Blame Economists for the Mess We’re In
nytimes.com
nytimes.com
* end the draft, replace with well-paid all-volunteer military
* let international exchange rates vary
* evaluate regulations based on the cost-to-save-a-life
Does Applebaum want to bring back the draft? Put exchange rates back under direct political control (as is attempted in places like Venezuela & Argentina)? Have a purely "feel-it-in-our-guts" approach to regulation, without regard to whether the same $X million dollars in imposed costs could save 1 life in one case, or 100 lives somewhere else?
When the military is only voluntary you get a military with specific ideas about foreign policy and how you see the enemy, whoever they are.
If you introduce the draft you have a more heterogenous military.
If the influential always go to the coast guard or whatever, war is less meaningful for those in power.
Exactly. That’s why I despise ppl whose connections got them out of the draft. For everyone of those punks, another one of McNamara's morons had to be drafted.
Mohamad Ali, on the other hand, he had the courage to go to jail.
Burn your draft card, escape to Canada, or simply refuse. But those who use university exemptions or bone spurs can go to hell.
Perhaps you won’t go so far as to call conscription kidnapping, but you seem to sympathize at least a bit with people having scruples over being shipped off involuntarily to wage aggressive war. Now, you may admit that some are principled objectors, and others may simply believe that dirty work is beneath them. The more important question is whether the draft is just. If so, then any refusal by the able is wrong, and if not, we may not condemn resistance in any peaceful form.
The reality of deferments for the politically connected and most especially those for the children and grandchildren of politicians who vote for war makes utter propaganda the notion that disinterested philosopher-kings or a technocratic elite are merely acting to promote the greatest good for the greatest number.
The only difference between your methods is consequences for the person undertaking it, not those that have to replace them. You appear to want people avoiding being drafted to suffer. Pretty odd if you otherwise sympathise with them.
Has the US suffered fewer war-fatalities in the era(s) where it had a draft (including the Civil War, WW1, WW2, & Vietnam), or in the era where it has an all-volunteer force (since 1973)?
The quality of weapons and armor (and training and medical care!) also isn't independent of the draft/volunteer dimension. A all-volunteer-force may find it necessary to invest more in each, because fewer people will volunteer to be part of a military force that tries to win with raw & disposable strength-of-numbers.
So maybe the all-volunteer-force "raises the cost of war" even more, considering financial costs & second-order effects, and thus best deters war? It's possible, which is why such claims need to be evaluated against history, not just asserted.
Assuming you even recruit the officer class from draftees, you're going to recruit the ones that think like you, or at least that you respect, which in practice means they know someone you respect, were taught somewhere you respect, in short they're probably from the same circles as you.
Plus if you don't want to join the military, are you really going to give a toss about contributing?
I see the margin the parent commentator is trying to make, but feel it misses people who join the military to obtain gainful employment, get education, or numerous other reasons.
You're right. But I wonder what kind of "politics" they would adopt when needed if they didn't feel the rest of the army has one way of thinking.
The people involved are certainly imperfect (and some are more imperfect than others), but we're always just a few years away from a course correction if the electorate sees fit.
The military gets no say - wars are declared, or not, by elected politicians. What you say is only true in countries where the military runs the government.
Every American presidential election has a side show about the candidates military record and a meaningful number appear to have dodged their service - current president included.
I think we should just accept that the hypocritical institution is dead after Vietnam and stop trying to use it for power fantasies over society or advocacy - its only function is to snatch defeat from the jaws of victory as it makes reasonable ideas grossly unreasonable.
I talk about it in episode 138 in my podcast: http://joshuaspodek.com/guests/rants-raves-monologues-volume....
General McChrystal wrote about it in Time Magazine: Every American Should Serve For One Year https://time.com/4824366/year-national-service-americorps-pe...
Infastructure work's limitations are based on funding and skilled labor - not a mass of gruntwork.
Now, those programs are complicated, involve a lot of overhead, often underutilized, and create unintentional disincentives to work when the "marginal tax rate" (in taxes or lost benefits) sometimes goes over 100%. Offering a simple & big-enough UBI instead can fix all that.
(A UBI can also replace minimum-wage laws and most if not all unemployment insurance. And perhaps, many workplace regulations, because a citizenry where everyone can say "this job sucks, I'm outta here" can be a better check on abuses than the current system of compliance-surveillance, regulatory-fines, and court-cases.)
UBI is transparently an attempt to redistribute tax income to private companies such that no opportunity for profit stays with or is limited by government. UBI would mean no more Medicare stipulations, no more existing conditions protections. Just your ten grand a year or whatever and a bunch of private companies who have what you need, at whatever price they set.
Indexing the UBI amount to some basket-of-subsistence-consumption could likely address this concern.
