A Blogging Goal

Over at The Monkey Cage, Andrew Gellman writes about one of the goals for his blog:

One of the central goals of our blog is to improve communication between political journalists and political scientists. From one direction, we want to make journalists aware of important and relevant scholarly research. From the other direction, we want to encourage political scientists to write for general audiences.

I like that as a goal to aim toward. At the ASSA meetings this past January there was an interesting session about how economics is covered in the media. Echoing some of the sentiments expressed, I hope that a greater number of academic bloggers view their goal as partly an educational one.

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A Behavioral Economics Taxonomy

I came across an interesting graphic which shows how several of the topics in behavioral economics are grouped together. Biology often employs a similar charting technique to show groups of species and I thought this was a helpful adaptation.

Behavioral Economics

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Snow

Washington D.C. awoke to a light layer of snow this morning, the first in a long time. When in moderation, snowy days are some of my favorite weather.

Here is a poem by Meng Jiao (751-814):

“Distant View of the Luo Bridge”

Beneath the Tian Jin Bridge the ice

has just begun to show;

In Luo Yang City’s empty streets

no traveler will go;

Willows and elms are bare of leaves,

pavilions lie unused;

But in the bright moon brilliantly

I see Mount Song’s far snow.

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Economic Uncertainty

It has become fashionable for politicians to blame the nebulous concept of “economic uncertainty” as the reason their opponent’s policies are holding back the economy. At least until they decide to pursue a policy (such as threatening to default on the national debt) which actually does hinder hiring and investment when the term vanishes from the debate.

But are there times when there isn’t any economic uncertainty? Yes, and that’s the best definition of a “bubble” that I can think of.

Here is a graph from the paper “Measuring Economic Policy Uncertainty” by Baker, Bloom, and Davis which I saw presented at the recent ASSA meetings in San Diego.

Baker Bloom Davis - Figure 2

First, the periods of lowest uncertainty occurred right before recessions – in the late 1990s during the tech bubble, and during the 2000s during the housing bubble. A lack of uncertainty doesn’t mean sound fundamentals.

Second, the 2011 debt fight was worse than 9/11 and much worse than the collapse of Lehman Brothers in 2008 in terms of uncertainty.

If politicians truly do believe that “economic uncertainty” is bad for the economy, then they should stop playing games with the credit of the United States, because that is the biggest threat this country currently faces.

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The Ease of Finding Information

Here is another passage from Timothy Brook’s The Confusions of Pleasure:

Later, when [Qiu Jun] was on leave from his research post in Beijing in 1472, he built a library for the use of students at the prefectural school. Built of stone to withstand moisture, Qiu called it Stone Chamber. It was “a narrow place from which one can grasp the breadth of all within the four seas” and the books he placed there were the means “to grasp the world for ten thousand li from within the space of one room.” His choice of distance metaphors shows his awareness of the problems that distance imposed on the communication of knowledge, particularly for those far from the centers of academic knowledge production.

It has become popular to claim that recent innovations don’t compare with those of the past such as electricity or the train, and will lead to slower economic growth in the future. Gordon’s recently discussed article is a good example of this. My own belief is that people don’t consider how truly revolutionary the almost instantaneous communication of almost all knowledge is, and how difficult it used to be to learn anything, useful or not. We now have to waste much less time finding information, or even finding what information we should be seeking.

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Losey’s Don Giovanni

Mozart’s Don Giovanni is probably my favorite opera. And my favorite filmed version of it is the one directed by Losey. I’ve watched the DVD version many times and I learned today that a Blu-Ray version is due out in February. Highly recommended.

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Growth

Whenever The Economist does one of its briefings on an issue, it becomes the first thing to read to get a good understanding of the background. The magazine recently ran a summary on the alleged slowdown in economic growth. This is, today as always, one of the most important issues facing our society. Over the course of decades economic growth is the factor that determines living standards and, hence, the political and societal pressures that we face. This article is a good starting point on an issue that everyone should be aware of.

There’s this good quote on one of the fundamental roles of government in inspiring the basic research which leads to long-term gains in wealth and living standards. This role is all-too-often ignored by people who think they understand economics.

Another thing which may have changed permanently is the role of government. Technology pessimists rarely miss an opportunity to point to the Apollo programme, crowning glory of a time in which government did not simply facilitate new innovation but provided an ongoing demand for talent and invention. This it did most reliably through the military-industrial complex of which Apollo was a spectacular and peculiarly inspirational outgrowth. Mr Thiel is often critical of the venture-capital industry for its lack of interest in big, world-changing ideas. Yet this is mostly a response to market realities. Private investors rationally prefer modest business models with a reasonably short time to profit and cash out.

From the founders of the colonies to the Revolutionary generation on, Americans have understood that one of the roles of government was to fund long-term projects that can’t provide the immediate returns that the private sector demands. It’s a sad to see many people today forget this important point.

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