A NICE SOFT PLACE



I don't know why I do such things...just like I don't completely understand why music has such incredibly deep meaning to me that I would drop everything I am doing to sit virtually comatose for nearly 2 hours absorbing every note like a sponge...but that is exactly what's happened to me tonight. 

It is obvious to me that music is and always has been the life's blood of my very soul and that is in addition to also being the soundtrack of a life...namely: MINE. So that probably explains why I periodically find the need to just completely immerse or encase myself in sound...shutting out all other distractions until I seemingly come back to life with my Soul's Blood thoroughly & completely rejuvenated. 



More often then not, it is solely the music of one particular band that I will listen to and it is typically the band I find myself listening to the most right now anyway. That is just my way...I tend to focus on an artist and pretty much listen to them until I have completely exhausted myself on every aspect of them and their music...at least for the time being. This often can take time as in several months before I tire of a certain band .

Currently that band has been an old favorite: PEARL JAM. I have been basically listening to nothing but PJ for several months now. I have been helped in this endeavor by the fact that Sirius/XM Radio has a PEARL JAM RADIO Channel. They basically feature one live show after another and I am hooked.

I am not sure exactly what prompted this Musical "SOUL SESSION" with Pearl Jam but I have really been feeling lop-sided emotionally...translated I suppose that means I am feeling out of balance or not even f**king close to balanced, he he.

I will break from tradition and NOT post the YouTube Video's here but instead list the songs and if you feel up to it you may track them down yourself...

I think listing the titles says a great deal about "The State Of My (Personal) UNION". So Here they are:

NOTHINGMAN
GARDEN
ANIMAL
LEASH
INDIFFERENCE
IMMORTALITY
PRESENT TENSE
CRAZY MARY (Cover: Victoria Williams)
CROWN OF THORNS (Cover: Mother Love Bone)
BLACK
RELEASE
PORCH
HUNGER STRIKE (Cover: Temple Of The Dog)
BETTER MAN
BROTHER
JEREMY
CORDUROY

Now it's probably time for someone to call the folks with the nice big truck with the wonderful little men in their nice white coats and super big syringes to take me home to a nice soft place....FOREVER.


A thought on the policy consequences of fiscal talk

We talk about taxes in terms of rates. We talk about spending in terms of levels.

There's good reason for that of course, since those are the units of the policy decisions.

But what are the implications of this way of talking about fiscal policy? It's going to bias people into thinking "spending is out of control". As a result of inflation, population growth, and economic growth, the levels of both revenue and outlays are going to be continually increasing, even if the role of government in the economy stays exactly the same. The same is true of revenues, of course. But that's the point - nobody talks about tax policy in terms of revenue levels (unless they want to just flash big numbers). They talk about it in terms of tax rates. When tax rates have stayed steady but spending levels have increased, it's very hard to make the argument that we need to raise taxes.

There's also a credibility argument to it. Spending is going to keep increasing no matter what. Any effort to balance budgets by pulling back on spending - even if it helps to reduce deficits - will always look like it has failed, since all the opposition has to do is wait a little while and let it keep creeping up.

Tax cuts have no such (apparent) credibility problem. When Congress cuts tax rates they're cut. Tax cutters look like they keep their promises, even if the government actually collects more revenue over time (for the same reasons they spend more money over time).

Boiler Hopeful


I'm not sure I even want to post anything this afternoon because I have not been feeling very positive about much of anything of late. And there really hasn't been any thing too exciting going on in the world around me other then Purdue fired their Head Football Coach and are actively looking to replace him as soon as they can. That move my sports minded friends...has bee way to long in coming,

No word on the hiring front so it is probably going to take a few days. It at least looks like Purdue's Administration is at least willing to shell out a few bucks for a decent compensation package for the Head Coach plus Assistants, so maybe we can actually put together a competent coaching staff to go along with a fairly skilled group of players.

All we can do is wait and see.          

Costco is not necessarily as cheap as Wal-Mart

People are talking a lot about how Costco treats workers better than Wal-Mart and does well and that it offers a better "big box store model".

I don't know how widespread Costcos are or how many people actually shop there, but I think it's important to recognize that these are not exactly the same shopping experiences. You have to pay a big up-front fee with Costco that you don't with Wal-Mart. And it's different products. Costco let's you buy a lot in bulk. Wal-Mart has some bulk purchase aspects to it, but mostly it just has a whole bunch of cheap stuff.

We were Costco members for two years, but if you're just buying for two it's not the most cost effiective way of shopping. Ten years from now I could see us joining again.

It just makes me wonder: is Costco able to be better to its employees because its actually not as low-cost of a store, it just seems that way because it has a warehouse/wholesale-type feel to it? Everybody's been making a big deal about the differences on the side of labor costs, but there are big differences on the other side of the ledger as well.

Costco is great for salmon, sun-dried tomatoes, and beer. We got our flat-screen there too.

returning home

what were we thinking? truth be told, we had signed up for a dance conference without the forward thinking of realizing the conference fell on thanksgiving weekend. in san francisco. in union square. we arrived 15 minutes after the tree lighting ceremony ended. this is what it looked like the three blocks we trudged up powell with our luggage to get to the st. francis. (thank you theresa rougeau for the photo)
 i wish i could say our stay was wonderful. the people we accompanied were, for sure. being with bella and caroline plus debbie and the girls was a real treat. and although the hotel was lovely, we simply did not sleep the first night.i was unable to capture any photos the first night with the exception of this one ipad shot: (photo: sarah ryann)it was literally like a train station. too many people.

 the following day i ducked out of an afternoon class to shoot a bit of the environs...
(stair wells were far faster than the elevators)
i don't know how i captured these rooms without swaths of people, but i did. i imagine it is a lovely place to be, when quiet.
(this is more like how it felt)
 my girl, for whom the trip was about. jazz, ballet, hip hop classes back to back in ballrooms.
  (senior room above, junior room below, where bella danced)
 my two girls :)

the (new) room, in the towers, 9 stories higher than room #1.
 ear plugs to ward off the street noise = achieving necessary sleep!
exhausted and fighting a stubborn head cold, we headed back down powell, through crowds with bags, cars, buses and panhandlers, to the underground station.
 and back through the pearly landmark gates of home. ah! is there anything better than returning home?
 

day of thanks

friends and family, turkey and all the fixings, swapping stories, reminiscing, decorating the navy museum and simply being with each other, that's how we spent thanksgiving this year. 
what about you?


