Tyler Cowen and Martin Gurri vindicated; WTF happened in 1971; Noah Smith on American build-nothingism; Suzy Weiss on college cheating; Tyler Cowen on complaining
I currently wear on my body two medical devices that did not exist in 2004. A drug that didn't exist in 2004 saved my life.
I would say there have been major advances in medical technology and pharmaceuticals since 2004, but almost no advancement (and sometimes backwardness) in the provision of medical services.
Going to a hospital is as awful as ever. I find dealing with doctors a lot worse then twenty years ago (some of his is the cultural/language barriers or dealing with a nearly all Indian medical establishment down here, some of it is the increase in bureaucracy).
One could say the same of all the "red line" sectors in that AEI inflation chart. Any technological advance simply goes right back into service costs.
And of course in some cases, like end of life care, these advances are basically pointless in a fundamental sense of not changing the inevitable.
About Afghanistan westernizing. I have at least 10 different things to nitpick from that article, but I'll try to limit myself to a few things that were not quoted by Dr Kling or by Anton Cebalo. I doubt Afghan culture is converging with western culture very rapidly (centuries?) if at all.
- "On Valentine’s Day—the celebration of which is forbidden in Islam—peddlers in the streets of Kabul were selling heart-shaped balloons." => Kabul based Chinese traders (see "Chinese hotel" paragraph) will sell whatever they get from their Chinese suppliers. I doubt many Afghan buyers know about the meaning that some westerners give to heart-shaped balloons in the middle of february but only in the middle of february (Salwāǧa?).
- "Khariji rats", "Were the Germans Sunnis, or were they Shias?" => It seems religion still plays a very large role in Afghan's lifes even in situations not regulated by the Taliban. If the Taliban reverse their women education ban but keep everything else, would that make them more western ?
- "For years Kabul was full of these addicts." => Is Kabul full of "plugged-in youth" ? It doesn't seem it is ("Afghanistan’s only shopping mall"). I assume Afghan drug addicts are not high status, but Oks seems to assume that this new tiny minority is high status ("And while these young men were still a tiny minority, they were also the bleeding edge... Status flows downward").
The cheating epidemic shows that *many* students clearly believe the signaling model, but it's not clear what the proportion is. It matters whether it's 80% or 20%. Moreover, it also matters what the response is: if cheating is normalized then a minority can become a dominant majority via arms race dynamics.
From my experience teaching, 80% is probably about right. I don't think most consciously believe the signaling model (most seem slightly offended when you bring it up in class) but nearly all have a "just get through this" mentality to class. They have figured out long ago that what matters in the end is the grade, not so much how you got it. They resist the pure signaling model because they want to believe they ARE better because they got through college and deserve higher wages, not merely that they went through hoops. The fact they will use very little of what they were tested on has been extremely deeply internalized.
Beyond cheating, the very idea of doing the minimum to get a B (or an A), with the expectation that the "knowledge" would be useless in the future is corrosive to the effort of thinking, which is required for good learning.
Getting the grade with the minimum of work, and learning, is the usual mantra - and it's hard to blame the students. Sad, but real.
"Equity" has been written into the fabric of nearly all our large institutions. Biden has been passing new equity regulations of sweeping import very recently.
In this sense we should consider BLM a success. Obviously it couldn't do much to improve policing. But it has remade professional and government institutions and that isn't going away.
Unfortunately very true; tho it's also a delayed Occupy Wall Street success.
Fortunately, the Trump-supporters WERE able to get 3 conservatives on SCOTUS and get rid of the lousy Roe v Wade decision - putting it back with the states where it belongs.
The US oligarchs plus deep state gov't plus media plus academia (esp Law Schools) plus judges in a near monoculture against conservative Republicans mean few of those types of solutions will actually be tried. "Our (their) Democracy" will be protected by the FBI and others. The non-Republican changes by Democrats are generally making problems worse rather than reducing them.
