I am not interested in literature, I do not go to the theatre, and I do not listen to music. I am occupied only with theories.
Is that Professor Galamobos talking about what he did on his sabbatical leave? His advice to students taking Econ 300 during winter term? Professor Brandenberger talking about how LU professors used to be back in the day? Our new mantra for the Math-Econ major?
Not at all.
It’s Nobel Prize winning physicist, Paul Dirac, describing the work ethic that led him to international superstardom, if only he would have desired such a thing. I picked up Graham Framelo’s biography of Dirac this past summer, and I would definitely recommend it as a good read for break, or a gift to that bookworm in the family.
For those of you finishing up a final paper or a thesis this term, be sure to check out the full requirements, including the snake wrestling. This part often confuses students, but we don’t believe there is “one” way to measure academic performance:
Q: Would someone who wrote a bad thesis and defeated a large snake get the same grade as someone who wrote a good thesis and defeated a small snake?
For those of you interested in an extra unit or two, next term we are offering an independent study / tutorial reading Joseph Schumpeter’s classic, Capitalism, Socialism, and Democracy. For those of you unfamiliar with the book, here is a review by Schumpeter biographer, Thomas McCraw.
This is a thick book, so if you are interested, I would recommend that you pick up a copy and start in on it over break. The likely trajectory for this is for us to set up a weekly discussion time, and for each student to provide a review essay. See Professor Gerard or Galambos for details.
A preview of things to come over the next few days:
The evolution of the capitalist style of life could be easily — and perhaps most tellingly — described in terms of the genesis of the modern Lounge Suit.
That’s Schumpeter on the fashion industry.
Watch this space for Schumpeterian-type discussions of fashion, beer, Hollywood, and Wal Mart.
When I conceived of the “free market Monday” tag, this recent Reuven Brenner article in Forbesis what I had in mind. Brenner is one of the great champions of the idea that access to capital and fluid capital markets are prime drivers of capitalist economies. In this piece, he talks about the importance of risk capital in revitalizing the North American economic outlook.
Just in time for the end of term, the newJournal of Economic Perspectives is here, the new Journal of Economic Perspectives is here. And this quarter’s issue is chock full o’ articles* about the state of macroeconomics after the financial crisis, so that should be fun to peruse.
The new JEP also has an article titled “Activist Fiscal Policy” by Alan Auerbach and colleagues, which has been a continuing source of consternation inside and outside of the profession (see here for our previous post on this topic). Here’s the abstract:
During and after the “Great Recession” that began in December 2007 the U.S. federal government enacted several rounds of activist fiscal policy. In this paper, we review the recent evolution of thinking and evidence regarding the effectiveness of activist fiscal policy. Although fiscal interventions aimed at stimulating and stabilizing the economy have returned to common use, their efficacy remains controversial. We review the debate about the traditional types of fiscal policy interventions, such as broad-based tax cuts and spending increases, as well as more targeted policies. While there have been improvements in estimates of the effects of broad-based policies, much of what has been learned recently concerns how such multipliers might vary with respect to economic conditions, such as the credit market disruptions and very low interest rates that were central features of the Great Recession. The eclectic and innovative interventions by the Federal Reserve and other central banks during this period highlight the imprecise divisions between monetary and fiscal policy and the many channels through which fiscal policies can be implemented.
It’s interesting to look through the article, if for no other reason to look at the variances in estimated multiplier effects for different policy levers. For example, direct government purchases have a range of 1.0 to 2.5, whereas the extension of the homebuyer credit seems to be self-defeating, ranging from 0.2 to 1.0. Federal transfers to state and local governments vary depending on whether the spending targets infrastructure, and transfers to individuals range from 0.8 to 2.2.
Wow, we really don’t have a very good idea about how this works.
*Yes, Chock Full O’ Nuts is really a coffee brand. As we saw in class, it has a lower price elasticity than brands such as Folgers and Maxwell House.
File this one under truth is stranger than, well, it’s pretty strange. The United States Food and Drug Administration (FDA), the agency responsible for regulating cigarettes — yes, you read that correctly — has proposed some innovative mandates on cigarette packaging, intended to reduce tobacco consumption.
There is a whole tortured history of how the agency responsible for approving new drugs is also the agency responsible for regulating the “safety” of cigarettes, but that’s probably for another day. For today commentary, the wise guys over at The Awl sum it up pretty nicely.
They’re all here: hole-in-the-throat guy, child at risk, toe-tag dude, skeletal cancer man, preemie, zipper-chest fella, weepy lady… it’s like a United Nations of tobacco victims.
I was perusing Kottke.org — a “weblog about the liberal arts 2.0” — last night and noticed how much great stuff he has on innovation & entrepreneurship.
