Planet Harvard

2010-09-04T09:14:29+00:00

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Should the Bush tax cuts be extended?

2010-09-04T08:59:17+00:00

This seems to be the economic policy question of the hour. It might be worth recalling that last month, the Wall Street Journal polled economists about this question. Of those who expressed an opinion, here are the results:

6 percent said no, all the tax cuts should be allowed to expire,
24 percent said yes, but only for those making less than $250,000 a year,
70 percent said that all the tax cuts should be extended.

This year's Freshman Seminar

2010-09-03T08:44:41+00:00

My freshman seminar starts today. Here are the books we are reading this year (in this order):

The Worldly Philosophers, by Robert Heilbronr
Reinventing the Bazaar: A Natural History of Markets, by John McMillan
Thinking Strategically, by Avinash Dixit and Barry Nalebuff
Capitalism and Freedom, by Milton Friedman
Equality and Efficiency: The Big Tradeoff, by Arthur Okun
Nudge, by Richard Thaler and Cass Sunstein
How the Economy Works, by Roger E.A. Farmer
The Return of Depression Economics, by Paul Krugman
The Road to Serfdom, Friedrich Hayek
The Myth of the Rational Voter, by Bryan Caplan
The Big Questions, by Steven Landsburg

Counting Small Businesses

2010-09-03T08:40:08+00:00

From Kevin Hassett and Alan Viard:

Recently, for example, Vice President Joe Biden harshly rejected House Minority Leader John Boehner's assertion that the hikes would harm small businesses, saying that "he has created this myth that a tax cut for millionaires is actually a tax cut for small business. There aren't 3% of small businesses in America that would qualify for that tax cut."...

In fact, the sound bite about 3% of small businesses, which has been picked up by numerous pundits, is one of the more misleading statements in the long history of economic propaganda.

The 3% figure, which is computed from IRS data, is based on simply counting the number of returns with any pass-through business income. So, if somebody makes a little money selling products on eBay and reports that income on Schedule C of their tax return, they are counted as a small business. The fact that there are millions of people in the lower tax brackets with small amounts of business income may be interesting for some purposes, but it is irrelevant for the assessment of the economic impact of the tax hikes.

The numbers are clear. According to IRS data, fully 48% of the net income of sole proprietorships, partnerships, and S corporations reported on tax returns went to households with incomes above $200,000 in 2007. That's the number to look at, not the 3%. Would Mrs. Pelosi and Mr. Biden deny that the more successful firms owned by individuals in the top income-tax bracket are disproportionately responsible for investment and job creation?

Cash for Clunkers

2010-09-02T14:32:31+00:00

One of my Harvard colleagues recommends this critique.

Da Vinci, Updated

2010-09-02T10:12:34+00:00

Check out his choice of textbook.

Source.

The CEA Chair Says Goodbye

2010-09-01T22:36:23+00:00

Here is Christy Romer's farewell speech.

At Best they have Tenure

2010-09-01T05:14:03+00:00

Even though Obama is no longer holding beer summits for a certain Ivy League professor, the Ivy League is brimming with professors who need to start saying, “Do what I say, and not what I do” in lecture once school convenes. This past August: a Columbia grad is kicked out of Starbucks, a Harvard researcher is guilty of [...]

Welcome Class of 2014!

2010-08-31T14:33:34+00:00

To the Class of 2014: Welcome to Harvard! The Harvard College Democrats have some awesome events planned for you in the coming week to kick off the new semester in style. Here’s the run down:

Wednesday, September 1st from 4pm to 7pm – Be sure to check out the Harvard College Democrats’ table at the Student Activities Fair in the Quad! You’ll be wasting your time at any other table

Saturday, September 4th from 1pm to 2pm - Come to the Dems’ Get Involved Weekend event in Sever 213. We will do an overview of the organization and discuss ways for you to get involved. Food will be provided, so don’t miss out!

Tuesday, September 7th at 8pm – Come meet past, present and potential members of the Harvard Dems as we kick off the election season with our 2010 Campaign Kick Off in Emerson 105. We will have two very special video messages from two very special Democrats, so you definitely want to be there.

Sunday, September 12th (time TBD) – Join the Dems on our first canvassing trip of the semester as we head up to New Hampshire to knock on doors for Democratic candidates. Our canvassing trips are legendary on this campus, so hop on the cool train while you still can!

