the failure of a self-interested society...

Why Bonuses Are Bad

A lot of outrage has been expressed over the possibility that some of the people who greased the financial slide we're on may still get substantial bonuses. How can anyone at Merrill Lynch, for example, merit a bonus when its losses in the last year exceed its profits for the last forty. We should be outraged by undeserved bonuses. But we ought to be thinking bigger. Why are we paying bonuses at all? Why pay people extra-often a lot extra-just for doing their jobs? Pay them a nice salary. Give them a promotion. But a bonus?

Maybe its just me...

but the inauguration hoopla makes me think of this scene...



make of it what you will.

Zizek at google! : )

The Austrian and Chicago Schools

Excerpt from History of Economic Thought: A Critical Perspective, by E.K. Hunt via Mark Thoma

I think the best point made is this

Every human being has ideological, moral and political views. To pretend to have none and to be purely objective must necessarily be either self-deception or a device to deceive others. A candid writer will make his preconceptions clear and allow the reader to discount them if he does not accept them. This concerns the professional honour of the scientist.

You see this all the time. I always think about Howard Zinn's you "can't be neutral on a moving train."

probability and induction

Who really cares?

Ezra Klein on conservatives and charitable giving... DO LIBERALS HATE CHARITY?

Every so often, his findings are trumpeted as proof that conservatives are more genuinely compassionate than liberals. And that's exactly what Nick Kristof did over the weekend.

But the difference can be explained in one word, and it's not "compassion." It's "religion." A recent survey from Google similarly found that self-identified conservatives gave more to charity than did self-identified liberals. But they also found that "if donations to all religious organizations are excluded, liberals give slightly more to charity than conservatives do." Indeed, religious congregations are far and away the largest recipients of charitable gifts: In 2006, they made up 32.8 percent of all giving. But is that charity, at least charity as Kristof and Brooks are defining it? For instance: Utah is among the most Republican states in the nation, largely because of its heavily conservative Mormon population. Mormons tithe 10 percent a week to their church. But is that charitable giving? Or is it a membership fee? How much of it goes to anti-poverty programming? How much to church administration?

Saying that conservatives give more to charity is another way of saying that conservatives are more religious.

under the name of reason

From Effcient Markets Theory to Behavioral Finance by Robert J. Shiller

The trouble with economics

It isn't exactly science, as noted at the economist.com:

First of all, I know that we all consider economics a science, but as sub-fields go, macroeconomics is one of the least science-y. Among the reasons—too many variables, too small samples, no repeatable experiments, and so on. Consider the paper Mr Cowen would have us consider. It examines the American economy from 1955 to 2000, and it excludes all fiscal shocks but those that are orthogonal to the business cycle. What that leaves is, well, not very much. There are similar methodologies in other key papers on the subject, including that by the family Romer, and given the range of multipliers presented I don't know how one could conclude, definitively, that the science isn't there.

Which is why it's important to have a good, qualitative model of the mechanisms involved to supplement the data analysis. Greg Mankiw gave us a potential model for a way in which tax cuts might boost private investment, but it's not clear that his narrative is superior to those explaining just how deficit-funded government investment might work. In short, the data, on its own, isn't compelling enough in such cases to justify policy.

with Mark Thoma also noting:

We have very little U.S. historical data for time periods when the economy is in a depression, so we don't know a lot about the effectiveness of policy in this framework. It's hard to find decent data about the economy prior to 1947 (and make that 1959 for data on money), and we haven't had that many recessions in that time period. And more importantly, we haven't had the deep kind of recession that depression economics is intended to address. When most of your data (half in any case) is from good times, it is not surprising that the empirical evidence finds that crowding out is an important consideration. If we had lots of episodes like the current one to look at, then I would have more confidence in these results, but we don't. Parameters such as the responsiveness of investment and money demand to changes in the interest rate, the marginal propensity to save, etc., can all change drastically in deep recessions, and that means that the results from empirical investigations covering other time periods won't be very informative. I don't think we know much at all from the econometric evidence about the success of fiscal policy in deep downturns. We'll know more in the future because we'll be able to look back at this one, but for now policymakers are flying pretty blind. What we can examine is the experience of the Great Depression, and when you do, the case for fiscal policy is strong.

