My segment starts about 3 minutes in, his starts about 15 minutes in. His is much more interesting.
Question from a Commenter
In your three-languages model of politics, it is usually the conservatives using the barbarism-civilization axis, and the progressives using the oppression-oppressed axis.
But given the recent murder of Sotloff by Islamic State terrorists, the vocabulary being used highly progressive sources to describe the event are very conservative sounding. Just today I heard President Obama, Secretary Kerry, reporters and commentators on NPR and C-SPAN have all talked about the event specifically using the words, “uncivilized”, “barbaric”, “savages”, “fiends”, “monstrous”, “beastly”, and so on.
It seems that they are being quite genuine in using these words as their honest appraisals and not paying lip service to the concepts.
So, what do you make of all that?
I have not been following these statements. Do they apply to the act or to the group? If you call an act barbaric without calling a group barbaric, then you are not really using the civilization-barbarism axis. If the progressives are calling ISIS as a whole barbaric, then that would represent a shift toward using conservative’s rhetoric. I have not seen a similar shift in rhetoric on Hamas–I do not know of any progressives who have described Hamas’ tactics as barbaric. I have not seen progressive use the word “barbarism” in describing Rotterham (Indeed, that story has been easy to miss if you only follow liberal media. The Washington Post put in the “religion” section quoted a member of a Muslim youth group as saying that the police “failed us,” so that the story fits the oppressor-oppressed axis). So on the whole–and again, I have not been following the statements on ISIS–I do not get the sense that progressives have undergone a major shift in their outlook.
Labor Force Participation
From a paper by Bill Wascher and many co-authors.
participation rates among youths have been declining since the mid-1990s, in part reflecting the higher returns to education documented extensively by other researchers, but also, we believe, some crowding out of job opportunities for young workers associated with the decline in middle-skill jobs and thus greater competition for the low-skilled jobs traditionally held by teenagers and young adults. Such “polarization” effects also appear to have weighed on the participation of less-educated prime-age men and, more recently, prime-age women. In contrast, increasing longevity and better health status, coupled with changes in social security rules and increased educational attainment, have contributed to an ongoing rise in the participation rates of older individuals, but these increases have not been large enough to provide much offset to the various downward influences on the aggregate participation rate.
…the nearly 2¼ percentage point decline in the aggregate participation rate we project over the next decade will continue to hold down trend output growth by a little less than ½ percentage point per year through the end of the decade.
Gender and Risk-Taking
Jason Collins favorably reviews The Hour Between Dog and Wolf, a book by John Coates, who says that hormonal responses to success and failure serve to reinforce risk-taking and risk aversion. I note from the book description on Amazon:
Dr. John Coates identified a feedback loop between testosterone and success that dramatically lowers the fear of risk in men, especially younger men—significantly, the fear of risk is not reduced in women.
I count this as additional support for what I have said I would do if I were financial regulatory czar: change the gender of the CEO’s of the largest banks.
DeLong-Term Interest Rates
when I look at the sub-zero 5-Year TIP and at the 0.6%/year 6-10 Year TIP I read that as Ms Market decoupling its inflation expectations from its real growth and real interest rate expectations, and not in a good way.
Read the whole thing. Pointer from Mark Thoma. My thoughts:
1. To me, the biggest macroeconomic/financial mystery today is the low ten-year real interest rate.
2. Ten years ago, the biggest macroeconomic/financial mystery to me was the low ten-year real interest rate. That, combined with loose mortgage credit standards, fed a housing bubble.
3, Why aren’t corporations borrowing like crazy? Issuing long-term bonds to buy back stock would seem akin to owning a money-printing press. (And yes, this is an argument that stocks are not overvalued.)
4. One possible story is that savers in China and Russia do not trust their domestic financial markets, so that their savings are pouring into the U.S., and from here spilling over to western Europe. But that would presumably make it expensive for Chinese and Russian borrowers. Is that the case?
Gregory Clark on Immigration and Income Distribution
Self-recommending, although I could raise many objections to his conclusion. Some excerpts:
There is reason to believe that many recent migrants to both the United States and Europe will have a much more difficult time than their predecessors. Meanwhile, the countries in which they settle are less likely to see the benefits of immigration as they experience heightened social tensions and widening social inequality. Policymakers would be wise to take those risks into account. Rather than focus on policies for integrating new immigrants, they should concentrate on avoiding selection policies that threaten to create near–permanent ethnic or religious underclasses.