Linotype: The Film is a feature-length documentary film centered around the Linotype typecasting machine invented by Ottmar Mergenthaler. Called the “Eighth Wonder of the World” by Thomas Edison, the Linotype revolutionized printing and society, but very few people know about the inventor or his fascinating machine…. The Linotype completely transformed the communication of information similarly to how the internet is now changing it all again.
The collisions obtained were able to generate the highest temperatures and densities ever produced in an experiment. “This process took place in a safe, controlled environment, generating incredibly hot and dense sub-atomic fireballs with temperatures of over ten trillion degrees, a million times hotter than the centre of the Sun.
In a follow up to our “Reeding Period post,” this week’s This is Lawrence video features the Lawrence University Collective of Early Music (LUCEM) “petting zoo” from a couple of weeks back. The petting zoo allowed anyone to come in and check out, fondle, and even play these instruments from our James Smith Rudolph Collection of Early Winds.
Our own Katelin Richter is featured prominently, both in explaining what is going on and in her “oboe d’amore” performance.
Though the publishing industry is on the rocks, I’ve been getting The Atlantic Monthly for more than 20 years. It’s a great general interest publication that has contained some of my all-time favorites, like “Why McDonalds French Fries Taste So Good,” “The Truth About Dogs,” and the extraordinary “Laws Concerning Food and Drink.” I often will send these to my former students in the Peace Corps, who are always happy to get something interesting. Actually, they are happy to get anything, period.
I was reminded of these when my renewal notice came along with my latest edition and I was wondering whether I should continue to support these guys. The answer was a resounding yes.
Why?
Here are few sample sentences from this month’s issue to wet your beak:
Simpson is not yet selling his rum by the bottle—he serves it at his bar and trades it for other exotic liquors—but I had a chance to try it recently when a sample arrived in the mail. It came in Simpson’s standard packaging: a used whiskey bottle tightly wrapped in a brown paper bag, the cap sealed with duct tape. “Gunpowder on the Rocks“
Then there is this strange and horrifying image:
Many of the visitors to the tin-roofed shrine labeled Pol Pot Cwmationsite in Anlong Veng are local men who light incense in the hope that the spirit of the murderous Communist leader will provide them with money for prostitutes. “Dark Tourism“
And, finally, this bit of comedy of absurdity, also strange and horrifying in a different dimension:
“If you’re a terrorist, you’re going to hide your weapons in your anus or your vagina.” He blushed when I said “vagina.”
“Yes, but starting tomorrow, we’re going to start searching your crotchal area” — this is the word he used, “crotchal” — and you’re not going to like it.” “For the First Time, TSA Meets Resistance“
And all that is before I’ve gotten to the feature articles I want to read, which generally run about 2000 words longer than a reasonable person would find reasonable.
The economics writing is a different matter, a lot of what Paul Krugman used to call “pop internationalism.” I remember reading a cover story when I was in grad school called “Head to Head,” where Lester Thurow was arguing that the Japanese and Europeans were going to bury the US in the 1990s (I don’t see that one in the archives now?). It’s not clear why they keep giving that guy space. But, I don’t read it for the economics.
So there you have it, my pitch for you to subscribe to The Atlantic.
Those of you who think that “quantitative easing” means that we’ve relaxed the general education requirements might consider cracking a newspaper — or the virtual equivalent.
L.W. Burdeshaw, an insurance agent in Chipley, told the St. Petersburg Times in 1982 that his list of policyholders included the following: a man who sawed off his left hand at work, a man who shot off his foot while protecting chickens, a man who lost his hand while trying to shoot a hawk, a man who somehow lost two limbs in an accident involving a rifle and a tractor, and a man who bought a policy and then, less than 12 hours later, shot off his foot while aiming at a squirrel.
“There was another man who took out insurance with 28 or 38 companies,” said Murray Armstrong, an insurance official for Liberty National. “He was a farmer and ordinarily drove around the farm in his stick shift pickup. This day – the day of the accident – he drove his wife’s automatic transmission car and he lost his left foot. If he’d been driving his pickup, he’d have had to use that foot for the clutch. He also had a tourniquet in his pocket. We asked why he had it and he said, ‘Snakes. In case of snake bite.’ He’d taken out so much insurance he was paying premiums that cost more than his income. He wasn’t poor, either. Middle class. He collected more than $1-million from all the companies. It was hard to make a jury believe a man would shoot off his foot.”
It’s not often that I come across source material like this that I will use every single time a topic comes up in class. I tested it out on Econ 300 today and I daresay the image is a lasting one.
So you think the little fishies are cooperating? Not so much… It’s actually a straightforward prisoners’ dilemma problem: If all the little fish would scatter at the same moment, most would escape, because there are so many and the predators are few. But if I expect YOU to take off, I should stay in the ball. One or two fish trying to escape will be caught. And if I expect you to stay in the ball…I should STILL stay in the ball.