How legit is the DC area boom?

Scott Sumner and Josh Wojnilower link to a Glenn Reynolds post on how federal power props up the DC area economy (that's tricky to nail down in and of itself, which is important to realize - to a large extent this means most people south of Baltimore, north of Richmond, west of Annapolis, and east of West Virginia - that whole area is on the same growth trajectory).

To a certain extent this is clearly true. But I'd push back a little on this. Certainly the federal government got the ball rolling on growth in the area (it was a swamp before they came in, after all), but the bigger point is that the federal government makes the region more stable/less cyclical. That is obviously really nice. But take it from someone who pays a mortgage with a federal salary: the federal government is not a growth industry right now. I haven't talked about it on here because I've never been in the mood to read comments about how it would be better if a bunch of federal employees were shown the door, but we have real concerns about whether Kate's employing agency will even exist if sequestration goes through (to say nothing about the pay freeze that's been in place for a couple years now). The graph below (indexed to the peak of the cycle - spike is obviously Census) illustrates the point. The federal government is stable to be sure, but not some kind of robust contributor to the region right now except insofar as we're talking about its acyclicality.

FRED Graph

The article mentions Tysons, which is a mess to drive through right now from construction.

That is not the result of the federal government's power.

So what is it?

Self-sustaining growth to a large extent. There's a lot of tech firms and medical research in this region, and it's also just an up and coming population hub that's nice to live in. Why is that the case? Certainly the feds had a role. Tech firms got into this position of self-sustaining growth because defense contractors moved in over the last fifty years. The health sector got into this position of self-sustaining growth because NIH was here. That's all true - I'm not trying to deny the role of the federal government. I'm just pointing out that although it's due to a federal spark, the growth in this region is self-sustaining. Could it survive if the federal government vanished tomorrow? Of course not. New York City would be in trouble if Wall Street vanished tomorrow too, though. It's part of the ecosystem - just tearing it out would be a big problem. But there's clearly more to New York City's economic vibrancy than Wall Street.

One other point: in a balance-sheet recession where one of the most important items on the balance sheets in question are homes, a little acyclicality in the housing market can go a long way toward paving the way towards steady recovery. In other words, it may not be so much that federal power is propping us up as it is that the federal government's presence prevented the sort of balance sheet problems for Washington area households that could have kept us mired in continuously depressed labor markets. It's not the federal power is growing - it's that it did not shrink at a very critical time for area households.

Why can't Gene post interesting things on my schedule?

I mean seriously Gene!

I am busy with a paper today but I wanted to highlight a couple more posts from Gene on monkey brains and objective truth:

1. This one (I have issues with how he characterize my argument here, which I note in the comments. Then I have issues with how he characterized my comment, which I also note in the comments - once it's through moderation).

2. This one too (haven't read yet - hopefully will later today)

3. And this one (ditto)

Also, please take a look at the comment section of my other post - some good discussion is going on there.

This is because I'm shocked no one has made an Indiana Jones reference yet

It's The SAME, Yet Different...


One of the most difficult aspects of recovery for me has been accepting my current situation as it REALLY is. I spent so many years in the past telling myself things were OK when they weren't. I never accepted responsibility for what had happened and as a result I could always pretend it wasn't really real and thing's would change. This was an absolutely normal pattern of living for me for decades. It was easy to justify the bad behavior and make excuses for it because I was working, making good money...those facts are easy to manipulate.

I really did live a fantasy world type existence.  I know that it is really hard for a normal (read:sober), hard working member of our society to comprehend. But one must remember that I was rarely if ever in a sober and sane frame of mind. As time wore on it got worse..the line between sane and the insane blurred to such an extent that it was no longer possible to tell the difference.


That is why today I value my sobriety clear mind and faculties as much as I do. It is such a pleasure to be able to think clearly.


The next several posts I am going to explore how difficult it was to not only make the change and get sober but the almost impossible task of staying that way... 

Terrible

Our house has been in a load of turmoil the past several months.  We are dealing with a very difficult childhood stage right now with our boy.  One that our girl never really went through.  Or maybe she did but certainly not to this extreme, or in a different way. Somehow I could, and usually still can, always get inside Ruby's head.  I have yet to find the key to mastering Lincoln and this troubles me.

I googled, "Terrible Twos" today.  Just to make sure that that was indeed what we are dealing with and not that my son is experiencing a demonic possession.  Google confirms that we in fact, in the the throws of a classic case of the Terrible Twos.  I'm glad because I don't know of a lot of priests will perform an exorcism on a 2 year old boy.  Well, I don't actually know *any* priests at all so I guess I'd really be in trouble.

"Characterized by toddlers being negative about most things and often saying 'no', the terrible twos may also find your toddler having frequent mood changes and temper tantrums."


Except switch out "often saying no" with "repeatedly screech-crying NOOOO over and over and over" and change "frequent mood changes" with "irrational, wild behavioral swings" and replace "temper tantrums" with "psychotic breaks with reality" then you've pretty much summed up what we've got going on. 

So now that I know for sure what I'm dealing with, how do I deal with it?  Google suggests a few things like a stringent schedule, limited choices, and not laughing at them when they throw a tantrum.

Laughing?  During a tantrum? 

Don't worry, Google, I can assure you laughter is not my go-to expression when someone is thrashing and stomping and kicking and punching and screaming at the top of their lungs all because a cheese string was removed from it's wrapper in a manner that the boy doesn't like.

Google also says to never give in to tantrums.  Really?  Because sometimes if I just get him a new cheese string and remove the packaging properly (whatever that means, it's different every time) things settle down. Yes, sometimes it takes 4 or 5 cheese strings for me to get it right but it's so worth it in the end.  So that isn't OK?? Christ, at times I would be willing to sell my soul to get him a new Ferrari if it would just make him settle down. 
I had my cards read this weekend and I was told to focus on a question or something that has been troubling me during the reading.  Well, this situation is what came right to mind.  The cards kept showing conflict between my head and my heart.  My head and my heart.  Damn straight, Tarot cards.  My head is constantly trying to be technical about this and not take it personally, to remember it's a stage, it's his age, he can't help himself.  My heart is often sad and hurt that this sweet, awesome boy that I am insanely, madly in love with, is acting like a wild, vicious primate. 