Any questions, comments or concerns, don’t hesitate to contact Jason at president@harvarddems.com

An Enlightening Example

2010-08-31T11:54:28+00:00

Chapter 1 of my favorite textbook talks about how policies can have unintended consequences because of their effects on incentives. One example I use is Sam Peltzman's famous study of seatbelt laws. Here, from The Economist, is another example:

SOLID-STATE lighting, the latest idea to brighten up the world while saving the planet, promises illumination for a fraction of the energy used by incandescent or fluorescent bulbs. A win all round, then: lower electricity bills and...less climate-changing carbon dioxide belching from power stations.

Well, no. Not if history is any guide. Solid-state lamps, which use souped-up versions of the light-emitting diodes that shine from the faces of digital clocks and flash irritatingly on the front panels of audio and video equipment, will indeed make lighting better. But precedent suggests that this will serve merely to increase the demand for light. The consequence may not be just more light for the same amount of energy, but an actual increase in energy consumption.

Barro on Unemployment Insurance

2010-08-30T12:07:47+00:00

Harvard's Robert Barro says the recent expansion of UI explains the persistently high unemployment rate.

Reinhardt on Efficiency

2010-08-30T11:46:17+00:00

Princeton's Uwe Reinhardt offers a thoughtful and thought-provoking perspective on economists' use of the concept of efficiency.

I know that Uwe has used my Principles of Micro textbook in his introductory class. So his commentary on "modern textbooks" is, at least to some extent, directed at me. (In particular, I suspect he has chapters 7, 8, and 9 in mind.) Uwe also provides some useful links to handouts he gives to his class.

Update: Steven Landsburg responds.

Easing Restrictions on Cuba: A Win-Win Situation

2010-08-29T15:04:37+00:00

While recently the country has been entrenched in the mosque debate, talk of easing restrictions on Cuba has somewhat flown by the national radar. Still, it’s an idea worth discussing seriously, as it has much more far-reaching implications for citizens of both countries than does talk of the potential mosque.

A New York Daily News article reported that the Obama administration has made plans to ease travel restrictions on the Communist state. Under the Bush administration, travel restrictions to Cuba were tightened successively, and the current administration only plans to return back to Clinton-era travel guidelines, which enabled religious, humanitarian, and academic groups to visit the country much more freely than current rules allow.

Although as yet it’s a political long-shot, the idea of completely lifting the embargo on Cuba is perfectly sensible on various fronts. For one, Americans really want to visit Cuba. According to an Orbitz poll conducted last year, 67% of those surveyed said they favor all Americans having permission to travel to Cuba, and 72% of respondents agreed that allowing free travel would positively impact the lives of the Cuban people.

The whole idea behind the embargo in the first place is to ostensibly punish the Castro regime such that it is forced to move to a more democratic system of governing. Interestingly enough, this Cold War era goal is not anywhere near to coming to fruition. If anything, the embargo has only further isolated Cuba from the outside world. How can a democracy proliferate when the free flow of information is being squelched?

Moreover, it isn’t simply information that Cubans are being denied through the embargo; it’s also food and much-needed medical supplies. General health in Cuba is poor; the rationing system leaves many malnourished, especially men since women and children are given first priority.

Even if we discount humanitarian goals as being too idealistic, lifting the embargo on Cuba would be in everyone’s best interests. Cuba is a resource-rich country, and by allowing free trade with our Caribbean neighbor, the United States stands to benefit substantially.

While the embargo may have made more sense decades ago, now it is simply incomprehensible. There is no denying that the embargo remains a sensitive topic, considering the Cuban-American vote in Florida is a key group to which politicians must often kowtow and appease. In any event, let’s stop fighting fire with fire. In order to be consistent with our country’s democratic, free-market ideals, it’s time that the Obama administration considers further easing sanctions. The recent announcement to ease travel restrictions is a heartening first step in the right direction.

##
This guest post is contributed by Lauren Bailey, who writes on the topics of online colleges. She welcomes your comments at her email Id: blauren99@gmail.com.

Chiddy Bang Shouts Out to Harvard and Yale

2010-08-25T05:14:06+00:00

Chiddy Bang announces at 1:17 that he’s “well endowed like Harvard and Yale.” Who knew you could make $42,138,886,000 in alternative hip hop? Wharton students take notice!

