Sentences to Ponder from Mike Konczal

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He writes,

Oil doesn’t experience unemployment as the most traumatic thing that can happen to it. Oil moves magically to new opportunities, unlike people who don’t often move at all. A barrel of oil doesn’t beat their kids, abuse drugs, commit suicide, or experiencing declining life expectancy from being battered around in the global marketplace. But people do, and they have, the consequences persist and last, and now they’ve made their voices heard. It’s the the dark side of Polanyi’s warning against viewing human being as commodities.

Pointer from Tyler Cowen. The entire essay, which looks at Donald Trump’s consistent message, is worth reading.

Tyler Cowen on School Choice

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He writes,

if you’re reading a critique of vouchers and the critic isn’t willing to tell you up front that parents typically like this form of school choice, I suspect the critic isn’t really trying to inform you.

Perhaps the voucher movement ought to be called the “Make schools accountable to parents” movement. I was opposed to the No Child Left Behind law from the very beginning, on the grounds that it defined “accountability” for schools as accountability to Washington.

Parents will not be perfectly informed consumers of public schools. But bureaucrats in Washington will be much less well informed.

I am not claiming that vouchers will lead to better long-term outcomes. As you know, I believe in the Null Hypothesis. But I like the idea of having teachers and school administrators accountable to people who can observe their performance close up.

Why it May be Hard to Change My Mind

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Cass Sunstein offers a list of books from the left or center-left for a conservative to read to possibly change one’s mind. Pointer from Tyler Cowen.

You recall that I appreciated his idea of proposing books for liberals to read that presented a conservative or libertarian perspective.

If you go back and read his first list, written by conservatives and libertarians, the books are quite obscure. I have not done a Google search to check, but I would not be surprised if there are only one or two that have been reviewed in publications that liberals would read. My guess is that if you gave a typical liberal intellectual only the title and author of one of these books and said, “Tell me what you think it says,” you would get an answer that is blank or incorrect.

It turns out that I have not read any of the books on Sunstein’s new list, but long before I saw Sunstein’s post I had read op-eds by the authors and/or reviews of all of them other than Dworkin’s (which falls outside of my area of interest). Based on these, I presume that:

–Nordhaus makes the case that climate models are uncertain, that we need to be worried that they under-estimate the danger, and that a carbon tax is the most efficient way to buy “insurance” against climate risk.

–Frank makes a case that we live in luck village.

–Mullainathan and Shafir say that there is a household-level poverty trap in that the less income you have, the less mental/emotional slack you have, and the worse decisions you make.

–Gordon makes the case that current technological innovation is not boosting living standards as dramatically as innovation a hundred years ago.

My point is that when liberals publish books, conservatives become aware of them. So at the margin, actually reading the book does not introduce us to new ideas–although the book may make the argument more compelling. When conservatives publish books, liberals are not aware of them. So just encountering the ideas would be new. Other things equal, I would expect liberals to find more unfamiliar ideas in conservative books than vice-versa.

Russ Roberts interviews Thomas Leonard

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Self-recommending. I could choose almost any paragraph to excerpt. Here is one:

Darwinism, with its kind of material explanation for evolution, for human evolution, seems to imply that the idea of having inalienable natural rights invested in you by a Creator–the language that you find in the Declaration of Independence–Darwin seems to suggest that’s just kind of a nice fiction.

He is trying to explain how the progressives in general, and economists in particular, came to downplay individual rights.

I put Leonard’s book at number 2 on my books of the year for 2016. I wrote an essay about it earlier this year.

Symposium on Low Interest Rates

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From the Mercatus center. The contributions are not coordinated in any way. We wrote essays about causes, effects, predictions, …whatever we felt like, on the general subject of the implications of low interest rates and the potential for them to rise. So far, we have

David Beckworth:

the 10-year Treasury yield has fallen more as a result of business-cycle pressures and policy uncertainty than because of structural changes like demographics. Consequently, more normal levels of interest rates are likely to prevail in the future.

If he is right, he could make a lot of profit by shorting bonds. And he may be right.