Compounding the trouble is that we have a tenant living in our basement suite. We have hardwood floors and it's far from soundproof.  It make it ten times more difficult, embarrassing and stressful knowing someone can hear your every cry, stomp, scream, tantrum, argument and it sometimes leads me to parent in ways that I would rather not - like getting even more frustrated when I can't calm things down.

Last night, after another wild ride, Steve and I looked at each other and agreed, "OH MY GOD, THIS IS HELL!!! HOW DO WE GET THROUGH THIS???!" Near tears, my brain/heart conflict came into play again and I logically reminded us both that we are in a phase.  It's just a phase.  He will grow out of it.  It's not forever.  We just have to get through.  He is a sweet, loving, funny boy and he is just in a phase.
It IS just a phase, right?  It's not forever, right? 

Right?

Please tell me it's just a phase.  Even if it's not true.  I need to have a light at the end of the tunnel that isn't a train.

Brad DeLong is making a real monkey of himself

And I mean that as a compliment.

Specifically, he makes his way in the world using "a set of heuristic guesses made by a jumped-up monkey with a set of brain circuits designed to detect whether the fruit is ripe or it is safe to jump to the next branch".

And of course, that's true of all of us.

I do not know Nagel, so I will not jump into that particular fight with Gene Callahan. But speaking of monkey brains specifically, Gene trots out the tired old "if it's just a heuristic guess or convenient fiction then you can't prove the claim - you're just guessing about the fact that you're guessing!".

Right. That's the point.

And you're just guessing too. The thing is, Brad and I know we're guessing.

The metric is not whether we have plumbed the depths of objective reality. That sounds like a good metric on paper, but it's not a metric that we have access to. Instead of criticizing Brad on the basis of a metric that neither Gene nor Brad have available to them, perhaps we should come up with a different metric. Something like "does this heuristic seem to help me navigate the world".

That doesn't pose the same sort of problems as the metric of consistency with objective truth. We may argue about it, but I don't see what's wrong with that. Gene and I may never agree about the claims that best help us navigate the world, but I Gene and I can both have more confidence in the sentence "this claim helps me navigate the world" than the sentence "this claim is consistent with objective truth".

That seems pretty good to me.

And it turns out that even though we have to accept a degree of pluralism and disagreement when we abandon "objective truth", we still seem to generate a fair amount of agreement. It's not hopelessly disordered. There seems to be enough consistency in peoples' subjective experience that we can generate a set of claims that a lot of people agree with.

What more could you ask for? That's pretty good for a monkey, right?

UPDATE: Nagel's way of thinking, of course, is itself a heuristic that does a decent job helping people navigate their world. It staves off existential anxieties, explains the order we see, reinforces social institutions, along with all sorts of other benefits. That's why it endures. That's even why it's worth talking that way sometimes. But that doesn't mean it is "true" in the "objective truth" sense of the word "true".

Coase and Wang are starting a new journal, with an overwrought (but unavoidable) theme

Slightly old news, but I just came across it. From an interview by Nick Shultz: "We are now working with the University of Chicago Press to launch a new journal, Man and the Economy. We chose our title carefully to signal the mission of the new journal, which is to restore economics to a study of man as he is and of the economy as it actually exists."

I look forward to the project. However, this way of putting it always bothers me. Why the hell do they think we all got interested in economics in the first place? Because it was "a study of man as he is" and "of the economy as it actually is"!

This sort of critique gets tired, IMO. Pretty much every economist makes this claim for their work in one way or another. I am restoring economics to a study of human social behavior as it actually is! Those people over there are just playing with unrealistic models! I'm getting to the real thing!

Seriously - can you think of a single economist that doesn't raise this banner over their work? Name me one that doesn't genuinely think this is what they are doing. Maybe the economics equivalent of the machine tool industry (econometricians, etc.) - but even they're building those tools in service of people who are "restoring economics to the study of man as he is".

I don't take Coase too seriously (yikes... that was agonizing to write) when I read this. I've read similar statements too many times before. Everyone thinks this.

I read this statement as saying "Human society is complex and multifaceted. It's hard to take into account everything you'd want to take into account. There are some things I wish people would focus on more and some things I wish they'd focus on less. I'm starting a journal that's going to feature things I wish they'd talk about more and it will reject papers about 'man as he is' that happen to focus on things that I don't want to focus on".

That is not as dramatic, but it's still intriguing. After all, Coase is brilliant. This mission statement would suffice for me. I'd love to get better acquainted with things that Coase thinks are important to focus on. He certainly hasn't disappointed in the past.

As for "restoring economics"... meh.

Self-appointed restorationists ought to be taken with a grain of salt, even if they're Ronald Coase.

The economics of space

As I've pointed out before, it is very hard to make a profit-maximizing case for anything outside of low Earth orbit (although there are lots of profit maximizing opportunities there). Tim Worstall goes through the sad truth about asteroid mining. Getting access to those sorts of deposits could revolutionize life - it's not that the treasure trove isn't an enticing prize. But it's unclear whether it's a viable business plan:

"Start from the size of the platinum market. This is some 6.2 million ounces a year. 6.5 million ounces of virgin material, that is: given the value of the metal some to all of past usage is recycled as well. At our $2,000 an ounce price guide, that gives us a market value of some $13bn a year. That certainly seems large enough to keep a space programme running. (Do note, I'm ignoring palladium, a similar sized market, and rhodium etc, which are much smaller ones. They don't change the final conclusion by their inclusion or exclusion.)

Except that's not quite how markets work. There are demand curves as well as supply ones: sure, a nice high price will encourage new entrants like Planetary into the market. But in order to shift all this new material, prices will have to decline. The important question therefore is how elastic is the market? How far, if at all, will the price fall if a new supplier enters? From a recent trade report we've seen recently, an extra 250,000 ounces has come onto the market. This has led to a 25 per cent fall in the price of platinum. Ah! Price is very sensitive to an increase in supply, then. Or, if you prefer, demand is very insensitive to a change in price. They're the same statement, really.

