardly any numbers in them – nothing to link together the two  epochs, or to foreshadow the future.  Measurement is the province of economists. Compelling journalism seldom has time.

Therefore I have been reading, with special interest (and a certain dread), Is US Economic Growth Over? Faltering Innovation Confronts the Six Headwinds, by Robert J. Gordon, of Northwestern University.  In fact, I read it last summer, even before it was a National Bureau of Economic Research working paper, since Gordon is a friend. It’s a short report (25 pages) on an ambitious work in progress.

Beyond the Rainbow: The American Standard of Living Since the Civil War, a book version of the article, already long in preparation, will be anything but brief when it’s finally done. It will, however, be the definitive survey of American living standards over the last 150 years. (Think Carmen Reinhart and Kenneth Rogoff, This Time Is Different, on the history of financial crises.) It will formulate an educated guess about the future as well.  And since that prediction has implications for anyone following the election campaign (and more than just them!), there is good reason for considering it now.

The standard assumption is that, after the disruptions of the financial crisis, and once various fiscal imbalances have been resolved (pensions, health care obligations, etc.), the United States will resume the real per capita GDP growth of around 2 percent a year that we’ve enjoyed since 1929.  In the immediate aftermath of the crisis, I toyed with it myself.  Technology, the growth of knowledge, will see us through.

What if it won’t?

Usually we get our forecasts of technological progress from magazine writers and futurists; they come and go. Gordon, on the other hand, IS a well-regarded economist, author of a popular introductory macroeconomics text now in its twelfth edition; a historian of the Phillips Curve; member of the NBER business cycle dating panel; editor, with Timothy Bresnahan, of The Economics of New Goods. In recent years Gordon has turned towards economic history: his current project goes back to Interpreting the “One Big Wave” in U.S. Long-Term Productivity Growth; he teaches a popular freshman seminar, Did Economics Win  the Two World Wars?

There are two sides to Gordon’s argument, cosmic (by economists’ standards) and concrete, both of them rooted in standard practices of growth accounting. After a windup on the “super-long run” since the year 1300, he settles down to the analysis of three industrial revolutions that have occurred since the eighteenth century. These clusters of innovation should be understood as a series of discrete inventions, he says, adopting a familiar schema, followed by incremental improvements which ultimately tap the full potential of the original breakthrough

Thus the first industrial revolution, between 1750 and 1830, created steam engines, cotton spinning and railroads.  The second, with its three central technologies of electricity, the internal combustion engine and running water with indoor plumbing, occurred in the relatively short interval of 1870-1900.  And the third, associated with the computer and the Internet, began around 1960 and reached a climax in the late 1990s.

In each case, the innovative process brought improvements that, by their nature,  “could only happen once.” The first two revolutions required about a hundred years each for their full effects to work their way through the economy, says Gordon; the benefits of the second industrial revolution were still producing gains in the 1950s and ’60s, in the form of air conditioning, home appliances and the Interstate Highway System. Only in the 1970s did productivity growth slow.

The third revolution, based on information and computer technology, happened more quickly, according to Gordon. Computers took over much clerical labor in the ’70s and ’80s; since 2000, attention has centered on smaller and smarter devices for communication and entertainment, but not ones that contribute the kinds of gains in labor productivity associated with earlier surges in the standard of living.

The audacious idea that economic growth was a one-time-only event has no better illustration than transport speed. Until 1830 the speed of passenger and freight traffic was limited by that of “the hoof and the sail” and increased steadily until the introduction of the Boeing 707 in 1958. Since then there has been no change in speed at all and in fact airplanes fly slower now than in 1958 because of the need to conserve fuel.

Other one-time-only changes included the transition from animal to machine propulsion that freed the city streets from disease-causing animal waste; from outhouses to indoor plumbing; from housewives carrying buckets of water, coal, and wood into the house to the modern world of running water and sewer systems; from interior cold and heat to uniform indoor temperatures made possible by central heating and air conditioning; and many more one-time-only inventions. This may seem obvious about horses, outhouses, speed, and temperature, but once you accept that, you’re drawn into the central theme of this article: economic growth may not be a continuous long-run process that lasts forever.

