Cowen and Gross on scouting talent; Cowen on interview questions; Scott Sumner vs. Brad DeLong; C. Bradley Thompson on the educational deep state; Martin Gurri appears on video
"Without question, the principal transmission belt delivering Critical Race Theory directly into the bloodstream of America’s K-12 schools is through America’s teacher-training institutions."
How come? Well, the people in the education business think that school is the primary cause of upward mobility in the United States. Indeed, that it is disproportionately responsible for what is good in America; see, e.g., the bumper sticker, "If you can read this, thank a teacher." For at least 60 years, people in the business have been very, very concerned about "the gap"--the fact that white students (on average) do considerably better than black students. Ed schools have come up with lots of ways to attempt to close the gap but nothing has worked.
It is hard to exaggerate how frustrating this is. Why is nothing working? Why can't we do what we know we should be able to do? Explanations are required. The only constraint is that they must not "blame the victim". But that leaves only one possibility: It's still white people's fault. Even if there is no explicit or conscious racism, there is such an overpowering system of white privilege that schools can't do what they should be able to do, which is to close the gap. If it weren't for white privilege, they would.
As long as "blaming the victim" explanations are forbidden, something like CRT is the only possibility.
I think you do better to just look at the futures markets in the ordinary bonds, or just the bond prices themselves today. As I have written before, a recession will end this bout of inflation immediately, and may already be doing so.
I agree that at the current rate of inflation the US economy will quickly dive into recession. I do wonder if we will see price declines in food, shelter and energy. I worry this time everyone is going to get poorer. The 2008 downturn was bad, but those who stayed employed benefitted from the collapse in prices. To get a collapse in prices this time we will need a depression.
"About 44 minutes in, Martin describes the elites as, rather than wanting to adapt to the new century, wishing they could “reconfigure the public” to go back to the 20th century."
Using Peter Zeihan's descriptions of the post-WWII era as a guide, they specifically want to go back to the last half of the 20th Century, and if pressed would really rather live in the last decade of the 20th Century forever. They are simply unequipped to handle anything more dynamic, and we're all going to suffer until they either learn or are replaced.
Counterpoint: "everything will be better if we can just get Millennials and Gen Z'ers in charge" is another way to express that sentiment, and from where I sit, that's a really tough sell. I'm a Millenial myself, and most of my peers I'm not sure I want having too much influence, well, anywhere, really.
The TIPS market embeds what the market believes the government will report as inflation going forward. This is a different prediction from what inflation will actually be, but will be unmeasured.
An important point. The official numbers pushed really hard to avoid reporting the high inflation we saw over the last year. What most people actually care about is the real inflation they face, not the pretend numbers the government will admit to.
“Many of the research studies pessimistic about interviewing focus on unstructured interviews performed by relatively unskilled interviewers for relatively uninteresting, entry-level jobs. You can do better. Even if it were true that interviews do not on average improve candidate selection, that is a statement about averages, not about what is possible. You still would have the power, if properly talented and intellectually equipped, to beat the market averages. In fact, the worse a job the world as a whole is at doing interviews, the more reason to believe there are highly talented candidates just waiting to be found by you.
In most of the studies on this subject, interviews were more effective for higher-level jobs. So if you wish to hire an economist, Tyler believes that asking a person substantive economics questions during an interview is a good way to start assessing their competence”
Another robust finding of research about hiring is that tests are better predictors of job performance than interviews are.
Using an interview to mimic a test might indeed increase an interview's predictive value. Asking a person substantive economics questions during an interview for an economics job mimics a test.
Interviews can be structured to mimic IQ tests and subject matter tests. Maybe there are norms (or other obstacles) against formal tests. If so, covert tests during interviews might serve as an imperfect substitute.
Tyler's blogpost explanation of insights from the interview question, "What are the open tabs on your browser right now?," strikes me as over-interpretation. But who am I to say? Tyler certainly has an outstanding record at hiring talent. Perhaps a mastery of the art and science of interviewing is part of his talent at hiring?
Sumner has a specific idea of average as starting back in 202? and so that average is getting worse. I think the going forward expected average is more important, but DeLong is too sanguine about the 6-10 year TIPS expectation as being that significant. The fact is that TIPS does not expect the Fed to achieve 2% PCE (~2.3% CPI) over the next ten years. The Fed has more work to do.
Weak-EMH says it's unlikely we can do better than the markets at predicting future inflation rates. Nevertheless, that only puts a floor on error to what the market is usually able to achieve, and the track record isn't all that great. The statement, "The market forecasts ... " should include very wide plus-or-minus error bands that make having more than one significant digit completely specious precision.
If you continue the graphs of predictions vs what the official reported inflation rates turned out to be, the low accuracy in that article collapsed even further over the last few years. Yes, pandemic and all that, but then again, once that was priced in, the market still seemed to be really undershooting the inflation that turned up. As for the Fed, they seem to be conflicted in trying to balance other priorities, whatever the statutory language may say.