The housing YIMBYs are simply tiresome at this point. They attack zoning and similar mechanisms which are all that the middle and upper-middle classes have left to legally defend themselves against public disorder and crime that have exploded - surprise, surprise! - in the late 60s and 70s, while pretending to not understand or misrepresenting the reason which causes M/UMCs to defend these mechanisms (the inability of M/UMC to articulate these reasons does not help). Small wonder this leaves housing YIMBYs deeply frustrated. In Japan, where public disorder and crime are by American standards non-existent, there is no problem with rezoning and building new stuff, no need for car-centric development as people have no reason to avoid public transport, etc. I again recommend Anomaly UK's post from last summer on virtual nations: https://blog.anomalyuk.party/2022/07/cars-or-police/
There is a difference between, let's say, the Tea Party rise and fall and BLM's rise and fall. BLM's supporters now run the government, the Tea Pary supporters don't.
oh, just checked those "jokes" about GMU/Mercatus. So, Mercatus is Koch-funded, thus Caplan, Hanson, Cowen are in the brothers' pockets? Cool. Make me think those Koch's must be great. As Thiel. - Doubt I will watch videos of 4 guys who do not know conservative EAs. Only 7k do - as compared to this one: 9 million (Fridman+Peterson). https://www.youtube.com/watch?v=sY8aFSY2zv4 Or this one - 120 Million - MrBeast maketh the blind see: https://www.youtube.com/watch?v=TJ2ifmkGGus Btw: Scott Alexander S. is EA. And had interests even in neoreactionaries. Got doxed by the NYT. Making 50k $ a month on a free boring substack without ads or "like"-options. (just joking, S.A.S. being the most wonderful essayist around)
Jager: The BLM/George protests should not be judged as failures because no police departments were “defunded” but rather because the did not lead to reforms in policing resulting is less crime (incuding police misconduct and the failure to prevent unlawful behavior during mass protests.
Health Care costs: Somehow we need to inject into the decision process the idea of cost-effective treatment. The patient does not have the knowledge and with insurance the incentive to choose only cost-effective treatment. I think the best chance is private insurers with doctors trained to understand the concept and not try to subvert the process in favor of the patient’s desires.
America exports its culture, movies, music, tech, and even politics to the world. This has been widely understood by many millions of people. Tyler Cowen doesn't own this obvious and widespread idea. Similarly, the idea that a college degree is valuable as a strictly artificial credential isn't remotely unique to Bryan Caplan, although I will credit Caplan with formalizing that argument better than anyone else I've seen.
Next, regarding vindication. Tyler Cowen downplayed the COVID lab leak theory and ignored evidence in its favor. Tyler Cowen stayed silent on the premise of the Federal Government coercing Twitter and Facebook and other media and social media companies to steer the 2020 election in underhanded ways, and then recently says, all of this is obvious, and the Twitter Files expose is boring. Recently, Tyler Cowen promotes skepticism of the theory that the US was involved with the Nord Stream pipeline sabotage, yet all evidence strongly points in that direction. Mainstream media now cites unnamed US intelligence officials that the Nord Stream pipeline was sabotaged by a Pro-Ukrainian group. But apparently not the USA? It seems overwhelmingly likely that some branch of the USA was directly involved.
Caplan previously claimed to be an extreme pacifist, but now even he supports US military engagements in Ukraine and around the world?
Tyler Cowen (and Caplan) has sided with a corrupt USA ruling elite class on all of these issues and that is the opposite of vindication.
I have a very low opinion of Noah Smith, so take this for what it's worth: the problem is that he's trying to analyze a problem that requires a "law and economics" approach with just the economist's lens. There were a lot of important legal changes in the '70s that contributed to this "frozen development" outcome. There's the EPA, there's the Warren Court decisions, and there's the fallout from the CRA. His approach in his post suffers from the myopia of overspecialization. Understanding the Warren Court precedents also helps to explain why zoning law has been favored as a means to suppress and work around the Fair Housing Act (FHA).