Go read the rest of Marks Post Depression Economics: Normal Rules Don't Apply, as it takes apart a lot of what conservatives are saying right now... and has an awesome example for answering the question about government spending crowding out private investment.

We are animals

A reminder from Greta Christina

This is the point I want to make. It's a point that most of us know and understand consciously... and yet it's a point that we have a striking tendency to forget.

We are animals.

I'll say that again:

We. Are. Animals.

We are an animal species: in the primate order, in the mammalian class, in the vertebrate sub-phylum. We are a product of evolution; a product of nature.

Yes, we're animals with an unusual ability to shape our environment. But it's an unusual ability -- not a unique one. Other living things have made dramatic physical impacts on the planet as well. Coral, for instance. Earthworms. And, of course, plants. Plants breathing in carbon dioxide and breathing out oxygen made a huge, radical change to the atmosphere of the planet. (A change that, so I've read, was a serious ecological threat to plant life, until animals came along and re-balanced the ecosystem.)

And yes, humans are the dominant life form on the planet right now. But even that doesn't make us special. Other life forms have been dominant in the past: trilobites, for instance, and dinosaurs. They were around for tens of millions of years. We've been the dominant species for what -- ten thousand years? Less? In geological terms, we're not even a blip.

It's so easy to think of human beings as somehow apart from nature. It's deeply woven into our language and our way of thinking. Nature versus nurture. Nature versus culture. Natural versus man-made. Is such- and- such plant a native, or was it brought to this region by people? Is X (global warming, homosexuality, the tendency of twenty- something human males to get into stupid accidents) caused by human beings and human culture, or is it natural? It's a way of thinking that's very pervasive. Even among people who aren't talking about religion. Even among atheists.

When people talk about evolution, for instance, they -- we -- often do it as if human beings were evolution's pinnacle, the goal it's been inexorably moving towards... as opposed to just one tiny, short-lived twig on an enormously huge, four- billion- year- old tree. Ditto when we talk about the food chain. There's a decided tendency to talk about the food chain as if it all headed straight into our mouths.

And it's a way of thinking that shows up a lot when science collides with politics or morality. When the question comes up of whether human gender roles are born or learned or both, we tend to forget that we are animals -- and that most animals have some sort of innate gender- differentiated behavior when it comes to sex and reproduction. When the question comes up of whether human homosexuality is born or learned or both, we tend to forget that we are animals -- and that homosexual behavior has been observed in hundreds upon hundreds of other animal species. We don't think of zoology as applying to us. We think of ourselves as different.

this might be satire... (on both our parts?)

comment from a fellow leftist that I highly disagree with:

FDR's and LBJ's fascist tendencies are the reason we have entitlements, and the United Auto Workers' fascist tendencies are the main reason the auto companies are failing. We blame CEOs, and exonerate unionized workers, because CEOs make "excessive" amounts of money, while workers are, well, working. But we never stop to think that CEOs have a lot of talent, education, and jobs that require hard work and much more stress than working on an assembly line. The advantage of being on the left is that you don't have to think or put forth any effort to be considered compassionate.

From this quote Robbie obviously took the side of Marx in his spat with Bakunin. I took the other side and I think history has exposed Marx as having been wrong about decreasing liberty via authoritarianism as an end to be sought.

Entitlements via subconscious pathologies? Robbie you are mixing micro with macro... even more you are taking quick steps from conscious to subconscious. Tough to do which is why I might be misinterpreting some of your positions.