Joseph Gagnon writes

There are at least five reasons for the current low real rates of interest: (a) labor force growth has declined around the world, thereby reducing the need for business and housing investment; (b) a large cohort in many countries is entering the maximum saving years immediately prior to retirement; (c) productivity growth has declined around the world, thus reducing the demand for business investment; (d) regulatory changes have increased the demand for safe assets, including those that are commonly used to quote interest rates; and (e) driven by government policies, developing and emerging market economies have become net savers instead of net borrowers since 2000. In late 2009, I noted that the decline of real interest rates had been going on for about 30 years, and I pointed to several of those factors. This phenomenon is not limited to the aftermath of the Great Recession.

George Selgin writes,

Interest rates, like other prices, can change for all sorts of reasons; the implications of the change generally depend on the particular reason for such a change.

I had the same problem that Selgin had in starting the discussion with the value of an endogenous variable. I wrote,

The fiscal effect of an interest rate change depends on the source for that change. The source could be an increase in real economic growth, an increase in inflation, or an increase in the risk premium that investors assign to government securities.

Will Trump Revive Liberal Economists?

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Justin Wolfers writes,

you should think of the economy as being in a state of constant churn. The economist Joseph Schumpeter used the now-famous phrase “creative destruction” to describe this process by which new firms push out the old. The result can be cruel, but an extraordinarily fluid labor market, many economists argue, is the secret of American dynamism.

Wolfers tells a PSST story using a metaphor of a parking garage. The metaphor works a bit awkwardly in my view, but it will suffice.

Mr. Trump is focusing his resources on existing firms — the cars already parked there — rather than on the millions of potential entrepreneurs who might open the next generation of businesses.

Pointer from Mark Thoma.

If Mr. Trump can get more center-left economists talking about the seen and the unseen and describing the economy in the way that I do in Specialization and Trade, then he will have done a great service to the profession.

WaPo Watch

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The idea would be to have regular analysis of the bias in the Washington Post. One reader emailed encouragement but suggested that the New York Times is more influential.

My guess is that I do not want to take this on as a regular job. Instead, I might try it for a few weeks to try to develop a model for how it ought to be done. Then we can think about creating some sort of franchise to do it.

The goal is to create something that editors the Post might look at and recognize that there are reasonable indications of bias. Ideally, editors would start to think about how their priorities, headlines, and lead paragraphs could be altered to be less biased.

Below is a first pass at a weekly analysis. For the main news section, the emphasis will be on stories and op-eds related to Donald Trump. For stories, I will tally positive, negative, and neutral, based on bias or spin. As long as there is no spin involved, then I consider the story neutral, even if it reflects on Mr. Trump very favorably or very unfavorably.

For op-eds, I don’t begrudge the paper running negative op-eds on Mr. Trump. I think that the job of the op-ed writer is often to complain and “speak truth to power.” The Post showed bias, in my view, by regularly running op-eds favorable to the Administration with Mr. Obama in office. I will make note of any op-eds that are favorable to Mr. Trump. I expect that in many weeks that tally will be zero, and I am not saying that it should be otherwise.

I will look at other biases in the front section, as well as in the Style section that covers arts and culture and in the Metro section that covers local news. For the Sunday Outlook section of op-ed essays and book reviews, I will tally the slant of non-Trump pieces. I will count the number that appeal to closed-minded progressives, the number that appeal to closed-minded conservatives or libertarians, and the number that offer something to people with open minds.

Read below the fold for the first week’s analysis.
Continue reading →

Consequences of Internal Free Trade

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Dietrich Vollrath writes,

The scale of the relative job changes, though, indicates that more of the losses have to do with free trade within the US than free trade outside of the US. The areas with relative decline lost 13 million jobs compared to the 1990 distribution of jobs. In total the US shed 6 million manufacturing jobs from 1990 to 2015 (18 million to 12 million, roughly). So this relative decline cannot possibly be a function only of manufacturing and international trade in manufactured goods. There is just too much relative movement out of the declining counties to attribute to this. This is a sloppy way of thinking about how this would work counter-factually (I’m ignoring spillovers entirely), but if you magically added 6 million extra jobs to those counties in relative decline, they would still be in relative decline compared to the Sunbelt in terms of jobs. They’d have 84.4 million jobs (as opposed to 78.4 million), but you’d expect them to have 95.6 million based on the 1990 distribution, so they would still be 11.2 million jobs off the pace.

Pointer from Mark Thoma. I recommend the entire post, which is rich in data analysis. One thought that occurred to me in looking at some of the information is that job losses have tended to occur in large metro areas long controlled by Democrats, and job gains seem to be in locations that are a bit more fluid politically.