I'm confident that Noah would be shocked to learn the 101-level basics of what the EPA actually does and what kinds of permits it requires for the simplest of operations (such as literally digging ditches near puddles much less building stuff). You're just not going to be able to understand the issue by staring at charts harder when you need to be also reading statutes, regulations, cases, and treatises to have the faintest notion of why things are so screwed up. This kind of issue is one in which an economist can do nothing to budge the legal reality. No quantity of economic analysis can alter the law. It's like shooting bullets at the ocean and expecting to kill Poseidon.
Noah's coalition membership also makes this tougher for him to see the root causes. Some members of his coalition understand it a little bit, but honestly, actually understanding it or breaking up this settled arrangement would also fracture their political coalition, so they're unlikely to actually do it.
It seemed in all cases studied excessive spending and over-fat bureaucracy's may have been the issue while the central banks were providing loans to the government at negative real interest rates and paper discounts (always an implied interest rate). To stop the inflation, outside powers (League of Nations) prevented the central banks from creating these money losing negative real interest rate loans to the government which forced the government to slow spending and layoff workers. In these cases people had other currencies as a store of value and fled to those (even with capital controls) and probably any fixed real assets. In the US at this time you can only flee into fixed assets from stock, and housing to paintings with the hope that inflation doesn't destroy their value.
Fiscal and monetary policy seems a bit confused when the real interest rates are negative. It appears that the Fed and the government are the same super-institution with only a turf battle between them.
This paper was before Volcker killed the inflation expectations of the 70's with positive real interest rates proving he was serious much like they did in the cases Sargent examined (someone actually said and meant NO). Perhaps only the Fed has the guts to say NO, our political class that now think that the president can give away half a billion in student loans to people in the richer half of our society with his pen clearly can't see reality.
The concept of momentum with inflation beyond the expected time delays seem like a misuse of physics with no meaning, as all of Sargents examples inflation stopped fast which implies momentum is near zero at all times. In the 70's I was doing a fair about of cost analysis and old fashion engineering economics where inflation estimates are critical in cost analysis. It was all based upon experience and observations of past inflation rates.
In todays world in the US, perhaps the only way we can make a "soft landing" from this inflation and possibly stagflation repeat is to drastically increase our economic efficiency by eliminating our permission system which gives veto power to every "stakeholder" who has an opinion. Meanwhile, inflation is stealing my retirement wealth and the government is taxing me on my imaginary nominal interest rates (actual negative real rates). We have a lot of fat in the permissions/regulatory systems that have grown over time and are killing innovation in anything dealing with the real world and we only have innovation in the permissionless sectors of the economy.
I am not an economist, but have lived a long time and I was trying to remember whether any country has broken inflation (significant reduction) while having the central bank maintain a negative "real interest" rate? In the 80's Volcker killed inflation with a positive "real interest" rate which forced loans to only be made on projects with positive ROI's.
With negative real interest rates, the connected with access to loans can always make money even at negative investment ROI's with just the assumption that the investment won't lose as much real value as the money will. Having witnessed a hyper inflation in Brazil where people bought and saved re-bar as a source of value I have only seen a complete revolution (military takeover and new money) and theft of all money or positive "real interest" rates tame inflation.
As I noticed the gas heater I bought a few years back on sale at over 300% higher price, the inflation is out of hand.
Could you provide some information on what had stopped inflation before in many other countries and how well it worked. Any "soft landings" or just crashes and the question becomes how bad of crash is required. The 80's high real interest was much softer than Brazil in the 60's or Venezuela today.
It is consistent with a view that inflation is a fiscal phenomenon. If the government gets its deficits under control, it can end inflation. Otherwise, I am less confident.
I currently wear on my body two medical devices that did not exist in 2004. A drug that didn't exist in 2004 saved my life.