It seems to me that inflation might be nearly unpredictable in a real sense for almost everyone who is an outsider to the decision variables. Essentially a would be predictor has to take into account market variables (output changes domestic and foreign, wars, etc) as well as policy variables (stated targets, Fed interest rates, fiscal policy, energy policy, etc.). The policy variables in particular seem to be extremely random from the outside, as government actors have so many different goals other than "keep a stable money supply" and often these goals are contradictory, with regards to each other and sometimes common sense.
Just looking at the short term, one would have to guess whether serious steps to curb inflation are going to be taken before the election in Nov or not, whether the economy will enter recession before then anyway, whether fiscal spending will continue to inflate the debt, what post-COVID production looks like, whether China will stop locking down Shanghai and get some of those container ships moving again, and probably 20-30 factors I am not thinking about. Most of those questions can't really be answered without making assumptions on what the relevant government actors' priorities will be, which... well, government priorities rarely seem to match some model of "responsible serious people should care about X, Y and Z, in that order."
Sure, there are lots of reasons it's hard to predict the future. This goes double for an arbitrary construct like inflation.
The question before us is how many grains of salt to add to statements like, "Based on currents spreads, the market predicts ... "
To know whether one can relax or should hedge, one wants to know the market's track record, especially how often it misses big negative shocks around the corner.
If the market - which many think does as well as anyone can - turns out to be off a lot and often, then current spreads still tell us something, but not enough to chill out about bad times ahead.
Yea, sorry, I wasn't being too clear. My point was intended to be more that we should expect even a very efficient market to be wrong a lot, and maybe rarely even close, just as a result of inflation being more a question of what highly unpredictable priorities a group of... maybe not crazy but... people choose to pursue and less a question of the logical extrapolation of facts about the world. Worse than usual predictability, and so markets predict the state of the future much less accurately than we come to expect in other realms.
I do not disagree about the uncertainties. Unfortunately the Treasury has not provided us with intermediate TIPS -- 1, 2, 3, 7 years -- that could (could have) helped the Fed react sooner and more vigorously
"Without question, the principal transmission belt delivering Critical Race Theory directly into the bloodstream of America’s K-12 schools is through America’s teacher-training institutions."
How come? Well, the people in the education business think that school is the primary cause of upward mobility in the United States. Indeed, that it is disproportionately responsible for what is good in America; see, e.g., the bumper sticker, "If you can read this, thank a teacher." For at least 60 years, people in the business have been very, very concerned about "the gap"--the fact that white students (on average) do considerably better than black students. Ed schools have come up with lots of ways to attempt to close the gap but nothing has worked.
It is hard to exaggerate how frustrating this is. Why is nothing working? Why can't we do what we know we should be able to do? Explanations are required. The only constraint is that they must not "blame the victim". But that leaves only one possibility: It's still white people's fault. Even if there is no explicit or conscious racism, there is such an overpowering system of white privilege that schools can't do what they should be able to do, which is to close the gap. If it weren't for white privilege, they would.
As long as "blaming the victim" explanations are forbidden, something like CRT is the only possibility.
I think you do better to just look at the futures markets in the ordinary bonds, or just the bond prices themselves today. As I have written before, a recession will end this bout of inflation immediately, and may already be doing so.
I agree that at the current rate of inflation the US economy will quickly dive into recession. I do wonder if we will see price declines in food, shelter and energy. I worry this time everyone is going to get poorer. The 2008 downturn was bad, but those who stayed employed benefitted from the collapse in prices. To get a collapse in prices this time we will need a depression.
"About 44 minutes in, Martin describes the elites as, rather than wanting to adapt to the new century, wishing they could “reconfigure the public” to go back to the 20th century."
Using Peter Zeihan's descriptions of the post-WWII era as a guide, they specifically want to go back to the last half of the 20th Century, and if pressed would really rather live in the last decade of the 20th Century forever. They are simply unequipped to handle anything more dynamic, and we're all going to suffer until they either learn or are replaced.
Counterpoint: "everything will be better if we can just get Millennials and Gen Z'ers in charge" is another way to express that sentiment, and from where I sit, that's a really tough sell. I'm a Millenial myself, and most of my peers I'm not sure I want having too much influence, well, anywhere, really.
The TIPS market embeds what the market believes the government will report as inflation going forward. This is a different prediction from what inflation will actually be, but will be unmeasured.
An important point. The official numbers pushed really hard to avoid reporting the high inflation we saw over the last year. What most people actually care about is the real inflation they face, not the pretend numbers the government will admit to.
Why does Sumner mention Average Inflation Targeting, when he himself says that the Fed has quietly dropped that policy?
Re: "a question [Tyler] likes to ask during interviews: “What are the open tabs on your browser right now?”