But moving on... how do personal pathologies of elected officials equal out to social policies that are popular? Directly mind you not indirectly... because then everything gets thrown into the interpretation

So did the fascist tendencies of FDR beat the fascist society of Germany? If so then good. Ditto for passing popular legislation.

UAW? If you are opposed to the purchasing power of walmart and want to attack their ceo's then i'd be happy to get into a discussion of the collective bargaining pro's and con's of the UAW. I hold human beings to be more important than excessive shareholder value thats an ideological position on my part. The idea that unions are the reasons for their troubles shows a very shallow grasp of the issue, unions didn't stop the foreign makers from making popular high quality cars. If the American Auto Manufactures management aren't as good as the competitors with managing their unions,well that's a problem but not the unions or the other compainies.

CEO's have talent...well, some do some don't.

Ineptitude and pay rate are not necessarily corollaries.

Larry Summers is getting a promotion to a job in the Obama administration for missing and helping perpetuate the housing bubble!?!?!?

What percentage of economist missed the housing bubble as a major crisis... and/or stayed silent on it 75,85,95%????

How many of them got fired for it?

I am a lowly wage slave mind you so i'm oft to be disingenuous and ignorant of so many things.

As to Robbie's experience from being on the left, that "you don't have to think or put forth any effort to be considered compassionate" I can't speak to it because I have never worked with people and talked about compassion at all. I've always worked with people on the left talking about improving the quality of life for people through policies and organizing. At least in my experience compassion ain't a topic of discussion much.

Mind you compassion (ethics more broadly) often is a topic in my political philosophy classes... and I must confess I do enjoy a good philosophical debate. But when it comes to actual politics and organizing, dealing with very real problems and how to solve them--what I would define as "politics"--there isn't much use for such ivory tower intellectualism. To someone in politics words have meaning... but human consequences are the important issue at hand.

That does drum up some debates within social science has to how and what we are measuring with our analysis. But i'll leave that for anohter day.

Ahhh the Free Market...

To watch the free market work is truly a marvel.

WHEN EVIDENCE FAILS.

Diuretics sales jumped, but only by a few percentage points. "[They] should have more than doubled," says Curt Furberg, who chaired the study. And in a world where doctors prescribe medications based on a simple reading of the latest evidence, maybe they would have doubled. But we don't live in that world. We live in a world where pharmaceutical companies have big budgets and sophisticated public relations teams. Pfizer, for instance, put up $40 million to ensure that their Cardura, their alpha blocker, was included in the study.

Nothing like the free flow of information, capital, and labor; to make a guy like me feel ignorant for thinking "free markets" never have and never could be a sucessful, sustainable, or ethical economic policy...

Go read...

The Ideology of No Ideology by Norman Solomon right now. Do not pass go... do not collect $200. Go read it right now...

dead on.

The ideology of no ideology is nifty. No matter how tilted in favor of powerful interests, it can be a deft way to keep touting policy agendas as common-sense pragmatism -- virtuous enough to draw opposition only from ideologues.

Meanwhile, the end of ideology among policymakers is about as imminent as the end of history.

But -- in sync with the ideology of no ideology -- deference to corporate power isn't ideological. And belief in the U.S. government's prerogative to use military force anywhere in the world is a matter of credibility, not ideology.

Ideological assumptions gain power as they seem to disappear into the prevailing political scenery. So, for instance, reliably non-ideological ideological journalists sit at the studio table every Friday night on the PBS "Washington Week" program, which is currently funded by similarly non-ideological outfits including Boeing, the National Mining Association and Constellation Energy ("the nation's largest supplier of competitive electricity to large commercial and industrial customers," with revenues of $21 billion last year).

Along the way, the ideology of no ideology can corral even normally incisive commentators. So, over the weekend, as news broke about the nominations of Timothy Geithner and Lawrence Summers to top economic posts, former Labor Secretary Robert Reich wrote an article praising "the members of Obama's new economic team." Reich declared: "All are pragmatists. Some media have dubbed them 'centrists' or 'center-right,' but in truth they're remarkably free of ideological preconception. ... They are not visionaries but we don't need visionaries when the economic perils are clear and immediate. We need competence. Obama could not appoint a more competent group."