Proposal: The Restaurant Incubator

2010-08-24T18:24:50+00:00

The problem: Starting a new restaurant is a huge undertaking, requiring the would-be restaurateur to raise a large amount of capital, find a good location, buy furniture, hire staff, get the word out, etc. All of this overhead severely limits risk-taking in the kitchen since it distracts from the mission of creating great food.

My proposal: Apply concepts from technology startup incubators (such as Y Combinator) to the restaurant industry. Give up-and-coming young chefs the opportunity to focus on cooking and creativity, and leverage shared infrastructure to reduce overheads.

I'm a big fan of Top Chef. (See my earlier proposal for a reality TV show for junior computer science faculty -- Top Prof. Bravo should be calling any minute now...) So naturally I see parallels between what the aspiring young chefs on that show are doing and what tech entrepreneurs face when starting a company. The tech industry has found ways to make it much easier for a new idea to get out into the real world, leveraging technologies such as universal Internet access and cloud computing. Why not apply the same ideas to the restaurant industry?

Here's my concept. Open a restaurant called, say, Restaurant Wars, after the popular Top Chef challenge. On a given night, three or four independent chefs each prepare and serve their own menu to the guests. They share a (large) kitchen, some amount of the ingredients, prep staff, wait staff, front of house, perhaps even the wine list. The space, tables, chairs, china, etc. are all owned by the restaurant. Guests can order from any of the chef's menus and are encouraged to provide feedback after the meal.

Get a big-name chef like Tom Colicchio or Ferran Adrià (he needs something new to do, anyway) to serve as in-kitchen mentor for the chefs.

The owners are investing in the future of the participating chefs and take, say, a 15% ownership in any independent restaurant venture that they launch after participating. Chefs spend up to, say, 3 months at Restaurant Wars, ensuring that there is constant turnover and thereby renewed interest from diners.

Of course there are a couple of kinks to work out (one of which is that my wife thinks this is a really dumb idea). The first is that it's hard to serve radically different styles of cuisine side-by-side. It sets up for some odd comparisons. Also, there needs to be a way to manage food costs across the "competing" chefs; if one is cooking with ridiculously expensive ingredients (say, a terrine of abalone served with a civet-cat coffee foam topped with Beluga caviar ) you need a way to limit costs and keep things equitable. Another is whether potential diners would go for a place with so much turnover in the kitchen, although that's the whole idea. Maybe Tom or Ferran can guest chef one night a month to maintain street cred.

If anyone has $20 million lying around and wants to go in with me on this, drop me a line. I'll be happy to help with the cocktail menu.

The Latest from Merle Hazard

2010-08-24T07:09:12+00:00

Krugman reestimates the Mankiw rule

2010-08-23T10:36:46+00:00

This scatterplot is from Paul Krugman. x is the core inflation rate minus the unemployment rate. y is the federal funds rate. It uses data from 1988 to 2008.

This graph is motivated by a version of the Taylor rule I once proposed. Paul uses a different sample than I did, so he gets slightly different parameter values. Nonetheless, I think Paul and I agree that this equation provides a reasonable first approximation to what the Fed will and should do in response to macroeconomic conditions.

Notes from the Sixth Row

2010-08-22T13:16:28+00:00

Last week, my friend Phill Swagel attended an event to hear about the future of policy toward housing finance. He sends along the following. (By the way, here is Phill's own proposal for GSE reform.)

Notes from the Sixth Row: The Treasury-HUD GSE Conference

Phillip Swagel

I took away four main points from Tuesday's Treasury-HUD GSE conference:

Hints of reform. Treasury Secretary Timothy Geithner said that the administration supported fundamental GSE reform but with still a government guarantee for housing finance in some form. The GSE portfolios, however, would disappear. None of this is a surprise, but it was still novel—especially in contrast with past policy efforts such as stimulus and healthcare, where the administration allowed the Congress to take the lead on policy formation.

Industry participants love government guarantees. Conference participants from industries involved with the financing and construction of homes assert that no American will ever buy a home again if the government does not provide a full credit guarantee against the financial market consequences of people defaulting on their mortgages. And that guarantee needs a fair (that is, low) price. Bill Gross made some news in calling for full nationalization of housing finance and complete guarantees on mortgage capital. He prefaced this by saying that he was speaking on behalf of public policy and not his firm. Mr. Gross is smart and was exceedingly public-minded during the financial crisis (even, yes, while profiting from some astute investment calls). There is no doubt that he means well. But it’s scary to think about what he might suggest when he speaks for his book of business instead of the public interest.

