VodkaHaze

I think you would enjoy "How Nations Fail" by Acemoglu and Robinson, and the EconTalk podcast with Russ Roberts.

Especially when memory constrained

The whole digging holes theory of aggregate demand is what's called "vulgar Keynesianism"

Yes, and we should ask Lysenkoists about effective growing of crops.

Marx contributed massively to sociology. He contributed nothing of note to economics that's really relevant to this day (not that his effort was not commendable). Sticking to orthodox marxist economics in 2016 is more dogma than science.

There is a lot of scanning going on by a lot of people

That's a bad argument to make, though, because nothing about Arrow's theorem says how much the criteria will be broken, only that they can't be fully satisfied. Moreover, it doesn't apply to "range voting" methods (cardinal information-based voting systems).

See here:

https://www.reddit.com/r/badeconomics/comments/5a9a1b/arrows...

Nassim Taleb is like his own Markov chain text generator now

DSGE models aim to be explanatory models of an economy. They are not the best at predicting (bayesian VARs do better forecasting, there is a tutorial on it in my quant econ link) but they turn out to do forecasting decently well, too.

The reason that is is that purely statistical/predictive models of macro are subject to the Lucas Critique [1]. It says roughly, if you observe an economic relationship is happening, but you don't have an explanatory reason why it is, it's a bad idea to use it for policy prescription.

The NY fed model has a whitepaper here [2], which should be accessible to the technical data scientist (technical, but not prohibitively so).

Their readme points to a few posts on using it, I think the open source code comes with a csv for example input data. There should be publicly accessible macroeconomic data in a few places for you to play with it, say at FRED or the World Bank. I think Julia has a Stata-style api package for FRED data, making the data processing easier.

Have fun!

[1]https://en.m.wikipedia.org/wiki/Lucas_critique

[2] https://www.google.ca/url?sa=t&source=web&rct=j&url=https://...

Always fun to point out is that the NY federal reserve switched their full scale model of the economy to Julia last year[1]. It's also open source, so data scientists interested in macroeconomics can feel free to play around with it.

Moreover, quant-econ, an academic entity dedicated to scientific programming in the social sciences has a few notebooks in python and Julia [2]

[1]https://github.com/FRBNY-DSGE/DSGE.jl

[2] http://quantecon.org/notebooks.html

If you need performance on these kind of structures, you can use structured arrays in python.

The main reason I like the idea of Julia is that I don't see the problem of parallelism being addressed in python, at least not without cumbersome libraries (disclaimer: I haven't tried dask yet). If python had an equivalent to

    #pragma omp parallel for 

I wouldn't have Julia ready in mind for my next project that requires creating a high performance algorithm.

Is there any probabilistic argument around the proof?

For instance, a decade before Wiles' proof of Fermat's Last Theorem, Feynman[1] showed it was extremely unlikely to be false. While you're not getting a million from Clay for that, it something non insignificant that we can use to guide our intuition.

[1]http://www.lbatalha.com/blog/feynman-on-fermats-last-theorem

There is such a thing as the "resource curse". That is, if a country is rich with exploitable resources, the political economy will tend towards infighting over who controls the resources. This is akin to a zero sum game, instead of creating an inclusive system where innovators can profit from their creating.

"Why Nations Fail" is a great book that goes over this.

Externalities are usually solved through pigouvian taxes.

But since we can't really know in advance what product will/won't be secure (or at least it's incredibly difficult in the constantly goalpost moving security industry) the only way I can see this happening is if, say DYN could sue the IoT manufacturers for negligence or something of the like.

Those sort of information asymmetry problems (in this case, you can't know the quality of the service you're buying until it's far too late) are a textbook case of market failure [1] [2]. You can improve the outcome sometimes with some smart regulation.

But in the security industry there are multiple levels of this problem:

- The end user doesn't generally know how hardened the product he buys is

- The manufacturer is rarely certain how high quality the security auditing/services he is buying

- How much to invest in securing a product is not an easy decision.

I'm of course simplifying a lot here, but you asked for the economics of those problems, and hopefully this was interesting to some.

[1] http://www.sfu.ca/~allen/leffler2.pdf [2]https://www.iei.liu.se/nek/730g83/artiklar/1.328833/AkerlofM...

This is the second time it's been pointed to me this month and I'm incorrigible.

Piketty looks weird to me because I pronounce it "Pike-etty" instead of "pique-etty" in my head.

You forgot the owners of the company. Presumably taxing the company would equate taxing them, which is separate from workers. But such is not how tax incidence works.