I would say there have been major advances in medical technology and pharmaceuticals since 2004, but almost no advancement (and sometimes backwardness) in the provision of medical services.
Going to a hospital is as awful as ever. I find dealing with doctors a lot worse then twenty years ago (some of his is the cultural/language barriers or dealing with a nearly all Indian medical establishment down here, some of it is the increase in bureaucracy).
One could say the same of all the "red line" sectors in that AEI inflation chart. Any technological advance simply goes right back into service costs.
And of course in some cases, like end of life care, these advances are basically pointless in a fundamental sense of not changing the inevitable.
About Afghanistan westernizing. I have at least 10 different things to nitpick from that article, but I'll try to limit myself to a few things that were not quoted by Dr Kling or by Anton Cebalo. I doubt Afghan culture is converging with western culture very rapidly (centuries?) if at all.
- "On Valentine’s Day—the celebration of which is forbidden in Islam—peddlers in the streets of Kabul were selling heart-shaped balloons." => Kabul based Chinese traders (see "Chinese hotel" paragraph) will sell whatever they get from their Chinese suppliers. I doubt many Afghan buyers know about the meaning that some westerners give to heart-shaped balloons in the middle of february but only in the middle of february (Salwāǧa?).
- "Khariji rats", "Were the Germans Sunnis, or were they Shias?" => It seems religion still plays a very large role in Afghan's lifes even in situations not regulated by the Taliban. If the Taliban reverse their women education ban but keep everything else, would that make them more western ?
- "For years Kabul was full of these addicts." => Is Kabul full of "plugged-in youth" ? It doesn't seem it is ("Afghanistan’s only shopping mall"). I assume Afghan drug addicts are not high status, but Oks seems to assume that this new tiny minority is high status ("And while these young men were still a tiny minority, they were also the bleeding edge... Status flows downward").
The cheating epidemic shows that *many* students clearly believe the signaling model, but it's not clear what the proportion is. It matters whether it's 80% or 20%. Moreover, it also matters what the response is: if cheating is normalized then a minority can become a dominant majority via arms race dynamics.
From my experience teaching, 80% is probably about right. I don't think most consciously believe the signaling model (most seem slightly offended when you bring it up in class) but nearly all have a "just get through this" mentality to class. They have figured out long ago that what matters in the end is the grade, not so much how you got it. They resist the pure signaling model because they want to believe they ARE better because they got through college and deserve higher wages, not merely that they went through hoops. The fact they will use very little of what they were tested on has been extremely deeply internalized.
Beyond cheating, the very idea of doing the minimum to get a B (or an A), with the expectation that the "knowledge" would be useless in the future is corrosive to the effort of thinking, which is required for good learning.
Getting the grade with the minimum of work, and learning, is the usual mantra - and it's hard to blame the students. Sad, but real.
"Equity" has been written into the fabric of nearly all our large institutions. Biden has been passing new equity regulations of sweeping import very recently.
In this sense we should consider BLM a success. Obviously it couldn't do much to improve policing. But it has remade professional and government institutions and that isn't going away.
Unfortunately very true; tho it's also a delayed Occupy Wall Street success.
Fortunately, the Trump-supporters WERE able to get 3 conservatives on SCOTUS and get rid of the lousy Roe v Wade decision - putting it back with the states where it belongs.
(See short Dan Mitchell on Swiss success & federalism: https://danieljmitchell.wordpress.com/2023/03/05/swiss-style-federalism-is-better-than-national-divorce/ )
The US oligarchs plus deep state gov't plus media plus academia (esp Law Schools) plus judges in a near monoculture against conservative Republicans mean few of those types of solutions will actually be tried. "Our (their) Democracy" will be protected by the FBI and others. The non-Republican changes by Democrats are generally making problems worse rather than reducing them.