…countries that selected elite immigrants to begin with now have high-performing immigrant classes. For example, the United Kingdom selects immigrants based more on education and skills. As a result, African, Chinese, and Indian immigrants outperform their British counterparts; although children of white British parents born between 1963 and 1975 attained on average 12.6 years of education, children of African migrants stayed in school for 15.2 years, those of Indian migrants for 14.2 years, and those of Chinese migrants for 15.1 years.
Pointer from Reihan Salam.
UPDATE: Also self-recommending is this Greg Clark podcast. Pointer from Jason Collins.
Being Charitable to those who Disagree
Maria Popova quotes D.C. Dennett on how to argue:
1. You should attempt to re-express your target’s position so clearly, vividly, and fairly that your target says, “Thanks, I wish I’d thought of putting it that way.
2. You should list any points of agreement (especially if they are not matters of general or widespread agreement).
3. You should mention anything you have learned from your target.
4. Only then are you permitted to say so much as a word of rebuttal or criticism.
Intellectually, I think only the first step is important. It is analogous to Bryan Caplan’s ideological Turing test.
Why Published Results Can be Unreliable
Mark Peplow reports on research by Neil Malhotra, who tracked research projects to compare those that were published with those that were not.
Of all the null studies, just 20% had appeared in a journal, and 65% had not even been written up. By contrast, roughly 60% of studies with strong results had been published. Many of the researchers contacted by Malhotra’s team said that they had not written up their null results because they thought that journals would not publish them, or that the findings were neither interesting nor important enough to warrant any further effort.
Pointer from Mark Thoma.
This is not shocking news. Can anyone find Malhotra’s paper?
The Book on SecStag
Coen Teulings and Richard Baldwin, who have edited a useful e-book of 13 short essays with a variety of perspectives on Secular Stagnation: Facts, Causes and Cures. In the overview, they write: “Secular stagnation, we have learned, is an economist’s Rorschach Test. It means different things to different people.”
Read his whole post.
The interesting secular trends include low real interest rates, low productivity growth, and declining labor force participation among prime-age workers.
From a conventional AS-AD perspective, low real interest rates are a demand-side phenomenon. The other two are supply-side phenomena. I wish the secstag folks would get together and sort this out.
I think that the most important secular trends are:
1. The New Commanding Heights. That is, the shift in the economy toward a lower share of goods consumption and a higher share of consumption of education and health care services. The New Commanding Heights are sectors in which productivity is difficult to measure and government interference is rampant.
2. The Great Factor-price Equalization. That is, the ability of workers with a given level of skills in China and India to compete with workers of equivalent skills in the U.S. This benefits the median worker in China and India as well as high-skilled workers in all countries, but it threatens the median worker in the U.S.
3. Vickies and Thetes. Or what Charles Murray calls Belmont and Fishtwon. In the U.S., there is extreme cultural sorting going on. People with high intelligence and conscientiousness are moving in one direction, and people who are low in those traits are moving in the other direction.
I think that (1) explains the low productivity growth. It could be partly a measurement problem and partly a problem of government putting sand in the gears.
I think that (2) and (3) explain the labor force participation problem.
What about low real interest rates? This one has puzzled me for a decade. Is it possible that (1) is the explanation? That is, the New Commanding Heights are not nearly as capital-intensive as the old commanding heights of steel, electric power, and transportation. Also, investment may be deterred because of the way government affects these sectors.
Culture and Institutions
Simple economics implies that government enterprises should be far worse than they really are.
I am reading (admittedly a bit late to the party) Peter T. Leeson’s collection of essays on anarchy. In at least one of the essays, he takes the view that the cultural margin is more important than the institutional margin. That is, he seems to be saying that there are no societies in which anarchy will work well but government would work poorly, or vice-versa. Instead, on the one hand there are well-developed cultures, which could have good government or good anarchy, while on the other hand there are poorly-developed cultures, which could have only bad government or bad anarchy.
I have referred often to the debate about the relative primacy of culture and institutions. I tend to side with the culturalists. The classic institutionalist counter-example is Korea. I think that it is reasonable to suggest that North Korea would be much improved under anarchy. But in general, I think that Leeson’s view, which I take to be one of cultural primacy, holds.