Blowback from the left. The administration is scared of its own shadow with respect to flak from the left—the White House staffer’s introductory remarks were an awkward ode to inclusion and conference guidelines such as time limits went out the window when advocates of affordable housing subsidies were speaking (As a note, I very much support these subsidies and think that an important element of GSE reform is to make the subsidies more effective. But this still does not mean that the people making that point should have had carte blanche to long-talk while avoiding answering direct questions.) Amidst the long-talking, it turns out that there is good reason for the administration’s trembling. To the limited extent that advocates of affordable/low-income housing participated in the conference, they vehemently opposed scaling back any form of government support, including reducing the activities of the portfolios. It was impossible to tell what the affordable advocates were for other than “more.” The administration’s GSE reform plan could come down on stone tablets from Mt. Sinai – and still be attacked by the advocate community as "not enough." GSE reform thus represents yet another conflict brewing between the administration and its frenemies in the “professional” left. And yet the President's political tactics of late center on demonizing the moderate/responsible Republicans (“privatizers”) with whom he might form a centrist coalition to actually move forward with a housing finance overhaul. GSE reform could be a long ways off—until we have a President who seeks to lead in a bipartisan fashion.

Settle in; this is going to be a long process. Yesterday's conference was a show of attention to the issue but not more. And next on the agenda are several regional conferences—perhaps the hotel and travel spending is a form of stimulus (or better—it’s time for Congress to shut off Treasury’s unlimited authority to spend money through the Office of Financial Stability). The wheels of GSE reform are turning, but the vehicle is moving forward at a crawl.

CBO's Latest Projection

2010-08-21T18:25:07+00:00

Source

Kimya Dawson’s “Driving Driving Driving”

2010-08-20T15:09:32+00:00

Driving Driving Driving

Amazon Bestsellers

2010-08-19T13:51:37+00:00

In Microeconomics and Macroeconomics.

Freaky Friday – Harvard

2010-08-19T05:14:05+00:00

On Friday the 13th, Harvard’s Managing Company filed its holdings for the 2nd quarter (ended 6/30/10) to the SEC (Securities Exchange Commission), not to be confused with the Southeastern Conference of college football. A copy of the submitted 13F-HR form can be seen here. When one compares its most recent filings to those reported on [...]

What I Learned on My Summer Vacation

2010-08-18T16:25:24+00:00

As is typical for me during this time of year, I have been on a field trip to study the economy of Nantucket. The chart below shows what I learned: This idyllic island has not escaped the rise and fall in housing prices that the rest of the nation has experienced.

Source.

Why I support the Cordoba Initiative

2010-08-18T15:04:21+00:00

I still don’t quite understand why what should have been a local issue has become a national debate. The community board approved the community center. District leaders support it. Even the mayor agrees there’s nothing inappropriate. Yet, the debate over whether to build a 13-story Islamic cultural center in lower Manhattan continues, with people purporting to represent 9-11 families leading the charge against it.

Don’t get me wrong – I have nothing but the utmost sympathy for families who lost loved ones on 9-11. It was a great tragedy for our entire nation, but especially New York City. However, I think one of the most important things we can do as New Yorkers – and as Americans – is to clearly state that there is a difference between being a Muslim and being a terrorist. To forget that is to do exactly what the extremists want us to do, as it helps them gain credibility. Also, we can’t forget that Muslim-Americans were also killed on 9-11. What the terrorists were attacking wasn’t Jewish or Christian New Yorkers, but rather the values that New Yorkers of any creed hold dear: our commitment to pluralism and diversity. We can’t give that up.

Imam Rauf, the man behind the plan, so to speak, is Osama’s worst nightmare. The Imam is a moderate muslim and has been involved in the community for decades. He owns a bookstore in the neighborhood where the community center will be built. Rauf shows that you can be a devout muslim and be successfully integrated into a non-muslim, western nation. And breaking news: He’s worked with the FBI on counterterrorism efforts! Madeleine Albright looks up to him! He was welcomed into Democratic and Republican administrations alike.

He is the poster child extremists don’t want other muslims finding out about! The community center he’s building won’t be just for muslims: just like the JCC, it will be for people of all stripes, and help revitalize lower Manhattan.

