Ideas vs. Interests

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In the latest Critical Review, Jeffrey Friedman argues against those who would interpret politics entirely in terms of individual interests. He says that ideas matter, and that ideas do not necessarily coincide with interests. However, things like the squelching of patent reform are indicative that interest matter.

The Murray Edelman view of politics that I learned at my father’s knee was one in which ideas do not matter. Instead, politics is a contest among insiders (as in the linked story, between tech lobbyists and trial-lawyer lobbyists), who have rational interests. The public is treated to political theater, using what Edelman called symbols. While the public is paying attention to the theatrics (think of Ferguson, or ISIS, or the controversies over contraception and Obamacare), the insiders are helping themselves to the real goodies.

Random Reading of Pseudonymous Authors

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1. A review copy of The Mystery of the Invisible Hand, by “Marshall Jevons.” A didactic novel, better than I expected, but not as good as The Price of Everything. I did finish it. My favorite passage, though, is when the author quotes Carl Christ.

Some people think that economists care only about money. I have heard an unkind critic say that an economist is someone who would sell his grandmother to the highest bidder. This is quite wrong. An economist, or at least a good economist, would not sell his grandmother to the highest bidder unless the highest bid was enough to compensate him for the loss of his grandmother.

2. How Civilizations Die, by David P. Goldman, who writes columns as “Spengler.” Very anti-Islam, very pro-Jewish and pro-Christian, very heavy on the civilization-barbarism axis. Not a book you turn to for even-handedness or diplomacy. One representative sample:

Wherever Muslim countries have invested heavily in secondary and university education, they have wrenched their young people out of the constraints of traditional society without, however, providing them with the skills to succeed in modernity. An entire generation of young Muslims has lost its traditional roots without finding new roots in the modern world. The main consequence of more education appears to be a plunge in fertility rates within a single generation, from the very large families associated with traditional society to the depopulation levels observed in Western Europe. Suspended between the traditional world and modernity, impoverished and humiliated, the mass of educated young Muslims have little to hope for and every reason to be enraged.

I think that recent events will lead people to give more consideration to such darker outlooks. If Presidents Bush and Obama had something in common, it is that they both believed that the process of political modernization among Arab Muslims would prove simpler than it has. Bush was overly optimistic about Iraq, and Obama was overly optimistic about the revolutions in Egypt, Libya, and Syria.

For a different take from the civilization-barbarism axis that is too long to excerpt but interesting, see Forfare Davis.

By the way, my Facebook feed has changed radically in recent months, with much less political snark and a surfeit of cute animal videos. Part of me wonders if something like that happened in Britain when Hitler took power in 1933. Was politics just too unpleasant to contemplate at that point?

All Solid for Fluidity

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Davis and Haltiwanger write,

Our discussion leads to the hypothesis that fluid labor markets promote high levels of employment. Conversely, according to this hypothesis, a secular decline in labor market fluidity is a force for lower employment rates.

…The loss of labor market fluidity suggests the U.S. economy became less dynamic and responsive in recent decades. Direct evidence confirms that U.S. employers became less responsive to shocks in recent decades, not that employer-level shocks became less variable…

The authors only speculate about the reasons for a less fluid labor market. An older labor force; changes in business models (I think of big firms coming in to replace mom-and-pop retailers), occupational licensing, health-insurance job lock?

What Else I’m Trying to Read

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Jeffrey Friedman’s latest essay in Critical Review. A snippet:

On a question of values, as Max Weber recognized, one’s decision is simple, for values are matters of axiomatic faith: there one stands and can do no other. Empirical issues, while not nearly as dramatic as valence issues, are much harder to decide.

Recently, I was asked to write a short piece on why it is that economists who support a welfare state tend to also support a regulatory state, and conversely. I claim that economists have common values but differ on the empirical issue of whether or not technocrats are able to improve market outcomes. I came to take this view in part because of years-ago conversations with Friedman.

The focus of the essay is on thinking about what political actors believe. One particularly interesting issue concerns when elites hold different opinions from the democratic majority. In such cases, is it best to have a political system that defers to elites or one that defers to the majority? If you need an example, think of open borders.

The issue of Critical Review is self-recommending, but I am just getting started with it.

Possibly relevant: Cass Sunstein, who writes,

It’s not easy to solve the knowledge problem, but in the modern era, regulators are in a far better position to collect dispersed information from the public. On this view, the goal of notice-and-comment rule-making is emphatically not to conduct an opinion poll, to take some kind of political temperature, to see how much applause a proposal is able to attract, to defuse public opposition, to engage in some communications strategy, or to collect the digital equivalent of postcards (even though a number of those are sometimes sent in). Instead, the goal is overwhelmingly substantive, in a sense even Hayekian—to fill gaps in knowledge and to see what might have been overlooked. In particular, the agency’s assessment of the likely consequences of regulations is subject to close scrutiny. If the agency has inaccurately assessed costs and benefits, public participation can and often will supply a corrective. Democratization of the regulatory process, through public comment, has an epistemic value. It helps to collect dispersed knowledge and to bring it to bear on official choices.