    > We should be taxing wealth and not income (or roughly speaking, unearned instead of earned income).

You'll see most economists advocating a consumption tax, instead.

    > quantitive easing pumping up asset prices while doing nothing for the real economy

Both the "pumping up asset prices" and "while doing nothing for the real economy" is extremely disputable. It's kind of pompous of you to think you know better than the team of PhDs at the Fed, too.

    > global corporate tax avoidance

The corporate tax should be 0%. No, I'm not kidding; hear me out.

Corporations aren't people; they don't ever actually pay taxes. People pay taxes. Yes, I know corporations are legal entities, but they're owned and managed by people, somewhere down the line. Those are the people the corporate tax is intended to target.

Presumably, the "goal" here is to get the corporations with scale economies, negotiation power, etc. to be taxed and use this to redistribute economic gains.

But what happens is that instead the burden of these taxes fall onto the shoulders of non-management workers in the firms and the people who buy what the firm produces. Because the incidence of a tax is indirectly distributed by a mechanism which depends itself on the negotiation power of the actors in the system.

That is the exact opposite group of the original intention (you'd want the burden to be as much as possible on managerial staff and shareholders -- eg. the people running the corporations). Also, the tax is distortionary and incentivizes all sorts of unproductive practices.

Of course, the tax would have to be replaced with something. That something should target the people owning and running the companies to make sure the tax burden is actually bore by them.

Consumption taxes can do that.

    > the rise of the low-paid 'gig' economy and under-employment; fewer high paid jobs all demanding workers with ever higher levels of education (unattainable-for-many)

What you'll see with automation is a polarization of the labor market [1]. So what you said is not false, but not spot on. There are going to be more of both low and high paying jobs, and fewer middle paying jobs.

    > A crisis is brewing. They leave us no option but to make changes.

Things are better than they've ever been, on average.

I don't think we should make any sweeping revolution, but smart, targeted changes. Of course, not all of those are pollitically feasible (imagine politically advocating for a 0% corporate tax replaced by a consumption tax and targeted taxes on shareholders and CEOs/board members).

[1] http://economics.mit.edu/files/9835

> my experience is that everyone, more or less, is better off from generation to generation, at least in material terms.

That is correct. Even when people make claims like "middle class income hasn't grown in the last xyz years" they're basing it on statistical sleights of hand, see [1].

> The problem I see is that when we talk about social mobility, we always talk about relative classes, in which case there will always be 1/5th of the population in the bottom fifth.

Right, but the question is more about opportunity. Like if you created a Markov transition model, what are the probabilities of going [1/5]->[2/5] (or [3/5], etc.)

> Right, wealthy parents are able to provide more opportunities for their offspring. But hasn't that always been true?

Sure. But the point is that we aspire for our society to be meritocratic. That is we'd like it to be better to be born smart than rich. Of course that's never been the case, but we want to isolate the "why".

It's not necessarily even about opportunities. If you make college free, for example, it ends up being a subsidy on the children of the tiers [4/5] and [5/5] (playing loose with facts here) because, even if you isolate parent's wealth they __still__ end up in college more often.

Things that are difficult to measure (like motivation and noncognitive skills) are built at a young age, and a good environment is needed to foster that.

> I imagine the education available to the least fortunate today is much better than the education available to someone in the lower class from 100 years ago

I know it's been the case in Canada [2], I've been told it's not in the US, but I'm unsure it's really the case (turns out you need fairly sophisticated statistical models to measure it properly).

[2] http://link.springer.com/article/10.1007%2Fs00181-009-0275-9

[1] https://www.minneapolisfed.org/publications/the-region/where...

I didn't say it requires such an education; I said it was intended for those people.

Anyone can read it, really, it's just going to be a slog for most people. Like reading some famous philosophy books (Sartre or the big name German philosophers comes to mind); it's not that anyone lacks requisites to read those book,s just that they're a slog without.

Sartre sits on my shelf unread for that reason; I imagine C21 sits on a lot of shelves for the same reason.

I'd like to add that there seems to be more of a consensus in education inequality.

That is, noncognitive skills developed very early (age 0-4) are a huge factor in educational outcome and early childhood intervention is pretty close to agreed upon to be a necessary thing to improve the outcomes of children who grow up in a poor environment.

James Heckman's work on the topic might be worth reading.

It just came out at an appropriate time; a year after Occupy Wall Street, etc. Inequality and inter-generational mobility is clearly on people's minds these days.