Now it's true that such sensitivities do not stay the same as you move up or down a supply or demand curve. As our little economics lesson for the day, think about the demand for water: if you're getting less than one litre a day you'll pay just about anything at all to get more. When you can have a swimming pool full just by turning on the tap then you'll not pay much for each marginal unit. And such demand curves can invert too: when that pool overflows into the basement you'll happily pay to have the water taken away, a negative demand for water.

But back to PGMs. We have something that we know the demand for, in the short term at least, is relatively insensitive to price. An increase in supply of as little as 250,000 ounces - seven metric tons - will drive the price down by a quarter. So instead of the $500m they were hoping for, our lads would only (yes, I know, “only”) get $375m. Can we run a space programme on that? The more platinum they try to bring down from space the lower the price gets, and so even more has to be brought down to finance the whole shebang."

So are we doomed to be Earth-bound until we're so technologically advanced and gasping for clean air and new resources on a crowded, hot planet that it makes sense to venture into space?

No - we just need something other than the profit-motive to get us there. Not everything is done with profits in mind. Quite a bit of what gets done is done by non-profits after all, and then of course there is the government. Arguably, even "profit-maximizing" firms have goals other than profit-maximization. People do benefit from space exploration, the problem is those people are not alive today and they do not have equity stakes in aerospace companies. They're people like the human residents of Mars in 2512 or the human residents of what we now call "exoplanets" in 4012.

Profit maximization is not going to do anything for these people. But there are people with visions for a better future, and those sorts of people can get the ball rolling. One example is Elon Musk who spoke recently about a Mars colony with 80,000 residents. He's not proposing things like this because it's profit-maximizing. He's proposing it because he has vision.

This Melville line really speaks to me as I finish my econometrics paper

"There are some enterprises in which a careful disorderliness is the true method"

He's talking about whaling, but it seems true about a lot of life.

How good do you all think the Hayek/Prescott-Lucas comparison is?

Peter Boettke has noted it in the past, but Bob Murphy doesn't seem to like it when Noah Smith makes the point more recently.

I think it's fair to say that Hayek's model is "frictionless", although that's not the stand-out feature. Hayek very much offers a real version of the business cycle. It's a "real business cycle" caused by monetary non-neutrality of course - and that is different. But most importantly, unlike Friedman, Lucas, Prescott (and a variety of others) returned to more Hayekian themes on the capacity of government to deal with the business cycle.

They're not Hayek of course. You can obviously find differences because they're different people! But within the mainstream, I think if you had to identify a re-emergence of Hayek it would be in these sorts of guys and these sorts of ideas.

btw - Solow writes on Hayek and Friedman here, and Evan shares an interesting Harvard Press blog post on Burgin's book here.

Grey's OK W/Me!


One of the things that I have found about blogging here on Shell Shock Serenade is that the relationships that you forge and build on are just as real and important sometimes as the face to face relationships we make every day.

Yesterday...really the last few days, the subject matter of my posts have been kind of hard and difficult and immediately I have a couple people reaching out to me to make sure that all is well...that I am just writing about this stuff and not actually re-living it. I don't know about you but that is a pretty cool thing as far as I' concerned. I'm not used to it. Typically I always felt that I was on my own and now I just feel more connected...and it is a feeling that I really, really enjoy.

I guess I would have to say that I am still in sort of the same place today as I have been the last couple of days...it's actually "my norm" really. I was never too much of a "rah-rah" kind of person and this is my kind of of day...grey, cool and dark. It doesn't really depress me...no, I actually prefer it to sun. Yea...I'm strange that way!

That is what I have for the moment. I actually managed to lay down for a nap at 3:30p and before I knew it, it was dark and 6p. So I gotta get moving so the day (night) isn't a total LOSS!

A few more thoughts on the medical labor market

1. It seems perverse to say that the medical labor market is problematic because Medicaid and even Medicare reimbursement rates are so low. Let's say the Defense Department used it's monopsony power to consistently force prices for weapons systems below what it really costs to make them, leading defense contractors to exit the market. It seems to me that suggesting the defense industry's labor market is out of whack is the wrong response: the right response is to fix the payment system (something a lot of people want to do with Medicaid and Medicare).

2. I am reading mixed things on whether Medicare funding of residencies or the residency review boards themselves are clogging up medical labor markets - particularly specialties. The latter makes a little more sense to me. Medicine is a lucrative field. If the governments' entitlement program can't bring itself to fund all the positions that need to be funded, I can't imagine the funding can't come from elsewhere. My brother is engaged in a PhD program in theology due to the generosity of University of Chicago undergrads. Surely schools benefit enough from their hospitals relative to the benefit that the University of Chicago receives from its theologians that most could manage the same for medical students if they had to. My guess is the blockage is elsewhere, although there could certainly be problems with institutional evolution on this front.

Life advice from Melville

"In all cases man must eventually lower, or at least shift, his conceit of attainable felicity; not placing it anywhere in the intellect or the fancy; but in the wife, the heart, the bed, the table, the saddle, the fire-side, the country."

Tyler Cowen as A.C. Pigou

A very thoughtful review of Wapshott's book by Noah Smith includes this and other analogies to the modern blogosphere. I think that's good. I've never quite been comfortable with the take on Cowen as an impartial judge. He does have a clear viewpoint, and yet there is an air of impartiality about him. Noah nails it - Cowen is Pigou!

Read the review - great stuff in there. Except I'm pretty sure Economica is still going strong.

The Health Workforce: Are DeLong and Henderson Worrying too Much?

Brad DeLong sees health workforce constraints as a problem with the increased demand that will come along with health reform. David Henderson gives him (somewhat unwelcome) praise for making the point.

I don't know what to think, but this sort of talk makes me uneasy. Why shouldn't the increased demand bid up health worker wages? Why shouldn't that draw new people into the field? One reason why is the AMA, which puts constraints on this market that I wish I understood better. But this still seems like an odd worry to have from the get-go. I feel like I need to have a good reason before I get worried about this. Health care is a well-paying, well-respected profession. If it had stagnant wages and reputation I might look to the increased demand from health reform with more concerns.

I told myself that I would use the Shapley/Roth Nobel as an opportunity to learn more about the health workforce, after being exhorted to by Brad himself. I did do a medium-thorough skimming of several of Roth's articles but then other obligations butted in. Maybe this winter break - it is an important issue. Does anybody know about a good book on this labor market?