(The handling of existing-conditions is a regulatory issue orthogonal from UBI. I'd prefer a UBI replace all "income-supporting" programs – including things like food stamps and housing vouchers – and also obviate many rules premised on the idea that the threat-of-privation captures people in bad jobs/relationships. But "structure-of-market" or "acceptable offerings" or "required minimum standards" regulations are a separate matter.)
What you're talking about was one of his biggest regrets.
> "It never occurred to me at the time that I was helping to develop machinery that would make possible a government that I would come to criticize severely as too large, too intrusive, too destructive of freedom. Yet, that is precisely what I was doing. [My wife] Rose has repeatedly chided me over the years about the role that I played in making possible the current overgrown government we both criticize so strongly."
[1] : https://www.theguardian.com/commentisfree/2006/nov/16/post65...
That is exactly what they want. The modern world of cost-benefit analysis and economic modeling has been unkind to the whimsical. They want emotions, narrative, and oratory--not reason and data--to guide policy.
Statistics and measurement are insidious like that. Sometimes you're just not measuring the right things, or the way you are measuring just tells you exactly what you think it should.
What does GDP mean to a worker making only enough to afford to pay medical bills or the rent?
What does * per capita do to assuage the suffering of the mother of 3 working 3 dead end jobs and living out of her car?
What good is the S&P500 closing up 6 points when most can barely afford to put more than what there company matches into the market?
What does anything the Dow does mean to anyone who's retirement on Social Security barely covers what they need to merely remain alive?
Economic modeling seems like it has done one and only one thing well.
Create work for economists to do.
But a presidential election is coming and the side not in power must convince everyone they are miserable. And since the economy historically ebbs and flows, “experts” will line up to write articles about the upcoming sunset so they can preen about when it inevitably does.
All the while our government is 22 trillion in debt and nobody cares. The left claims it’s because we don’t tax enough and then proposes programs that would explode the debt. And the right claims we spend too much yet, on their watch, deficits have never been larger despite record receipts.
High unemployment doesn't mean much if real wages are dropping for most people and necessities like housing or Healthcare are becoming less affordable even for those employed.
I agree that there are people out there incentives to make things seem worse than they are, but I so think things are pretty bad.
That is an utterly remarkable change and is unprecedented in all of human history. And so many wizards of smart assured the people of their time that population growth was going to lead to famine. They were dead-ass wrong.
But to concede a point, there's no finish line in the race to improve human health and experience.
I guess everything is relative. Obesity is relatively better than famine. But overall, the article is arguing that many things are getting worse recently, which I think is true. Despite improvements in science, technology, productivity, and economic growth, groups of people are facing lower affordability of basic needs. Whether or not economists are to blame is another matter.
Needing loans, and keep on debt for a very long time, to study on a university, isn't "easy access to career altering knowledge".
Add an injust healthcare system, that can bankrupt anyone in the lower class.
"Add an injust healthcare system, that can bankrupt anyone in the lower class."
Nice word salad - full of garnish and color that ultimately provides little nutrition.
But it's taught as if it's a science, handled inside academia as if it's a science, and has more influence on policy than hard science does.
If it's not a science, those three facts are rather curious.
It seems to me that this failure of the economists to guide policy more successfully is closely connected with their propensity to imitate as closely as possible the procedures of the brilliantly successful physical sciences – an attempt which in our field may lead to outright error. It is an approach which has come to be described as the “scientistic” attitude – an attitude which, as I defined it some thirty years ago, “is decidedly unscientific in the true sense of the word, since it involves a mechanical and uncritical application of habits of thought to fields different from those in which they have been formed.”[1] I want today to begin by explaining how some of the gravest errors of recent economic policy are a direct consequence of this scientistic error.
[0]: https://www.nobelprize.org/prizes/economic-sciences/1974/hay...
[1]: “Scientism and the Study of Society”, Economica, vol. IX, no. 35, August 1942, reprinted in The Counter-Revolution of Science, Glencoe, Ill., 1952, p. 15 of this reprint.
The relevant question for those bemoaning policy implementations of economic theories is, "If not guided by economics, then by what?"
Personally, I prefer a discipline which attempts to treat its subject matter scientifically, even if the sum of experimentally proven knowledge is small. Psychology runs into the same difficulties.
But with both (or biology, or high-energy physics), I don't hold it over their practitioners that their subject matter is elusive to experimental inquiry. One does the best one can.
Basically, nobody knows anything[1]. But if everyone were to admit that, there would be no basis on which to conduct policy. → Chaos/arbitrariness/incoherence (over time and sectors)
So people make up and promote a narrative (bullshit story) and if enough people believe / are made to believe in it, then you have a basis for relatively stable and coherent policy regime.