As is often the case, I do not find Sunstein persuasive.

Asymmetric Employment Adjustment

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From a paper by Ilut, Kehrig, and Schneider.

Suppose hiring after good news is slower than firing after bad news. A bad aggregate shock that lowers the mean of the distribution of private signals then has two effects. On the one hand, the mean signal is lower so hiring falls on average. On the other hand, the typical signal now brings bad news and thus generates a stronger employment response. As a result, dispersion also increases.

Asymmetric adjustment to provate signals leads to a number of predictions beyond the comovement of aggregate volatility and cross sectional dispersion. In particular, it should induce negative skewness of employment growth in both the cross section and the time series. Moreover, firms’ actions in anticipation of relevant fundamental shocks should depend on the sign of the shock realization: for example, bad (good) productivity realizations should be preceded, on average, by large drops (small increases) in hiring. We verify both sets of predicitions in Census data.

…One posssibility is that the logistics of the hiring process directly make hiring more costly than firing. This could be, for example, because hiring new workers is subject to costly search, whereas firing is free. A second candidate for asymmetric adjustment comes from information processing: if firm decision makers are averse to Knightian uncertainty (ambiguity) and are uncertain about the quality of signals, then it is also optimal to respond more to bad news.

From a PSST perspective, I think that lots of new information, which could include good news as well as bad, could lead to a recession. We have figured out that previous patterns of specialization and trade are no longer sustainable, but we are not sure where the new ones are.

What I am Trying To Read

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Casey Mulligan’s Side Effects, about the labor market effects of Obamacare. I suggested the title, after hearing him talk on the subject.

One snippet:

the ACA is still the third largest marginal tax rate hike during the seventy years.

I am finding it a tough slog. Part of it is that the e-book is not my preferred format for absorbing numerical and mathematical analysis. Part of the problem is that health care law is complex, which makes the economic analysis difficult.

Teaching, Batting, Craft, and Science

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Today I happened to have lunch with Russ Roberts, so we discussed his talk with Elizabeth Green. Some notes:

1. I like his analogy between the task of teaching and the task of hitting a baseball. In both cases, there is a limit on what you can learn by studying books or videos. At some point, you have to learn by trial and error. In baseball, a coach can do a lot to make a hitter’s practice more productive. Green, influenced by Doug Lemov and others, argues that a coach can do a lot to help a teacher.

2. This helps to bring out the difference between a science and a craft. You can learn a lot about science, such as chemistry, without trial and error. You can learn a lot through reading and through ordinary instruction in the classroom and in the lab. But you cannot learn much about hitting a baseball that way. Or you cannot absorb much of what you learn. Instead, you learn best by trying to hit and by being coached on how to hit.

3. My experience as a high school teacher have convinced me that these issues of “craft” are important. I think of most pedagogical theory as something that you could apply to writing a textbook or creating a MOOC. But actually getting a classroom to function takes a lot of skills that one can acquire only through practice and by responding to feedback. Green’s point is that American education methods tend to minimize teachers’ opportunities to receive coaching and feedback.

4. Coaching itself is very much a craft. In the case of hitting, how many people really know how to teach hitting really well? And can any of those people convey their knowledge of coaching well to others, so that other people can learn to coach hitting really well? The analogous problem exists in education. If “building a better teacher” is a scalable solution in education, then you need to find people who can teach teacher-coaching in a scalable way, so that there are enough good coaches of teachers to build lots of better teachers. I am skeptical that this is the case.

5. Coaching can improve any hitter. But it cannot make just anybody into a really good hitter. So I am also skeptical that you can make almost anyone into a really good teacher.