Can someone tell me why my labor demand subsidy is giving me numbers that look like a labor supply subsidy?

Arrrrggghhh

Nice, positive employment effects. Nice, negative wage effects. What the hell is going on here? If I were looking at Georgia's EITC program I would be quite happy with all this. But I'm not.

Two ideas to improve economics

- The first is one I discussed with my psychology PhD student sister-in-law and her psychology PhD student fiance over the holiday (they have a lot of the same publication bias issues in that field). They seemed intrigued. The idea is that you submit articles before your results are in and have them provisionally accepted for publication. So you have your motivating discussion, any lit review, your description of the data and the methodological set up, and any descriptive statistics. You might even have an initial conclusions section that discusses what to make of the results depending on which way they go. This gets refereed and provisionally accepted. Then you run the results and submit the final paper. Of course if there are any major problems with execution the journal could reject it, but you could have the journal publish all completed papers online that they rescinded their acceptance for for publication in the journal. This should, I imagine, cut down a lot on the publication bias in empirical results, and publishing the rescinded acceptances online would keep that from being abused.

- The second one was inspired just now by this post on Stumbling and Mumbling (HT - Gavin Kennedy), which discusses the extent to which economists are isolated from "real life" as Coase claims. To a certain extent this may be true, but I think it's one of those over-hyped criticisms that people that like to be critics of the mainstream like to make off the cuff without much real evidence. As the post points out, there's a lot of very useful stuff in economics for "real life" that many in "real life" also use. The recent Nobel Prize winners are an excellent example. You can think of giants in the field like Gary Becker that are acclaimed precisely because they pay attention to "real life". Anyway, so I think it's an overstated criticism but there's obviously something there too.

A solution would be to increase the extent to which economists did field work and interviews. I never really saw this problem at the Urban Institute, for example, because field work - or what was often referred to there as "qualitative research" - was a major part of the research program. The people that gave you estimates of disincentive effects of welfare programs actually went out and talked to welfare recipients or administrators, and they were surrounded by and always talking to people who did the same. It was impossible to get the thoughtless libertarian/conservative line that only speaks about welfare in terms of the disincentive effets or the thoughtless progressive approach that assumes away the disincentive effects because you're actually there seeing it in action (and then, of course, going back and working with the data as well). It's helpful working with Hal Salzman on my science and engineering workforce stuff too because he - as a sociologist - does a lot of his work in teh field. It's a nice balance with the data work that I do. Obviously this would be tough to push out to the discipline. It would require changing the way a lot of economists think about the science and it might require more money. But it would be a good change.

Krugman on skills shortages

Here.

Synopsis: markets work. When you hear employers especially complaining about skills shortages, it means they want policies to get the same workforce for less money. I'm very glad to see someone like Krugman not get caught up in this shortages nonsense.

Have we found life on Mars?

I don't know. We thought we might have before, and it disappointed (although some suggest we did find life before - the evidence is clearly too sketchy to get excited either way).

But in case you didn't hear, NASA's Curiosity had a big find that NASA is keeping secret as it tests and retests the data. They don't seem interested in managing expectations at all, announcing that "this data is gonna be for the history books". That's quite a statement, isn't it? More conservative guesses are that it's organic material in the soil. I found this passage from that article interesting:

"Whatever Curiosity has found, it is not evidence for life on Mars. It can't be. Curiosity is not designed to look for life. Grotzinger has stated this himself. In a NASA video about the mission, he says, "Curiosity is not a life detection mission. We're not actually looking for life; we don't have the ability to detect life if it was there."

What if they brushed dirt off a small fossil? What if a little bug crawled across the screen and Curiosity followed it back to a Martian ant hill? Or lichen on a rock? "Not designed to look for life"? What an unimaginative way of thinking about things. They mean, of course, that it isn't equipped to identify microbial life in soil. But Mars is a big planet, and even if most of it is blighted and uninhabitable that doesn't mean Curiosity couldn't have stumbled on something previous probes missed.

Of course, it probably isn't life. It probably found the sorts of things it was sent to find. That's where the smart money is. But "for the history books" is an intriguing turn of phrase, and I'll be waiting expectantly until they announce exactly what we've got here.

So what do you think:

1. Will we hear in a couple weeks that there is life on Mars right now?
2. How will that change the way people thinking about their place in the universe?

Quotation of the Day

From Bob Murphy: "Austrian economists are the analog of the “Intelligent Design” scholars"

I actually wouldn't go that far, but I feel it's important to share the considered thoughts of those who would disagree with me on that. I do think Bob put the quotations marks in the wrong place - it should be Intelligent Design "scholars". And that's the real problem - they use bad reasoning to prop up an unscientific idea long after most serious people who used to hold that idea gave it up. This is very unfair to compare to Austrians. Austrians aren't all that bad. They make a lot of hay out of processes that are probably of secondary importance, but they're not unscientific about it... except for when they are (for example - the way some Austrians scoff at theoretical modeling or empirical work). But that's a minority within the community of Austrians. If Bob just meant Austrians were a minority view, that would be true but it seems to me there are much nicer ways of saying that than referencing Intelligent Design "scholars".

In Hopeful Anticipation...Of FREE FLIGHT


Oh boy....I'm not really sure what it is that brings me around to situations like this but here it is, the Saturday after Thanksgiving and everything is good. The Holiday, traveling and seeing family were all great yet when it comes to posting on the blog, my stream of consciousness writing method pops out Sexual Assault and my weird reaction to it as a subject.

SORRY...it is true that I don't really have that much control when it comes to choosing this stuff, it really just kind of runs out of me on it's own. If I force a subject...well, you the reader would be the first to know because it is obviously so contrite, so manufactured and pushed out for the sake of writing.

I was responding to another post on on a friends blog about modern "performance art" and in the course of commenting on her post made the comment that it had crossed my mind what if one of the 3 men who sexually assaulted me as a kid video taped it.

Well that horrifying thought and possibility was something I never had spoken about to anyone...EVER. And my mentioning it now I have upset the delicate spiritual, emotional and psychological balance inside of me. I feel like a spacecraft spinning helplessly out of control...only waiting for the inevitable CRASH into the SUN.

