faulker020

A while ago, I wrote a blog post called " Redistribute wealth? No, redistribute respect. " That could have been the title of a speech Paul Ryan gave recently . I especially liked this part: There was a time when I would talk about a difference between “makers” and “takers” in our country, referring to people who accepted government benefits. But as I spent more time listening, and really learning the root causes of poverty, I realized I was wrong. “Takers” wasn’t how to refer to a single mom stuck in a poverty trap, just trying to take care of her family. Most people don't want to be dependent. And to label a whole group of Americans that way was wrong. I shouldn’t castigate a large group of Americans to make a point. So I stopped thinking about it that way—and talking about it that way. This is a hugely important step toward increasing American society's respect for the poor and the working class. Language matters, of course - Ryan's speech is almost certainly a ...

I've recently read two big-think piece about new paradigms for economic theory - this one by evolutionary biologist David Sloan Wilson , and this one by venture capitalist and activist Nick Hanauer and speechwriter Eric Liu. Is economic theory due for a paradigm shift? Maybe, but I don't think we know what the new paradigm will be yet. Wilson's piece - grandiosely titled "Economic Theory Is Dead. Here’s What Will Replace It." - claims that evolutionary theory will be the magic bullet that will breathe life into econ. The piece doesn't explain how to incorporate evolutionary thinking into econ, but it does link to a 2013 special issue of JEBO that Wilson edited along with Barkley Rosser about incorporating evolution into economics. In a paper in that volume , Wilson lays out his ideas slightly more explicitly. But only slightly. Wilson's paper does three things: 1) it references economists who have suggested making use of evolutionary ideas in the past, ...

My last post , about Russ Roberts' EconTalk interview with David Autor, was requested by Russ as part of a general symposium on the topic. But it also reminded me that I had wanted to blog about two earlier EconTalk episodes - Russ' interviews with Joshua Angrist and Adam Ozimek . These interviews, along with my own and Autor's, are basically part of a series. In this series, a bunch of people basically try to convince Russ that empirical economics matters a lot. Russ plays the part of the econ public - the average older academic, plus the econ-literate community of policy wonks, blog readers, and the like. He starts off basically thinking that econ is about theory (as it really was  back when he was learning his chops). Then, through a successive series of conversations, he becomes convinced that not only have things changed, but that this is as it should be. First, he talks to Angrist . Angrist is the chief academic evangelist for the " credibility revolution ,...

David Autor recently went on Russ Roberts' EconTalk  podcast to talk about his new paper about China trade. The Autor paper, co-authored with Dorn and Hanson, has been a real bombshell in the econ world, since it seems to challenge the "consensus" on free trade. Economists have long asserted confidently - in public, though not always in private - that free trade is always good, and now some top economists have shown that maybe it's not always good. That's a big deal. Roberts and Autor do a very good job of zeroing in on why free trade might not be good, and why it might not have been good in the case of China. The reason is distribution - trade can hurt some people, especially if the government is not perfectly efficient in using redistribution to cancel out the distributional effects of trade (which of course it never is). This has been known for a long time, but economists often wave their hands and ignore distribution.  Autor et al. have basically made a splas...

Scott Sumner, diabolical sentient alien virus  renowned monetary policy guru, has endorsed Eliezer Yudkowsky, professional Reasonable Dude, for King of the World. This is based on an interview of Yudkowsky by John Horgan for Scientific American. In that interview, the future King Yudkowsky makes some economic policy suggestions. However, as Emperor of the Local Group of Galaxies, I feel that I should grade the planetary monarch's ideas. First, King Yudkowsky holds forth on the value of college: Horgan : Is college overrated?  Yudkowsky : It'd be very surprising if college were underrated, given the social desirability bias of endorsing college. So far as I know, there's no reason to disbelieve the economists who say that college has mostly become a positional good, and that previous efforts to increase the volume of student loans just increased the cost of college and the burden of graduate debt. As far as I know, there is no quantitative or systematic evidence for social...

A lot of people seem to subscribe to what I call the Folk Theory of business cycles (not to be confused with the Folk Theorem of game theory ). Roughly speaking, this is the idea that: 1. Debt growth is necessary for GDP growth. 2. As GDP grows, debt levels become too large, leading to an economic crash. 3. Therefore, booms cause busts, through the mechanism of debt accumulation. I'm not going to say this theory is wrong, or bad. It might be right. But I have a few problems related to this theory. Problem 1: Misunderstanding Academia First, a lot of people who believe a version of this theory - private economic forecasters, asset managers, econ writers, heterodox economists, and random punters from the web - get exasperated with mainstream academic macroeconomics, because they think that profs have ignored this idea. I often get told that mainstream academic macroeconomists are idiots, fools, and/or knaves by people whose basic view of the world conforms to a version of the Folk Th...