The housing YIMBYs are simply tiresome at this point. They attack zoning and similar mechanisms which are all that the middle and upper-middle classes have left to legally defend themselves against public disorder and crime that have exploded - surprise, surprise! - in the late 60s and 70s, while pretending to not understand or misrepresenting the reason which causes M/UMCs to defend these mechanisms (the inability of M/UMC to articulate these reasons does not help). Small wonder this leaves housing YIMBYs deeply frustrated. In Japan, where public disorder and crime are by American standards non-existent, there is no problem with rezoning and building new stuff, no need for car-centric development as people have no reason to avoid public transport, etc. I again recommend Anomaly UK's post from last summer on virtual nations: https://blog.anomalyuk.party/2022/07/cars-or-police/
There is a difference between, let's say, the Tea Party rise and fall and BLM's rise and fall. BLM's supporters now run the government, the Tea Pary supporters don't.
oh, just checked those "jokes" about GMU/Mercatus. So, Mercatus is Koch-funded, thus Caplan, Hanson, Cowen are in the brothers' pockets? Cool. Make me think those Koch's must be great. As Thiel. - Doubt I will watch videos of 4 guys who do not know conservative EAs. Only 7k do - as compared to this one: 9 million (Fridman+Peterson). https://www.youtube.com/watch?v=sY8aFSY2zv4 Or this one - 120 Million - MrBeast maketh the blind see: https://www.youtube.com/watch?v=TJ2ifmkGGus Btw: Scott Alexander S. is EA. And had interests even in neoreactionaries. Got doxed by the NYT. Making 50k $ a month on a free boring substack without ads or "like"-options. (just joking, S.A.S. being the most wonderful essayist around)
Jager: The BLM/George protests should not be judged as failures because no police departments were “defunded” but rather because the did not lead to reforms in policing resulting is less crime (incuding police misconduct and the failure to prevent unlawful behavior during mass protests.
Health Care costs: Somehow we need to inject into the decision process the idea of cost-effective treatment. The patient does not have the knowledge and with insurance the incentive to choose only cost-effective treatment. I think the best chance is private insurers with doctors trained to understand the concept and not try to subvert the process in favor of the patient’s desires.
America exports its culture, movies, music, tech, and even politics to the world. This has been widely understood by many millions of people. Tyler Cowen doesn't own this obvious and widespread idea. Similarly, the idea that a college degree is valuable as a strictly artificial credential isn't remotely unique to Bryan Caplan, although I will credit Caplan with formalizing that argument better than anyone else I've seen.
Next, regarding vindication. Tyler Cowen downplayed the COVID lab leak theory and ignored evidence in its favor. Tyler Cowen stayed silent on the premise of the Federal Government coercing Twitter and Facebook and other media and social media companies to steer the 2020 election in underhanded ways, and then recently says, all of this is obvious, and the Twitter Files expose is boring. Recently, Tyler Cowen promotes skepticism of the theory that the US was involved with the Nord Stream pipeline sabotage, yet all evidence strongly points in that direction. Mainstream media now cites unnamed US intelligence officials that the Nord Stream pipeline was sabotaged by a Pro-Ukrainian group. But apparently not the USA? It seems overwhelmingly likely that some branch of the USA was directly involved.
Caplan previously claimed to be an extreme pacifist, but now even he supports US military engagements in Ukraine and around the world?
Tyler Cowen (and Caplan) has sided with a corrupt USA ruling elite class on all of these issues and that is the opposite of vindication.
I have a very low opinion of Noah Smith, so take this for what it's worth: the problem is that he's trying to analyze a problem that requires a "law and economics" approach with just the economist's lens. There were a lot of important legal changes in the '70s that contributed to this "frozen development" outcome. There's the EPA, there's the Warren Court decisions, and there's the fallout from the CRA. His approach in his post suffers from the myopia of overspecialization. Understanding the Warren Court precedents also helps to explain why zoning law has been favored as a means to suppress and work around the Fair Housing Act (FHA).
