Tag: economics

A Myth for Fools and Children

Mark DavisLeave a comment

 

Like the Overton Window, the Economic Expectations Window is the range of acceptable ideas about economics. Here’s my answer to the question of what I would do about inflation if I had been debating with Trump and Biden:

Folks, these two clowns (and one is more clownish than the other…you be the judge) are not divulging the truth about inflation. Here it is: the best guess by economists about our recent spat of inflation is that it was caused by two factors. First, consumer patterns shifted during COVID and that put demand stress on certain areas of the economy. Money chased after home offices and accessory dwelling units, and it stopped flowing to travel and tourism and eating out. Second, the payments and benefits to people—payments that were needed to head off greater suffering and possibly an economic depression—enhanced the effect. You had more money and lots of time on your hands.

There is no Biden or Trump economy. It’s a myth for fools and children, at least insofar as neither of them does anything dumbly radical (ahem, crazy tariffs).

The primary tool our government uses to manage inflation is the independent Federal Reserve changing certain government interest rates and attempting to slow spending. They have a hard task—a difficult balance—because they don’t want to force the economy into a recession. Raised interest rates ripple out and also impact the affordability of homes and cars. But the president doesn’t control how the Fed sets interest rates. They are independent and for good cause: to avoid creating an economic mess for political reasons like juicing the economy before an election.

There is one other tool that presidents do have a hand in, however, and that is taxes and spending by the government.

… Read the rest

Reverse Engineering the Future

Mark Davis1 Comment

I’ve been enjoying streaming Apple TV+’s Foundation based on Asimov’s classic books. The show is very different from the high-altitude narrative of the books and, frankly, I couldn’t see it being very engaging if it had been rendered the way the books were written. The central premise of predictability of vast civilizations via “psychohistory” always struck me as outlandish, even as a teen. From my limited understanding of actual history it seemed strange that anything that happened in the past fit anything but the roughest of patterns. I nevertheless still read all the “intellectual history” books that come out in the hope that there are underlying veins that explain the surface rocks strewn chaotically across the past. Cousin marriage bans leads to the rise of individualism? Geography is the key? People want to mimic one another? Economic inequality is the actual key?

Each case is built on some theoretical insight that is stabilized by a broad empirical scaffolding. Each sells some books and gets some play in TED and book reviews. But then they seem to pass away out of public awareness because the fad is over and there are always new ideas bubbling up. But maybe that’s because they can’t help us predict the future exactly (well, Piketty perhaps…see below). But what can?

The mysterious world of stocks and bonds is an area where there seems to be no end to speculation (figuratively and literally) about ways to game the system and make money, or even to understand macroeconomic trends. It’s not that economics doesn’t have some empirical powers, it’s just that it still doesn’t have the kind of reliability that we expect from the physical sciences.… Read the rest

Ethical Grounding and Numeracy

Mark Davis1 Comment

I recently discovered the YouTube videos of Paulogia. He’s a former Christian who likes to take on young Earth creationists, apologists, and some historical issues related to the faith. I’m generally drawn to the latter since the other two categories seem a bit silly to me, but I liked his recent rebuttal of some apologist/philosopher arguments concerning the idea that ethics must be ontologically grounded in something. The argument is of the sort stoned high schoolers engage in—but certainly more carefully attended to—as I commented on the video.

So rather than pick on definitional minutiae, let’s take an expansive view of ethical reasoning and try to apply it to contemporary problems in society. For instance, while all societies have generally condemned murder in one way or another, how do we approach something like whether governmental control or regulation of environmental pollution and interaction is necessary or obligatory?

For the apologist/philosophers in the video, they seem to argue that scriptural claims places a grounding of ethics in a person’s “heart,” but then leave open how that gets translated into some kind of decision-making. At one point, one of the guys says he tends towards virtue ethics, while the other notes that some might see deontological ethics as the proper extension of that ontologically- and theistically-grounded impetus.

Let’s take a minimalist and observational approach to ethical behavior. We can perhaps tease out a few observations and then try to fit an explanatory theory onto that.

  1. Moral and ethical perspectives are and have been varied across people and time.
  2. There seems to be some central commonalities about interpersonal and group ideas about what is ethical and moral.
  3. Those commonalities have reflections in the natural world and among non-human species.
… Read the rest

Theories of Leisure, Past and Future

Mark DavisLeave a comment

img_0028I am at leisure. Specifically—and many may not regard this as leisure—I just ran 17.71 miles in Yosemite Valley. I dropped the car along the road near the 41 junction and then just started running. I went south for a while, then circled back to Bridalveil Falls (lightly flowing), then up to the Glacier Point loop, then back down to El Capitan, then up to Yosemite Falls (not flowing). Lunch was at the Village and then I tracked down the car again.

Now, then, I am at leisure. The barman has set me up with a martini. I have a Fresno Fig flatbread on the way: goat cheese, bacon, arugula, and the critical figs. I am showered all the way down to between my toes. The late afternoon light is filtering through a mild haze onto the muddy belly of the lake. There must be bass out there somewhere. Let the bass live. Let them be at leisure.

A must-read on this topic is Derek Thompson’s Atlantic article, The Free-Time Paradox in America. I don’t agree with the thesis, though. It’s not really a paradox. It’s just an unknown. You should read Derek’s original, but I will comment briefly on some of his points. He argues that John Maynard Keynes forecast a reduction in work requirements by the 21st Century. Mechanization would take the drudgery out of most things and we would get to 15 hour work weeks with the management of our leisure time an increasing burden on us.

The present didn’t work out that way.

Instead, educated high-earners work ever harder. The only leisure class is the non-college-educated male youth who don’t work much these days but instead play video games (75% of their spare time) and are happier than when more of them worked.… Read the rest

From Smith to Darwin

Mark DavisLeave a comment

The notion that all the contingencies of human history can be rendered down into law-like principles is the greatest reflection of the human desire for order and understanding. Adam Smith appears in that mirrored pool alongside Karl Marx and, in his original form, even Charles Darwin. That’s only the beginning: Freud, Machiavelli, Rousseau, Hegel, and a host of others are reflected there in varying, and transitory clarity.

Adam Smith is a iconic case, as I discovered reading Adam Smith’s View of History: Consistent or Paradoxical? by James Alvey. The paradoxical component arises from a merger of a belief in the inevitability of commercial society and, at various points in Smith’s intellectual development, a cynicism about the probability of forward progress towards that goal. Ever behind the curtain, however, was the invisible hand represented by a kind of teleological divine presence moving history and economics forward.

The paper uncovers some of the idiosyncrasies of Smith’s economic history:

[T]he burghers felt secure enough to import ‘improved manufactures and expensive luxuries’. The lords now had something beside hospitality for which they could exchange the whole of their agricultural surplus. Previously they had to share, but ‘frivolous and useless’ things, such as ‘a pair of diamond [shoe] buckles’, and ‘trinkets and baubles’, could be consumed by the lords alone. The lords were fascinated with such finely crafted items and wanted to own and vainly display them. As the lords ‘eagerly purchased’ these luxury items they were forced to reduce the number of their dependents and eventually dismiss them entirely.

The lords ultimately have to trade off economic freedom of the artisans in exchange for more diamond shoe buckles. Odd, but perhaps reflective of the excesses of the wealthy in Smith’s era–something that needed explanation.… Read the rest