A recent EconTalk has John Quiggin, left-of-center author of Zombie Economics, discussing ideas with Russ Roberts, moderator and pro-market guy. Quiggin names his book such because he asserts that there are many economists clinging to ideas that have been thoroughly thrashed and should be discarded, yet they continue to emerge and thrive. Foreign Policy has a summary of Quiggin’s five most egregious “undead” ideas:
I'm an idea zombie
The Great Moderation: the idea that the period beginning in 1985 was one of unparalleled macroeconomic stability that could be expected to endure indefinitely.
The Efficient Markets Hypothesis: the idea that the prices generated by financial markets represent the best possible estimate of the value of any investment. (In the version most relevant to public policy, the efficient markets hypothesis states that it is impossible to outperform market valuations on the basis of any public information.)
Dynamic Stochastic General Equilibrium (DSGE): the idea that macroeconomic analysis should not be concerned with observable realities like booms and slumps, but with the theoretical consequences of optimizing behavior by perfectly rational (or almost perfectly rational) consumers, firms, and workers.
The Trickle-Down Hypothesis: the idea that policies that benefit the wealthy will ultimately help everybody.
Privatization: the idea that nearly any function now undertaken by government could be done better by private firms.
Roberts certainly doesn’t agree with Quiggin’s overall assessment, though they do find much to agree on. This is a great EconTalk for those who think that economists all drink from the same cup.
Econ 300 students might listen to the part about the Efficient Markets Hypothesis and compare it to what Landsburg says in Chapter 9.
And, if you like the dead-undead econ riff, you might check out Todd Buchholz’s now-classic, New Ideas from Dead Economists.
Rational ignorance is a common theme of economists thinking about voting and the electorate, but what about willing ignorance? That’s the gist of this Schumpeter quotation:
“[T]he typical citizen drops down to a lower level of mental performance as soon as he enters the political field. He argues and analyzes in a way which he would readily recognize as infantile within the sphere of his real interests…”
Here is some more background on that quote. It is certainly consistent with the overarching theme of Capitalism, Socialism and Democracy that capitalism might die out due to lack of enthusiasm from its principal beneficiaries.
The accompanying illustration is from the legendary political cartoonist, Herblock. I snagged both the quote and the picture from the Spirit of Moderation blog.
After yesterday’s spirited discussion of the nature of the long-run supply curve, tomorrow we will kick off with the classic brownie problem:
Brownies sell for $12 a dozen and are available only in packs of a dozen. You choose to buy two packs a month. If sellers begin offering brownies at $1 each, what can you say about the quantity you will buy?
The Lawrence Scholars in Law kicked off in style with a capacity crowd (35-40 students) and a festival-type atmosphere, with about 15 students joining us for dinner. As I said in my introductory remarks, the alumni talent on hand for our panel was extraordinary. Each is a lawyer and a member of the Lawrence board of trustees, and each is very enthusiastic about he prospects for the LSL program.
A couple of points emerged from the discussion. The first is that there is no right major that you need to choose to apply. Our four panelists came from four different majors — history, government, economics, and piano performance. The second theme seemed to be that a law degree opens up many doors, not just the door to the big law firm.
Panelist Jeff Riester also pointed prospective law students to Law School: Getting In, Getting Out, Getting On, by Michael Ariens. This seems like a good resource, and pre-law advisor Steve Wulf and myself will hold onto it if you care to take a look at it.
We are planning one LSL per term this year, and we would like to encourage you to provide us with feedback, as well as input into content for future programs.
Slate hasa very nice piece on investors buying US Treasury bonds that yield negative interest rates! Now, why on earth would someone buy a bond with a negative interest rate? Though the answer is not complicated, it is more than a sentence explanation, so I will let you read it for yourself. Let me just say, inflation is involved.
For those of you not versed in corporate finance (or “core-fin,” as it’s known), the article provides a good summary of how debt markets work.
All right, who said it?
For those of you interested in an extra unit or two, next term we are offering an independent study / tutorial reading Joseph Schumpeter’s classic, Capitalism, Socialism, and Democracy. For those of you unfamiliar with the book, here is a review by Schumpeter biographer, Thomas McCraw.
File this one under truth is stranger than, well, it’s pretty strange. The United States Food and Drug Administration (FDA), the agency responsible for regulating cigarettes — yes, you read that correctly — has proposed some innovative mandates on cigarette packaging, intended to reduce tobacco consumption.
Those of you who think that “quantitative easing” means that we’ve relaxed the general education requirements might consider cracking a newspaper — or the virtual equivalent.
So you think the little fishies are cooperating? Not so much… It’s actually a straightforward prisoners’ dilemma problem: If all the little fish would scatter at the same moment, most would escape, because there are so many and the predators are few. But if I expect YOU to take off, I should stay in the ball. One or two fish trying to escape will be caught. And if I expect you to stay in the ball…I should STILL stay in the ball.