6. For me, the hardest things for a teacher include:

–understanding how students get things wrong, so that you can steer them from wrong to right.
–dealing with the trade-off between introducing new concepts and trying to solidify the concepts you taught last week, particularly when you have students who are at different levels of mastery
–trying to engage in cognitive instruction and deal with behavioral issues at the same time
–motivating students to reveal to themselves what they do not know and to work on those deficiencies

Russ Roberts interviews Elizabeth Green

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She says,

when universities took over teacher training and created the first real professors of education, what they did was they recruited people from other disciplines to do this job. So, they would recruit people who studied psychology, for example–that was one of the first major fields to be imported into schools of education. And then they would have these psychologists. .. You are studying learning, and teaching is very related to learning. But the professors of education, even in psychology, did not have any interest in teaching. In fact, the guy who is known as the father of Educational Psychology, Edward Thorndike, he told people that he thought schools were boring; that he didn’t like to visit them. And when he once was speaking to a group of educators and a principal asked him a real problem of practice–you know, this thing happened in my school today, what should I do, what would you do, Professor Thorndike? And Professor Thorndike told him: ‘Do? I’d resign.’ He had absolutely no interest in real problems of practice. And I think that’s carried through. Today we have, in education schools, we have people in the history of education, the psychology of education, the economics of education. But we have very few people who study teaching itself as a craft. And as a result, the folks who are left to train teachers in teaching methods are drawing on a very impoverished science. And they have very little to draw on. There’s been a little bit of a change in the last 20 years, and that’s what I write my book about. I think there are emerging ideas about what teachers should be able to do. But kind of no surprise that teachers don’t leave teacher training prepared for the classroom when we haven’t really put any resources into figuring out what we should be preparing them to do.

As a teacher, you need to know things like how to explain something to a student who is not getting it, or when to keep reinforcing a concept and when to move on to something else, or how to manage a classroom so you can accomplish what you intend to accomplish. Those are “craft” issues, as opposed to “theory” issues.

There is an analogy with business management. A business school can bring in economists to teach profit maximization using calculus, but that is of little practical value in the business world. Harvard and other business schools try to use case studies rather than rely on pure theory. And there are many books on management that are “craft” oriented with respect to handling people or improving sales.

I say that teaching equals feedback. That means that teachers need feedback in order to improve their teaching. I agree with Green that there are better ways to organize schools so that teachers get faster feedback and incorporate it more effectively. How rapidly that can improve teaching is less clear to me.

Listen to the whole thing.

UPDATE: Her book is also reviewed in the New Republic (pointer from Mark Thoma). The review, by Richard D. Kahlenberg, is tendentiously political and uninformative. He says that Green has “one big idea” and then fails to mention what it is, and in fact he seems to have missed it completely. Kahlenberg really likes the idea of raising teacher salaries a lot. But if Green is correct that good teaching is not just a talent you are born with, then you should not need to attract talented people into teaching by paying them more. Instead, you should put those resources into giving teachers better feedback and training.

I see Kahlenberg’s review as an illustration of the way that people look at education through biased political lenses (not that I claim to be innocent here). This only increases my skepticism about anyone’s solution.

What We Know About Health Care Waste Isn’t True?

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Louise Shiner writes,

geographic variation in health spending does not provide a useful way to examine the inefficiencies of our health system. States where Medicare spending is high are very different in multiple dimensions from states where Medicare spending is low, and thus it is difficult to isolate the effects of differences in health spending intensity from the effects of the differences in the underlying state characteristics. I show, for example, that previous findings about the relationships between health spending, the share of physicians who are general practitioners, and quality, are likely the result of omitted factors rather than the result of causal relationships

Russ Roberts often asks whether any empirical work in economics changes one’s mind. I would say that the Dartmouth studies changed my mind about health care spending in the U.S., convincing me that much of it is “wasted” (I prefer “spent on procedures with high costs and low benefits”). However, there have always been those who doubted the validity of those studies, and this appears to be a particularly strong critique.

On the other hand, see Austin Frakt’s overview of the literature.

Joshua Gans on Apple Pay

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He writes,

This is why I think the resolution for the identification challenge is more significant. Last year, with the iPhone 5s, Apple finally got fingerprint recognition right. Last week I actually had to use a iPhone 5c for a few days without Touch ID and I couldn’t believe how much I had learned to rely on it. It really does work and you really do use it and it really is less hassle than a pin or even swiping to unlock the phone. But the security issues were not paramount but a fortunate side product.

Now they are paramount and what is more Touch ID solves the identification problem. It is really hard for criminals to spoof it or steal your identity using it. They would literally have to hold a gun to your head or take a hostage and, frankly, at that point, they are better off just robbing merchants directly.

U.S. credit cards are quite insecure. Biometric ID would seem to me to be a big improvement. Financial intermediaries will still have to put in back-up security measures, so that somebody who figures out how to copy your fingerprint is not able to make unlimited purchases. But I see phone-based payment technology as leapfrogging the current European model of more-secure credit cards.

Incidentally, I want an i-Watch, as long as it can use Google Maps as input. It would make bicycle navigation easier, but not with the crummy default maps app. Since the product won’t be available for a few months, and it since it won’t be biking weather for a few months after that, there is time to see how it develops.