Similar story happened with Nassim Taleb's Black Swan book. It's not a particularly good book -- it's rambling, hand wavy, and only ever presents anecdotal evidence as support for its claims. But the book came out at an appropriate time (right before the financial crisis) so it was embraced.

Picketty's re-response[1]. It gets rather technical from there on. It's not my area of expertise, either, so I won't come with my opinion on the matter. Acemoglu is a giant, and so is Picketty, so I watch the fight from afar.

The first two levels of discussion (C21 and Acemoglu's immediate answer) are digestible, though.

What's important to understand is that this is all part of a larger discussion on inequality, which has gained a lot of momentum in the last few years in economics (in all fronts -- wealth, income, education, etc.) It's fine to take the position of "I'm not sure" for the moment being, while informing yourself.

[1] http://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.29.1.67

r > g doesn't actually explain that much in terms of wealth inequality. See Acemoglu and Robinson paper in my other reply.

There is evidence that intergenerational mobility is going down, but not so much at the tippy top of the ladder. More on the "if you are born from lower class parents, you are likely to be lower class at 40" side.

Early childhood education is shown to help with the lower rungs of the ladder; most of the damage in a child's noncognitive skills is done before the age of 4 by bad environment (absentee parents, stressed parents, etc.) This lack of noncognitive skills effects outcomes everywhere starting with educational achievement.

I am not as well read in the mobility between the middle and upper classes, so I won't comment there.

The fact that the book is a best seller when its intended audience is really people with a graduate education in economics tells me that most people bought is as a signal of smartness (or as an honest effort to inform oneself, but without actually slogging through the book)

In the interest of giving the fuller discussion:

Picketty's book has been out for a while now. It is good economics. It deserves rightful praise, and scrutiny.

Acemoglu and Robinson's answer[1] is also good economics. Digestible podcast form here [2]. It purports that Picketty's "r>g" model is flawed. It also deserves a reading.

All of this is part of a larger discussion, which C21 started. r > g doesn't seem to explain nearly as much as Picketty presents in the book, but that doesn't mean his larger idea is fundamentally invalid, or that he didn't introduce something valuable.

[1] http://economics.mit.edu/files/10422 [2] http://www.econtalk.org/archives/2014/11/daron_acemoglu.html

> Unfortunately the new buzz words of today are the boring stacks of tomorrow.

Bullshit.

SOME of today's buzzwords will be boring stacks of tomorrow. But unless you're a some sort of oracle, chances are you won't be able to pick which are today, for the same reasons you shouldn't try to beat the stock market.

This:

> The subreddit arguing that it’s reasonable to give companies power over democratically legitimated governments

Is a massive strawman if you're referring to ISDS (which is what it seems). If you want a trade agreement, the terms need enforcement to be unilateral. But political actors in each respective countries will be incentivized not to respect that by internal pressures.

So there needs to be a way to settle those disputes, or else you might as well not have any trade agreement. You can dispute the merits of the current court system; I won't, I'm not an expert in that.

But saying that this means "companies have power over democratic countries" is absurd. Go look at supreme court cases in any country. How many are "[person] vs [state]" or "entity vs country"?

Democratically elected governments can act in ways just as abhorrent as any other entity; that's why the president doesn't have control over, say, what is constitutional or get to control monetary policy.

Yeah it's going through reforms in the next week or so, to improve overall quality.

The subreddit has tripled in subscriber base over the last year, and growth like that can be harmful if you're aiming for a higher signal/noise ratio.

Snark is not frowned upon as long as it's based on something meaningful. I'm guilty of snark, but I try to craft high quality posts. Making fun of people because they disagree with your viewpoint is not fine if you don't explain why in an objective manner, though.

But the subreddit is such that a lot of people bring their personal ideology and hope for the regulars of that subreddit to back them up. So there's a balance to be struck.

You want to find the niche expert subreddits. The ones you named are good. So is /r/badhistory, /r/badeconomics [1] which are generally hangouts of experts to make fun of people claiming things. /r/netsec is generally good, so is /r/machinelearning. Even niche job-specific subreddits (like meddit or /r/protectandserve) are interesting to observe.

Because economics gets politicized so much, it's very rare to find sound discussion in popular forums. It's a ton of people cheering for their "team's" policies.

[1] Full disclosure: I'm recently been made a mod there. /r/badeconomics is probably the highest signal/noise economics place on the internet at the moment though. I learned more there than in school in the years I've spent there.