I'm confident that Noah would be shocked to learn the 101-level basics of what the EPA actually does and what kinds of permits it requires for the simplest of operations (such as literally digging ditches near puddles much less building stuff). You're just not going to be able to understand the issue by staring at charts harder when you need to be also reading statutes, regulations, cases, and treatises to have the faintest notion of why things are so screwed up. This kind of issue is one in which an economist can do nothing to budge the legal reality. No quantity of economic analysis can alter the law. It's like shooting bullets at the ocean and expecting to kill Poseidon.
Noah's coalition membership also makes this tougher for him to see the root causes. Some members of his coalition understand it a little bit, but honestly, actually understanding it or breaking up this settled arrangement would also fracture their political coalition, so they're unlikely to actually do it.
Thanks for the link.
It seemed in all cases studied excessive spending and over-fat bureaucracy's may have been the issue while the central banks were providing loans to the government at negative real interest rates and paper discounts (always an implied interest rate). To stop the inflation, outside powers (League of Nations) prevented the central banks from creating these money losing negative real interest rate loans to the government which forced the government to slow spending and layoff workers. In these cases people had other currencies as a store of value and fled to those (even with capital controls) and probably any fixed real assets. In the US at this time you can only flee into fixed assets from stock, and housing to paintings with the hope that inflation doesn't destroy their value.
Fiscal and monetary policy seems a bit confused when the real interest rates are negative. It appears that the Fed and the government are the same super-institution with only a turf battle between them.
This paper was before Volcker killed the inflation expectations of the 70's with positive real interest rates proving he was serious much like they did in the cases Sargent examined (someone actually said and meant NO). Perhaps only the Fed has the guts to say NO, our political class that now think that the president can give away half a billion in student loans to people in the richer half of our society with his pen clearly can't see reality.
The concept of momentum with inflation beyond the expected time delays seem like a misuse of physics with no meaning, as all of Sargents examples inflation stopped fast which implies momentum is near zero at all times. In the 70's I was doing a fair about of cost analysis and old fashion engineering economics where inflation estimates are critical in cost analysis. It was all based upon experience and observations of past inflation rates.
In todays world in the US, perhaps the only way we can make a "soft landing" from this inflation and possibly stagflation repeat is to drastically increase our economic efficiency by eliminating our permission system which gives veto power to every "stakeholder" who has an opinion. Meanwhile, inflation is stealing my retirement wealth and the government is taxing me on my imaginary nominal interest rates (actual negative real rates). We have a lot of fat in the permissions/regulatory systems that have grown over time and are killing innovation in anything dealing with the real world and we only have innovation in the permissionless sectors of the economy.
Again, thanks for the link.
Crisis of Abundance is a great!
Arnold Kling,
I am not an economist, but have lived a long time and I was trying to remember whether any country has broken inflation (significant reduction) while having the central bank maintain a negative "real interest" rate? In the 80's Volcker killed inflation with a positive "real interest" rate which forced loans to only be made on projects with positive ROI's.
With negative real interest rates, the connected with access to loans can always make money even at negative investment ROI's with just the assumption that the investment won't lose as much real value as the money will. Having witnessed a hyper inflation in Brazil where people bought and saved re-bar as a source of value I have only seen a complete revolution (military takeover and new money) and theft of all money or positive "real interest" rates tame inflation.
As I noticed the gas heater I bought a few years back on sale at over 300% higher price, the inflation is out of hand.
Could you provide some information on what had stopped inflation before in many other countries and how well it worked. Any "soft landings" or just crashes and the question becomes how bad of crash is required. The 80's high real interest was much softer than Brazil in the 60's or Venezuela today.
Smith was excellent and much too valid.
A classic paper is by Sargent. https://www.nber.org/system/files/chapters/c11452/c11452.pdf
It is consistent with a view that inflation is a fiscal phenomenon. If the government gets its deficits under control, it can end inflation. Otherwise, I am less confident.