Imam Rauf on the Cordoba House

And of course, those opposed to the Cordoba house will trot out all sorts of polls about how the majority of Americans doesn’t support building it. But really, that doesn’t matter. Just like I would’ve vote on whether to built a YMCA in Wichita, Kansas, neither should Americans who’ve likely never met a muslim before in their life be deciding whether a community center gets built in a city they’ve probably never visited. The only poll that matters is how Manhattan residents feel, and more Manhattan residents support than oppose the community center, not to mention that this community center will bring over 150 jobs to lower Manhattan at a time when unemployment is still high.

Maybe I’d be more open to hearing the other side if this wasn’t the first time in recent years when there’s been an uproar over a seemingly harmless muslim project. When I was a junior in high school, not too long ago, the Khalil Gibran International Academy, a dual-language English/Arabic public school, was in the middle of such a controversy. It was labeled a madrassa and founding Principal Debbie Almontaser (another moderate muslim and interfaith activist) had her reputation ruined. The highlight of the controversy to me was when she was forced to step down shortly before the school opened, and was replaced by an orthodox Jewish woman who didn’t speak Arabic. That’s the background I’m coming from: it’s hard for me to believe that this is anything but plain old islamophobia.

As a New Yorker, there are some values I remember being taught before I learned the times tables. I remember the potluck lunches in the first grade in my very multicultural school, the different units for different ethnicities in the third, learning Spanish in the fourth and singing “Lift Every Voice and Sing” – the black national anthem – for my fifth grade graduation. To me, it’s unfathomable to oppose the Cordoba house simply on the basis of it containing a mosque. Bring me some real reasons, some real links to evil, not cloaked in lies in fears. Then we’ll talk.

(And of course, I also completely support the building of Bar Van Gogh-Gogh for those muslims who like to bend over outside the mosque as well.)

What I've Been Reading

2010-08-17T16:56:00+00:00

Sebastian Mallaby's history of hedge funds is well written, smart, and balanced.

For econonerds, this is a good beach read.

We're number one!

2010-08-17T09:59:04+00:00

Harvard tops the US News college ranking this year. (FYI, in a few weeks, I will be sending off my first child to school number two.)

The Non-Chronicles of Narnia

2010-08-16T09:14:07+00:00

Dorms fail at being entries into magical worlds, bastions of extra space, and creative fodder for this. However, mahogany wardrobes do. The start of move-in days and orientations is quickly approaching: Brown: August 28 Columbia: August 30 Cornell: August 20 Dartmouth: September 15 Harvard: August 26 Penn: September 2 Princeton: September 11 Yale: August [...]

Favorite Family Game

2010-08-13T08:42:21+00:00

A tip for parents. My favorite family game: Quiddler. It is fun for all ages (as long as your kids have started to read), it doesn't go on forever (like Monopoly), and it is a bit educational (bring a dictionary along).

Seeking: a small group of companions to form an email discussion list about the economy.

2010-08-12T22:46:29+00:00

Dear Readers of My Blog (if any of you even exist, that is),

I’m looking for some company in reading some books about economics and participating in an email discussion about the current state of the global economy. I’ve been having lots of discussions about this topic lately, some wonderfully cathartic and educational, others horribly depressing, and more still immensely frustrating. The root of this frustration is more often a lack of shared vocabulary and historical understanding than it is a lack of shared values, though in few subjects are the two so dramatically intertwined as in economics. Suffice it to say, I’ve found the most ~~productive~~ fruitful conversations to be those in which the participants have read at least some of the same books or articles, even if they vehemently disagree on what they mean.

In a somewhat blind-leading-the-blind experiment, I’ve compiled a list of ten books that might form an initial common ground. Recommendations for this list come from (hopefully less blind) friends, family members, professors, and the books themselves. It is not intended to be a comprehensive overview of a discipline or in any way definitive. I just tried to pick texts which seemed to be in dialogue with each other, and have something valuable to say. Some I’ve read cover to cover, others merely selections, and a couple I’m still waiting to stumble upon in a good used book store. They are listed in chronological order, but I do not propose we read them in that order, or that to join the list you must commit to reading all in their entirety. Instead, the only requirement is that you obtain a few and read them at your leisure. And the list itself? Questions, rants, relevant links, suggested readings, selected passages, apt quotations, critiques: really, whatever the participants desire.