This interpretation of economics (as a field) is consistent with the history of economic ideas. No economic ideas are ever discarded or disproven (the very antithesis of science if you will). As the Economist aptly put it: "Macroeconomic arguments tend not to produce winners and losers: only those with more in- fluence and those with less."[2]
That's why economics (the field) is really less about economics (the substance) but about politics and power.
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[1] Hyperbolically speaking, of course, and aimed in particular at macro- and monetary economists. There are some nice results but they apply, as far as I could tell, mostly to smaller settings, not the aggregate economy.
[2] The Economist. Free exchange: Magic or logic? page 69, Mar 16 2019.
In a situation that affects so many people, it may seem unwise to do experiments and try things where we can not say with certainty what effects they might have, though we admit they may be substantial. The ethics are very dim on that front. But the alternative has to be considered. We do not have 'generally accepted treatment' to turn to and rely on. We only have other experiments, albeit while not calling them experiments and not treating them as if their outcomes are in doubt, simply forging ahead with blinders on. I can't imagine an argument that would justify that as more ethical than earnestly doing experiments.
This is analogous to why econometrics is bullshit: lack of stationarity in the real world.
This is amplified by nonlinearities in the system. So even if things today were broadly comparable to, say, the 1990s (and they're emphatically not), what if there was this little thing somewhere (like an obscure accounting regulation) that led to massive differences in the outcome of the experiment?
Tbc, I think there are better and worse ways to deal with the problem, just because we know so little does not mean everything is equally meaningless.
This exaggerates our ignorance. Microeconomics is well understood, down to producing testable hypotheses. In macroeconomics, we can draw broad lessons. We know, with respect to elected governments, economies with independent central banks outperform those with political ones. We know there is a relationship between interest rates, money supply and inflation, even if we can’t precisely predict it.
Macroeconomics is largely qualitative. It tells us directions, but not precisely. (Microeconomics is properly a science, offering a full set of experimental tools and falsifiable predictions.)
We know there is a correlation, that's all. I happen to think that an independent central bank is a good idea but that is little more than a guess based on my low opinion of the political class.
But they absolutely are when you turn on the TV and listen to the Koch brothers go on and on about taxes. So many people just learn the bit of economics that supports their world view and then repeat that ad nauseam. Then the discipline as a whole gets the blame, because no-one stops to think that the messenger is in fact a self-interested (surprise!!!) idiot.
The truth is that nobody really knows how we ought to arrange society, and which arrangement is likely to work. Everybody is guessing!
The moment you arrange the system one way, people game it and your economic model no longer applies. What worked in 1999 needs not work in 2019.
Blaming the people you chose to listen to is just another form of avoiding the elephant in the room - that you don't know how to decide who to listen to.
To act on the belief that we possess the knowledge and the power which enable us to shape the processes of society entirely to our liking, knowledge which in fact we do not possess, is likely to make us do much harm. In the physical sciences there may be little objection to trying to do the impossible; one might even feel that one ought not to discourage the over-confident because their experiments may after all produce some new insights. But in the social field the erroneous belief that the exercise of some power would have beneficial consequences is likely to lead to a new power to coerce other men being conferred on some authority. Even if such power is not in itself bad, its exercise is likely to impede the functioning of those spontaneous ordering forces by which, without understanding them, man is in fact so largely assisted in the pursuit of his aims. We are only beginning to understand on how subtle a communication system the functioning of an advanced industrial society is based – a communications system which we call the market and which turns out to be a more efficient mechanism for digesting dispersed information than any that man has deliberately designed.
https://www.nobelprize.org/prizes/economic-sciences/1974/hay...
[Hayek’s worry about establishing the Prize in economics] is that the Nobel Prize confers on an individual an authority which in economics no man ought to possess.
This does not matter in the natural sciences. Here the influence exercised by an individual is chiefly an influence on his fellow experts; and they will soon cut him down to size if he exceeds his competence.
But the influence of the economist that mainly matters is an influence over laymen: politicians, journalists, civil servants and the public generally.
and pointing out the op-ed piece’s mistaken diagnosis.
The problem with narratives like Appelbaum’s isn’t that he is suspicious of the pretensions of economists, it is that he is blaming the wrong culprit for the mess we’re in. Here it is important that every one of these critics read Gregory Mankiw’s very important piece[1], published before the financial crisis, on the macroeconomist as scientists (read Chicago New Classical and Monetarists) and the macroeconomists as engineers (read MIT/Harvard Keynesian and New Keynesians).