It takes so very little in the way of a sudden, painful memory or flashback to throw this Train that I call me off the tracks, over the trestle and into the raging white-water below. I can clearly anticipate it coming yet at the very same moment it still always comes as a rather SHOCKING Surprise!

I really have held onto the hope that I was entering a period in recovery where it was no longer a daily fight for sanity yet it seems quite often that it it still very much is. I don't think it is unrealistic to desire some continual, achievable peace now and again.

I do not expect a miracle or a fairy tail existence but the sudden daily SHOCK seems more then unfair after so much growth...progress and nurturing care/concern by a significant other.

At the very least I would think that it is fair to hope for the daily POSSIBILITY or expectation of peace. Today that is not the reality that I operate under and I see no immediate change on the horizon....it is discouraging even for the hopeful, optimistic ME that I have become. So I continue to wait.....in hopeful anticipation, that I will one day fly FREE.

PHOTO: Kathy Tomson

Back In OHIO


Well it is the infamous (and ridiculously named ) "BLACK FRIDAY" today. Ridiculous because it sounds like an out break of the PLAGUE and not some silly commercial name for a shopping day for Christmas.

I am sitting at my computer in the basement of my sister's home in Centerville, Ohio...a suburb of Dayton. K and I are trying to figure out if we need to head beck north this morning. There is a possibility K could have to work early tomorrow so the decision I think has made itself...we gotta get going today.


Which is kind of a bummer because I had been thinking about visiting the US Air Force Museum at Wright Patterson Air Force Base here in Dayton. I think that visit is going to have to wait but I highly recommend it to anyone interested in flight, the military or history. And it's free which makes it a wonderful family outing.


When I was a kid growing up in suburban ColumbusOhio we frequently went to the USAFM for school field trips, with the Indian Guides & Boy Scouts, Youth Group and just on our own. I've been there at least a dozen times but I hadn't been there since the late 1970's when I visited several years ago on a whim with my niece Angela. I was stunned...what had been one hanger full of old planes was now 4 huge huge super-hangers and they contained the most incredible display of military aircraft ever. And they don't charge a cent to see it.


They now have a collection of retire Air Force One's...the Presidential Plane and they have now almost completed the total rehabilitation of the original B-17: Memphis Bell...the first 8th Air Force Bomber to take it's crew on 25 completed missions over occupied Europe and return them home. The Crew got to fly the old bird home and went one one long US War Bond Tour. They made several movies and documentaries about the "Belle'. Any way...I need to go next time I visit and again, I recommend it. It's onlt a 3 hour drive from the Coldwater Michigan area where I live so locals here could visit easily in a day.


All righty then...since it looks like we are traveling today I have to get going...we'll stop back later and fill in the details.

giving thanks

 without a doubt, i am genuinely, truly, unabashedly grateful for so much in this life, for the surrounds of support and encouragement, for opportunities to serve and be served, for sunshine and rain, for friends and for family, for grass and clean parks, for children and laughing, for god and grace, for the sacredness of life and the fallow season, for being conscious of all this, i give thanks. i am thankful for you.

Thanksgiving meal self-sufficiency index - 1900

I have noted on past Thanksgiving that actually the first Thanksgiving was in Virginia, not Massachusetts

Also in that vein, we can note that according to the National Historical Geographic Information System, Massachusetts wasn't even able to produce a full Thanksgiving meal for every resident in 1900 (Northern Virginia was, although the part of Virginia where the first Thanksgiving was held was not either)! Thankfully, the propensity to truck, barter, and exchange can solve this.

 

Thanksgiving Meal Self-Sufficiency Index* - 1900 Census

Data on turkey, sweet potato & cranberry production at county level from NHGIS
Thanksgiving Index

One of my favorite things to have on a crisp fall morning while everyone else in the house is still asleep...

Cocoa, bourbon, and coffee. It tastes like a bourbon ball - one of my favorite holiday treats.

We have had Kate's twin sister and her fiance, Alex, here all week from Alabama (Auburn University, some of you will be interested in knowing... not economics), and we're going over to the ladies' dad's house tonight for Thanksgiving.

Happy Thanksgiving everyone!

And if you're not shopping tomorrow and need something to do, go see Lincoln. I saw it yesterday with Alex and it's an excellent movie. The trailer is below. What's interesting is that it's all about getting the 13th amendment passed, but the trailer really doesn't give you a sense of the conflict involved in that effort at all. It's all about tugging between House Democrats, conservative Republicans, radical Republicans, and the Lincoln administration but you don't pick up on any of that conflict in the trailer, which makes it look like a war movie (except for a couple scenes, it's not).

Surprisingly funny too - Lincoln is one of the funniest characters, as is James Spader's character. That brings me to another thing: it was a great cast. I imagine when Spielberg comes to you and asks if you want to do a movie about Lincoln you don't get many "nos". This is one of those movies where after watching it you're going to have a hard time thinking about Lincoln as being anyone other than Daniel Day-Lewis (just like the guy they cast for the brief appearance of Lee was all wrong simply because he was not Robert Duvall).

OK, this morphed from a coffee post, to a Thanksgiving post, to a Lincoln post. I'll let you see the trailer now.

More on Keynes and Consumption

From Jonathan Catalan and Bob Murphy.

Jonathan takes the features that discussed which prove that Keynesians have consumption in models and have some thoughts about it to be a segue into thinking that it's a consumption-driven theory. Again, I disagree. If having consumption in the model and mentioning it opens the door to being a consumption theory, then every economist is a consumptionist. Austrians assume a trade-off between consumption and investment, after all! That seems to give it a much more prominent role than Keynesians do. After all, Keynesians assume a lock-step trade-off between consumption shares and saving shares, but that's simply because it's an accounting identity (S=Y-C)! Austrians have to actually assume the same sort of trade-off between investment levels and consumption levels - there's nothing in nature requiring such a thing. So if the mere relevance of consumption to the machinery of the model qualifies here, then there are other more prominent candidates for being a consumptionist theory. Now, I don't want to disavow the way Keynesians talk about it at all. I don't think there's anything wrong with emphasizing consumption if that's what you want to emphasize. So I'm not interested in tossing this back at Austrians, I'm just interested in keeping the mere presence of consumption in the mechanics of the theory distinct from the misleading tendency to think about Keynesianism as a consumptionist theory - because that leads people away from very important discussions about capital, money, the loan market, etc.