See "Cowen's Second Law: There is a literature on everything.":
https://marginalrevolution.com/marginalrevolution/2015/04/tyler-cowens-three-laws.html
Well, there is a literature on job interviews. A robust finding is that job interviews aren't good predictors of performance on the job.
Is it plausible that job interviews will become good predictors, if we change the questions to ones like the one about open tabs on your browser?
Perhaps Tyler's new book about talent will make the case. I look forward to reading the book and Arnold's forthcoming review thereof.
Tyler addresses this in chapter 2:
“Many of the research studies pessimistic about interviewing focus on unstructured interviews performed by relatively unskilled interviewers for relatively uninteresting, entry-level jobs. You can do better. Even if it were true that interviews do not on average improve candidate selection, that is a statement about averages, not about what is possible. You still would have the power, if properly talented and intellectually equipped, to beat the market averages. In fact, the worse a job the world as a whole is at doing interviews, the more reason to believe there are highly talented candidates just waiting to be found by you.
In most of the studies on this subject, interviews were more effective for higher-level jobs. So if you wish to hire an economist, Tyler believes that asking a person substantive economics questions during an interview is a good way to start assessing their competence”
Another robust finding of research about hiring is that tests are better predictors of job performance than interviews are.
Using an interview to mimic a test might indeed increase an interview's predictive value. Asking a person substantive economics questions during an interview for an economics job mimics a test.
Interviews can be structured to mimic IQ tests and subject matter tests. Maybe there are norms (or other obstacles) against formal tests. If so, covert tests during interviews might serve as an imperfect substitute.
Tyler's blogpost explanation of insights from the interview question, "What are the open tabs on your browser right now?," strikes me as over-interpretation. But who am I to say? Tyler certainly has an outstanding record at hiring talent. Perhaps a mastery of the art and science of interviewing is part of his talent at hiring?
Sumner has a specific idea of average as starting back in 202? and so that average is getting worse. I think the going forward expected average is more important, but DeLong is too sanguine about the 6-10 year TIPS expectation as being that significant. The fact is that TIPS does not expect the Fed to achieve 2% PCE (~2.3% CPI) over the next ten years. The Fed has more work to do.
Weak-EMH says it's unlikely we can do better than the markets at predicting future inflation rates. Nevertheless, that only puts a floor on error to what the market is usually able to achieve, and the track record isn't all that great. The statement, "The market forecasts ... " should include very wide plus-or-minus error bands that make having more than one significant digit completely specious precision.
This article is a little dated, but I think makes the case: https://www.frbsf.org/economic-research/publications/economic-letter/2015/september/market-based-inflation-forecasting-and-alternative-methods/
If you continue the graphs of predictions vs what the official reported inflation rates turned out to be, the low accuracy in that article collapsed even further over the last few years. Yes, pandemic and all that, but then again, once that was priced in, the market still seemed to be really undershooting the inflation that turned up. As for the Fed, they seem to be conflicted in trying to balance other priorities, whatever the statutory language may say.
It seems to me that inflation might be nearly unpredictable in a real sense for almost everyone who is an outsider to the decision variables. Essentially a would be predictor has to take into account market variables (output changes domestic and foreign, wars, etc) as well as policy variables (stated targets, Fed interest rates, fiscal policy, energy policy, etc.). The policy variables in particular seem to be extremely random from the outside, as government actors have so many different goals other than "keep a stable money supply" and often these goals are contradictory, with regards to each other and sometimes common sense.
Just looking at the short term, one would have to guess whether serious steps to curb inflation are going to be taken before the election in Nov or not, whether the economy will enter recession before then anyway, whether fiscal spending will continue to inflate the debt, what post-COVID production looks like, whether China will stop locking down Shanghai and get some of those container ships moving again, and probably 20-30 factors I am not thinking about. Most of those questions can't really be answered without making assumptions on what the relevant government actors' priorities will be, which... well, government priorities rarely seem to match some model of "responsible serious people should care about X, Y and Z, in that order."
Sure, there are lots of reasons it's hard to predict the future. This goes double for an arbitrary construct like inflation.
The question before us is how many grains of salt to add to statements like, "Based on currents spreads, the market predicts ... "
To know whether one can relax or should hedge, one wants to know the market's track record, especially how often it misses big negative shocks around the corner.
If the market - which many think does as well as anyone can - turns out to be off a lot and often, then current spreads still tell us something, but not enough to chill out about bad times ahead.
Yea, sorry, I wasn't being too clear. My point was intended to be more that we should expect even a very efficient market to be wrong a lot, and maybe rarely even close, just as a result of inflation being more a question of what highly unpredictable priorities a group of... maybe not crazy but... people choose to pursue and less a question of the logical extrapolation of facts about the world. Worse than usual predictability, and so markets predict the state of the future much less accurately than we come to expect in other realms.
I do not disagree about the uncertainties. Unfortunately the Treasury has not provided us with intermediate TIPS -- 1, 2, 3, 7 years -- that could (could have) helped the Fed react sooner and more vigorously