So it isn't a particular problem of economics. The problem of economics is testing theories. I would guess that most economists have a theory that never gets tested, because you can't test them in a lab, only in real life, the depth of knowledge just isnt there to know what will work, what won't, and popular but wrong theories aren't proven wrong fast enough. I cant reasonably say whether bald tyres will cause a crash, because no ones seen bald tyres before.
The widespread adoption of index funds was absolutely an outgrowth of academic financial economics. In particular the efficient market hypothesis and CAPM theories, as well as empirical research studying the (lack of) performance of active investment managers.
In the US alone, index funds now make up more than $3 trillion of assets. That's saving investors more than $30 billion in wasteful fees every single year. (Which doesn't even account for the downward pressure on fees for active funds.) Moreover this revolution has benefited ordinary and small investors the most.
This is a classic "seen" versus "unseen" problem - the "wasteful fees" saved is obvious, but what is unseen here? A couple of options might be: 1. indexing makes uneconomic acquisitions easier - a CEO can make stupid acquisitions to get bigger simply because indexing will bail him/her out as being larger for the sake of being larger and representing a greater portion of the index leads to great investor inflows. 2. smaller companies are hurt because there are fewer active investors to bother to analyze them as they have been crowded out by indexing.
This may have "benefited ordinary and small investors the most" thus far, but what happens in the next market crash when indexing investors are rushing for the exits? What has happened to Main Street as a result of the trend towards indexing being firms gain investment simply by being "big"?
It is doubtful many will agree with "bigness for the sake of bigness" is a positive development...
Tangentially, there are some nice lists out there of things economists do agree on - here is one of them: http://gregmankiw.blogspot.com/2009/02/news-flash-economists...
If you actually 'understand economics' which is more about 'understanding that you don't understand economics'
One thing is for sure is that we are wealthier now than ever before in history. In 1969 how many households had infinite knowledge at their hands? How many even had basic appliances?
>The rise of economics is a primary reason for the rise of inequality.
It's literally supply/demand. https://en.wikipedia.org/wiki/Labor_force_in_the_United_Stat...
As women entered the workforce, men left the workforce. Which isn't a bad thing, talented women are now contributing to society and displaced the incompetent men.
Those men however are still looking for a job and so we have greater supply and same demand. It means those people at minimum wage are competing with each other and driving their wages down.
Wikipedia: "Economics is the social science that studies..."
Economic law is immutable. There is no changing the law of demand. Price caps will always create shortages and price floors gluts. Even Marx knew this and tried to paper over it with nonsense about historical determinism and the rise of the New Socialist Man.
Blame Law/Politicians
Blame News/Social Media
...
Blame anyone but yourself?
But blaming doesn't score much on HN, no?
1. Using 19th century trade implements (tariffs) to wage a 21st century trade war was a dumb idea.
2. Bernake and Powell did too little to raise interest rates higher. While it would have been painful to do so, not doing it will make the next recession more difficult to weather and will likely compound recession with a liquidity crisis.
3. We have learned nothing from the last 40 years of boom and bust and are to scared of to end laissez faire capitalism to prevent it from happening again.
4. Because economics is not taught or is taught poorly the general public don't understand the difference between debt instruments and debt. They then shout ignorant stupidity into their favorite echo chamber and when it echos back they nod in agreement. When their idiot politicians repeat these dumb ideas back to them later they can do nothing but nod their heads in unison and cast their vote for another idiot.
But don't even bother. It has no clear reasoning, only a handful of anecdotes and hurling an insult to Friedman. It's a weak hit piece to sell you a book. NYT is a joke.
"Here is what we will do, we will pass laws and make it easy to outsource all of the jobs, and then we will import tons of foreign labor. Then, our gracious corporations will happily retrain all of our workers for new jobs with completely new skills. Mid/Late career workers can change on a dime right? Next, when the economy crashes in 2008, we will print unprecedented levels of money to save the economy by pushing up financial assets. That money will mostly end up in the hands of the upper class. Then we will scream wealth inequality! Telling those disenfranchised middle class citizens that it was not us who created such a disparity... we are not the enemy. As China continues to destroy and hollow our economy, we will paint all dissenting politicians as crazies, surely China's unprecedented wealth did not came at our own cost. We need more free trade, more immigration, and more outsourcing."
Not just laws. During the Reagan era, there were US government programs to promote outsourcing jobs. And to coach firms on how to do it.
Pardon my somewhat unorthodox HN tone but who is "America" here? I'll tell you who it's not...plenty of those who voted for the current POTUS.
There was - and still is? - an economic narrative that's pumped out of W.DC via the the corporate media shoveling machine. That spin is disconnected from the reality that plenty of people are experiencing.
Regardless of the static thinking of leading economists, those theories have been tested time and again, and the market has spoken. There's a dark sad irony to the NYT taking notice of reality; mind you it's merely an op-ed.