What about the biomedical revolution that seems to be in the offing?  We are a long way from being able to measure the effects of these transformative technologies – other economists call them general purpose technologies, or GPTs – much less predict their arrival.  But even without the technological forecast, the prospects for US growth are somewhat daunting. New technologies take root quickly around the world, though various nations face different impediments to their adoption. The US is facing its own particular combination of “headwinds” of its own.  Gordon lists six:

1. A “demographic dividend” that boosted measured growth between 1965 and 1990 as women entered the workforce is now reversed.  Baby boomers are retiring, and with hours per capita declining, output per capita must grow more slowly than productivity.

2. A stubborn plateau in educational attainment is slowing growth. As the cost of education increases disproportionately, low-income people stay away from college altogether.

3.  Rising inequality is becoming a serious problem having to do with “us” and “them.”  The top 1 percent captured 52 percent of the income gains from 1993 to 2008, he notes; the other 99 percent saw its household income grow just .75 percent per household per year, or nearly 0.5 percent less than reported growth for the economy as a whole. Never mind the happy few:  slower growth for the 99 percent is slower growth.

4.  The interaction between the information and communications technology revolution and globalization is especially damaging to the US.  Outsourcing will continue.  Jobs tend to flow to where wages are lowest.

5.  Coping with climate change will take a toll. Higher carbon taxes will mean less consumption, while China and India continue to grow.

6.  Paying down all that debt, household and government, will constitute a drag on normal growth as well.

To what does all that resistance add up?  Gordon undertakes some simple but alarming arithmetic – an “exercise in subtraction,” he calls it.  He begins by bracketing the first half of his article – the proposition that there may be no boom on the horizon with the productivity-enhancing heft of the Internet to give us growth anything like that of the last twenty years.  Instead, he takes the record of the years since 1992 – 1.8 per capital real GDP per year – and supposes that it somehow will be repeated.

Then he subtracts the estimated effect on that growth of each of his headwinds.  Two-tenths here, each, for demography, education, globalization and climate; five tenths there (that dramatic increase in inequality); three-tenths for paying down debt: all that adds up to 1.6 percent less growth per year over the next twenty years than in the past, or a shocking 0.2 percent per annum.  What kind of US politics will that make?  (Gordon’s remedies mostly have to do with dramatically opening up immigration.)

Not everyone who has heard Gordon’s analysis is persuaded – or even intrigued. Not everyone loves a growth accountant. And Gordon acknowledges that technological change is notoriously difficult to forecast.

But the “one big wave” analysis of Gordon’s Beyond the Rainbow project is slowly growing more persuasive. Its implications for the future seem dire, totally at odds with the Tea Party’s Club for Growth or the George W. Bush Institute’s Four Percent Growth Program (let’s just have 4 percent real growth for a dozen years or so, with no statement of how). David Brooks, of The New York Times, pressed for time, last week pulled a Bloomberg Businessweek off the pile and wrote a column (Temerity at the Top: in praise of the top 1 percent)  about how serial entrepreneur Elon Musk (Paypal co-founder, SpaceX commercial rocket buff) is working on something he calls a Hyperloop. “a tube capable of taking people from downtown Los Angeles to downtown San Francisco in thirty minutes” and hopes, too, to open a space colony on Mars “in ten for fifteen years.” Brooks concluded: “A few ridiculously ambitious people can change an economy more than any president.”

In his NBER paper, Gordon raises the specter of those four centuries of negligible growth that unwound before the first industrial revolution rescued Great Britain from a Malthusian crisis. That’s a little remote for my taste. When I was done with his article, I settled for the McGarrigles’ rendition of a Stephen Foster song about the years before America’s Civil War, “Hard Times Come Again No More.” (The lyrics, worth reading, are here.)  If Gordon is right, the hard times are just beginning. They are manageable; the US is a rich, sturdy and good-hearted nation. But the 4 Percent fantasy must be dismissed first.

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Hard Times Come Again Once More?
admin
Sun, 23 Sep 2012 19:42:42 GMT