Bob's post is a little odd. First he invokes the paradox of thrift and the marginal propensity to consume, but he seems to be making the same mistake I mentioned when I brought them up. Yes, we talk about the marginal propensity to consume because it impacts the multiplier. But shifts in that aren't what we think causes downturns (which I gather is what Gene was curious about). By mentioning mpc all you're doing, Bob, is noting that consumption is in our models. But... isn't that true of all economists?

He has an unusual use of the paradox of thrift to make his point to. As I said before - increasing saving relative to consumption is no problem. That won't cause a paradox of thrift. What's a problem is if you increase saving relative to investment. If the share of income you save increases, the consumption share declines, and investment increases you're fine. If the share of income you save increases, the consumption share declines, and investment doesn't change you're in trouble. So it should be pretty clear it's not consumption that matters even in the paradox of thrift. (Just a gentle remark, Bob!).

Bob actually helps me make this point when he quotes Krugman: "Some background: one of the high points of the semester, if you’re a teacher of introductory macroeconomics, comes when you explain how individual virtue can be public vice, how attempts by consumers to do the right thing by saving more can leave everyone worse off. The point is that if consumers cut their spending, and nothing else takes the place of that spending, the economy will slide into a recession, reducing everyone’s income."

"Spending" of course, is not just consumption. And the fact that in the next passage he talks about the Federal Reserve lowering interest rates tells you exactly what non-consumption spending he has in mind (there aren't many other options here!).

Now, if the damning evidence is that Keynesians will write an article about consumption during a recession - particularly one where consumption takes a bigger hit than normal, I'm not sure what to say. Isn't that what all responsible recession watchers do? In fact by pointing out how unusual a drop in consumption like that is, Krugman is basically saying "this is not usually what comes up during recessions, but since it's in the data let's walk through it". After all, investment shifts because of revisions of assessments of the marginal efficiency of capital due to some shock. Certainly there's nothing that prevents consumption from shifting for the exact same reason! We don't usually talk about it because it doesn't usually happen in the way that investment (a very forward-looking activity) does. But if it happens, we certainly have the theoretical machinery to talk about it, so why not?

Take a look at Bob's title too - how weird is that? One article on consumption by Krugman shows that consumption is more important than investment? Odd.

Holding On In The HOLIDAYS





For many people recovering from Alcoholism/Drug Addiction, the Holiday season beginning with Thanksgiving, can set off an annual period of Depression, negative thoughts and increased temptation to return to our old patterns of drinking, etc. Translation: A lot of recovering Alkies & Junkies want to get hammered during the Holidays...we can spend a lot of time feeling sorry for ourselves which is an extremely precarious place to be for someone in recovery. Not all of us are depressed but most of us would rather drink like we used to...

Oddly, I was not a big "holiday guy", therefore I never really thought about it much in festive terms...like celebrating or going to parties...I was an everyday drinker, I drank like it was a holiday every single day of the year...seriously. So it has not really been a more difficult time for me in recovery but I tend to be the exception to the rule in this case, I'd say...certainly among recovering folks that I know personally.

I was never "anti-Holiday" in the fashion of Scrooge...I just never thought it was that big of a deal. As I child I certainly did, believing in Santa Claus for quite awhile though I cannot recall how old I was when I stopped believing. I do remember pretending to believe for several years after I stopped because A) I had a sister 4 years younger then I and I didn't want to spoil it for her. Plus I enjoyed getting a slew of additional gifts from "Santa"....Sheesh, I wasn't STUPID!


As a child I was enthralled by the whole ideal of Christmas...the biblical aspect of it as well as the Santa Claus myth. It held a magical sense of what was possible if only one BELIEVED and that was a very hopeful feeling. One I still get today but now that I actually am a believer it takes on an even more special meaning spiritually.

I know though that this is rough time of year for some of my com-padre's in recovery so I am always aware that some of them, even those with many years of sobriety might be struggling.

My biggest challenge concerning Holidays and Birthdays is that I struggle or want to drink...no it's that I can be a real cynical and critical pain in the butt about it and ruin those occasions for others...that has happened quite often in the past. I didn't get why they were such a big deal so I intentionally ruined it for everyone else! But recently I have actually started to look at it all from a less selfish perspective and I truly enjoy these special days now. I think having two grandsons helped me a bit along the way but i work daily at being a less selfish person in my everyday life...I think it might be working.

So K and I are headed to my sister's place just south of Dayton, Ohio very early tomorrow morning (K works until late tonight)...I'm really looking forward to it. So I imagine the next few posts will probably be originating from there if I can still function well enough to write after I gorge myself.

Until then, SAFE TRAVELS Everyone!

Let's clear up a few things on the exogenous/endogenous money post

This came up in a couple places but a comment by Unlearningecon offers an opportunity to focus in on it. He writes:

"Reserves are just another cost decision, along with staff, other inputs, etc. The availability of them does not enter into a bank's lending decisions, which is done purely on a bookkeeping basis. At the end of some time period, a bank will settle its reserve decisions, as with any other cost. The price of reserves can be altered to make banks lend less/increase the interest rates, but this is only in a similar way that some other 'supply shock' might."

I think some of this is good and some of this isn't. If by "endogenous money" you just mean "loans create deposits", that's certainly correct [supply and demand simultaneously determine equilibrium so I'd add "deposits create loans" too, but no need to get into that because I don't challenge the "loans create deposits" point].

But a lot of people mean a lot more than that. A lot of people mean that the level of reserves is endogenous to the rest of the banking system - that it's just a residual that pops out of the loan and deposit creation decisions, given an interest rate decision by the central bank.

This point - that the banking system generates a particular level of reserves - is what I challenge. The central bank does exogenously create and destroy reserves every day. This is the exogenous policy lever.

Another point of clarification: if you think "endogenous money" means that the central bank targets interst rates, that's fine but I don't think anyone disagrees with that point. My point is, they don't "set" an interest rate and then reserves become whatever level is consistent with that interst rate and the decisions of the banking system. No - the central bank has an interest rate target they are interested in, and then they "set" reserves by buying and selling bonds (or through other institutions in other countries) so that the interest rate they want falls out the other end.