Competence can be very good. But "free of ideological preconception"? I want to meet these guys. If they really don't have any ideological preconceptions, they belong in the book of Guinness World Records.

As for competence, it seems that claims of non-ideology often go hand-in-hand with overblown claims of economic mastery. "Geithner and Summers are credited with expertise in crisis management," economist Mark Weisbrot pointed out on Monday, "but we better hope they don't manage the current crisis like they did in East Asia, Russia, Argentina or any of the other countries that Treasury was involved in during the 1990s with their help. They helped bring on the East Asian crisis in 1997 by pressuring the governments in the region to de-regulate international financial flows, which was the main cause of the crisis. Then they insisted that all bailout money go through the IMF, and delayed aid until most of the damage was done. Then they attached damaging conditions" to the aid.

After all is said and done, the ideology of no ideology is just like any other ideology that's apt to be much better at promoting itself than living up to its pretenses. No amount of flowery rhetoric or claims of transcendent non-ideology should deter tough scrutiny. And Judge Judy's injunction should apply to the ideology of no ideology as much as to any ideology that owns up to being one: "Don't pee on me and tell me it's raining."

dead on.

critique of enlightenment thinking

The Limits of Individual Knowledge

As Barack Obama is putting together his team that will help "fix the economy", we need to keep in mind that in a world with nearly 7 billion people all acting in their own self-interest, no one person or one group of people can ever have the knowledge to successfully tinker with the economic system.

Case in point: Less than three months ago, Hurricane Ike hike the Gulf Coast and already sky-high gas prices shot even higher. After more than than seven years of increasing gas prices because of terrorism and two Middle Eastern wars, everyone just knew that the old ways of American life were over. From business to politics to media to the arts, everyone in the American elite called for a "rationalization" of American energy policy.

I commented:

I think the Kennedy administration proved that the technical class isn't all knowing.

Well, in reality... look at any elite group since the beginning of time. There will always be those who promise salvation or claim some group will bring it to us.

That's not how salvation works, and that's not how human knowledge works. Another failure of enlightenment thinking really...

Also moving from theory to real world. I don't think terrorism, and two middle eastern wars, were the only contributors to our transportation crisis. Bad Transportation policy and bad governance doesn't help... as Doug noted:

there is no way any group of people - no matter how smart - can have enough knowledge to successfully plan the economy. The world is just too complicated, and the only way to efficiently allocate resources is through the market economy.

Throwing up our hands and saying here is the only solution, be it certain market approaches or the hands off "the private sector is the best way to address these issues"--the way people too often do. Has reaped the mess we are in (mind you bad transportation policies are supported by Dem's too!). This situation and many we fcae right now are of the "hands off" descent. This fact would fall within the logic of the post as well.

Thinking we can determine the most successful plan without using our best understanding of markets and the tried and true test-- what happens and is happening in the real world when we implement it--would be a stunning failure of human thinking.

Not that such is anything outside of the norm (myself included).

Policy is not pretty, representative government and the compromises and deal making it entails is most definitely not pretty. Life isn't fair... we just roll up our sleeves and try to find policies that work.

Chomsky

Sometimes a blog quote is just golden...

"This opinion is based on an empirically sound foundation of absolutely nothing." --Ezra Klein

this was on the question in regards to October polling numbers and the vote on election day.

ASK A POLITICAL SCIENTIST!

You're seeing a lot of talk lately about how closely October's polls correlate with November's results. Princeton political scientist Larry Bartels e-mails:

Historically (since 1948), about 75-80% of the margin in a typical October poll has lasted until Election Day. If that holds true this year, the current best forecast of the popular vote based on the polls is that Sen. Obama will win by about 6 points.