It doesn't have to work this way, of course. This is all based on institutional set ups. You could have the causality running from interest rates, through the banking system, to reserves if you wanted. That would be a discount window approach. An interest rate is set and the Fed takes all comers. Base money is endogenous. We used to do that. But now we primarily work through open market operations and causality runs the other way. Reserves get shuffled and a desired interest rate pops out the other end.

When most Fed policy starts taking place at the discount window again rather than the open market desk, we can talk about the strong version of endogenous money again (i.e. - not the weaker "loans create deposits" version that I think is fairly non-controversial when we get down to it).

I have trouble with this too, Gene

Gene writes: "So, I'm teaching Keynesian economics for the second time. And once again, I'm telling my students that, per Keynesians, recessions occur when intended investment falls short of savings. And the best way to fix this, per Keynesians, is for the government to invest in roads, bridges, parks, education, etc. I'm fine with explaining all that.

What I can't figure out how to explain is why there are people saying Keynesianism is all about consumption and takes no account of investment."

The idea that it "takes no account of investment" is very tough to justify - and probably can't be justified. But I can see why consumption might get into the mix.

First, Keynes is often taught without regard to government at all, so in the Keynesian cross you have investment and consumption with a standard consumption function. So without government in this, how would you talk about prospects for recovery?

Either investment could increase or autonomous consumption could increase. Those are both curve-shifters, after all. In practice a lot of government spending looks like consumption, right? Some is investment, but a lot is handing out money to people who will spend it: outsourcing consumption to taxpayers. That's not "the problem" from the Keynesian perspective, but it creeps into the solution.

Also, the level of consumption is reduced (along with the level of savings), when income declines. That's a symptom, though - not a cause.

The other thing is the multiplier - higher propensity to consume makes stimulus more effective. That's of course a result of the slope of the consumption schedule, not because consumption is the primary issue. But consumption also creeps into the discussion that way.

Finally, really, really bad treatments of the paradox of thrift get people to say things like "Keynes didn't like savings". Gene and other reasonable people know that the problem with this is that it ignores the distinction between any savings and an excess of savings over investment. But if you persuaded yourself to be mislead on this point, "Keynes likes consumption" is the obvious corrolary to "Keynes does not like saving".

The last two points - about the marginal propensity to consume and about the paradox of thrift - are out an out misunderstandings of Keynes leading to preoccupation with consumption. The first two points - about thinking of government spending as an increase in autonomous consumption or noting the decline in consumption - are not quite as bad but they do seem to confuse cause and effect.

So much for the huddled masses

The most recent immigrant in my line came from Thuringia, in east central Germany, in the 1890s. They weren't particularly well off. The patriarch left first to escape conscription. He sent for his wife and kids but then decided a younger woman offered greener pastures. So when my great-great-grandmother arrived she was a single mother that didn't speak much (any?) English. That works out even less well in the late nineteenth century than it does today, so she wisely married another German immigrant (named Kuehn - I know a lot less about his origins). The Kuehns spoke progressively more English and got progressively better education, and it all worked out alright. They eventually married into a family that's been here almost four centuries (but who were no better off when they first arrived). They were always on the run from bad circumstances. The Joys running from English persecution in England. The Comeaus running from English occupation in Canada. The Luthers running from conscription in Germany. A couple branches were running from rotting potatoes. As far as I know nobody came here and contributed to American GDP by establishing a tech company (steam boats, railroads - you know). They came here and were poor and uneducated until eventually they weren't poor and uneducated.

None of them ever read: "Give me your tired, your poor, Your huddled masses yearning to breathe free, The wretched refuse of your teeming shore. Send these, the homeless, tempest-tost to me, I lift my lamp beside the golden door!"

For one thing none of them came through Ellis Island. They also were all here by 1903 which was when the plaque was added.

I worry about the discussion about immigration today. There's always tension with new immigrants who don't act like us, of course. So long as it's just "tension" and not outright hate I don't worry about this too much because although it's misguided, it's a natural reaction to new things.

But you'd hope that more liberally minded public intellectuals and even policymakers would construct a narrative (what Rorty talks about as "imagining" a new "social hope") about why we want the huddled masses.

Andrew Sullivan reports that this sentiment is not particularly common anymore. Quoting Don Hopkins: "In the corresponding paper, we show that it’s not just Democrats and Republicans who agree: it’s liberals and conservatives, those with and without higher education, the wealthy and the poor, those who report biases against other racial or ethnic groups and those who do not. When it comes to the question of the types of immigrants to be admitted, there is a hidden American immigration consensus, one that crosses party lines. From these results, it seems clear that Americans would be likely to support a more skill-based immigration system, such as the one employed at the federal level in Canada."

Krugman: Public debt has distributional and incentive problems

Kling with Boudreaux chiming in: WRONG KRUGMAN! You can't forget that it also has distributional and incentive problems!

Sigh...

If you haven't had enough of the debt debates and if you want Bob's OLG model in words rather than in a nice understandable table, and if you want commentary from people who (seem to, to me) have a weaker grasp of what Krugman was saying than Bob, click through the links.

One virtue of Kling's post is that it details how one particular distributional nightmare associated with inflationary finance could play out. But as usual, the Krugmania is driving the narrative.

Keynes Radio Address, 1939

HT - Warren Mosler


Endogenous money

I think the whole idea of endogenous money is vastly overrated and the idea of exogenous money is vastly underrated.

Granted, the term is (intentionally, I think) vague. That's why I say "under-" and "over-rated" rather than "right" and "wrong". We've had some readings on it which I've only semi-attended to, and after a whole class discussing it today I am not very impressed by the whole debate.

If you want to say central banks care about interest rates, I'm fine with that. If you want to say that interest rates impact aggregate demand and that influences the broader definitions of the money supply, I'm fine with that. But monetary policy is still done by buying and selling high powered money (as far as I know - I've never talked to someone at the OMO desk), and it's done that way because while causality could run both ways (think of the old use of the discount window or Bagehot's dictums as an example of interest rates "causing" money creation), that's not how it works. Of course there is some target interest rate in mind (and THAT is only what gets churned out of some target inflation rate) - but you buy and sell stuff at the OMO desk because it causes that target interest rate to come to fruition.