Adam Smith, The Wealth of Nations (1776)
Karl Marx, Capital (1867)
William Graham Sumner, What Social Classes Owe to Each Other (1883)
Thorstein Veblen, The Theory of Business Enterprise (1904)
Georg Friedrich Knapp, The State Theory of Money (1924)
John Maynard Keynes, The General Theory of Employment, Interest and Money (1936)
John Kenneth Galbraith, The New Industrial State (1967)
L. Randall Wray, Understanding Modern Money: The Key to Full Employment and Price Stability (1999)
John Perkins, Confessions of an Economic Hit Man (2004)
Barry C. Lynn, Cornered: The New Monopoly Capitalism and the Economics of Destruction (2010)

Some ground rules: The list will be hosted either on rrrojer.net or some more convenient non-Google service. The archives will be private but as with all email, assume you are speaking in a public forum. I will take the role of benevolent dictator/curator when it comes to membership, at least for the time being. Wit and humility encouraged; good natured and pointed name calling acceptable; outright hostility and disrespect less so (think Taibi not Limbaugh). The list is meant to be mixed company, meaning people who have studied economics and people who have not (I certainly fall into the latter category), so minimal jargon please. Knowing my peers this will probably have a lefty bent, but free-market fundies most welcome, especially if you turn a good phrase, as well as the unaffiliated. Though many of us are funemployed and have lots of time on our hands, let’s aim for quality over quantity – count to ten before you send kinda deal – so that busy students and professionals are also welcome. I’m hoping for low-volume high-density, but if it becomes too high traffic for your tastes, you can always unsubscribe. I will ban those deemed abusive.

Interested? Send me an email at rebecca@(this site) with a little explanation of why you want in or what book I’ve most egregiously left off the list. If I get a reasonable quorum I’ll set up a list and send you an invite.

Yours in curiosity,
Rebecca

A Challenge to Extreme Keynesians

2010-08-12T10:44:48+00:00

The key insight of Keynesian economics is that the problem during recessions is inadequate aggregate demand. Taken to the extreme, which some Keynesians do, it says that aggregate demand is the only thing you need to worry about during downturns. Changes in aggregate supply (due to, say, high marginal tax rates or adverse incentives associated unemployment insurance) don't matter, they argue, because employment is being constrained by the low level of aggregate demand.

University of Chicago economist Casey Mulligan offers a challenge to that view. Casey points out that there is a regular surge in teenage employment during the summer months because more teenagers are available to work (that is, the supply of their labor has increased). That is no surprise: It is normal supply and demand in action. But if aggregate demand were the main constraint on employment, this increase in supply should not translate into higher employment during deep recessions such as this one. But it does!

Most economists, Keynesians and otherwise, ignore this summer change in employment because we focus on seasonally adjusted data. But as Casey points out, the raw unadjusted data may have something important to teach us.

Casey might want us to take this as evidence against the entire Keynesian worldview. I would not go quite that far, but it surely provides a challenge to extreme Keynesianism. I am reminded of a response I once gave to a reporter who asked whether I was a supply-sider or a Keynesian. "I am neither a supply-side economist nor a demand-side economist," I said. "I am a supply-and-demand economist."

Where does the Laffer curve bend?

2010-08-10T17:38:50+00:00

An informal survey.

The White House Policy Process

2010-08-10T08:05:59+00:00

Chapter 2 of my favorite textbook describes how economists play a role in the making of public policy. If students want a more detailed description of the White House policy process, a good place to look is this recent post by Keith Hennessey.

The Myth of Authoritarian Growth

2010-08-09T19:14:28+00:00

On a recent Saturday morning, several hundred pro-democracy activists congregated in a Moscow square to protest government restrictions on freedom of assembly. They held up signs reading “31,” in reference to Article 31 of the Russian constitution, which guarantees freedom of assembly. They were promptly surrounded by policemen, who tried to break up the demonstration. A leading critic of the Kremlin and several others were hastily dragged into a police car and driven away.

Events like this are an almost daily occurrence in Russia, where Prime Minister Vladimir Putin rules the country with a strong hand, and persecution of the government’s opponents, human-rights violations, and judicial abuses have become routine. At a time when democracy and human rights have become global norms, such transgressions do little to enhance Russia’s global reputation. Authoritarian leaders like Putin understand this, but apparently they see it as price worth paying in order to exercise unbridled power at home.

What leaders like Putin understand less well is that their politics also compromise their countries’ economic future and global economic standing.

Read the rest here.

Correction. Due to an oversight on my part during the editing process, the sentence that started with “Democracies not only do not underperform dictatorships when it comes to long-term economic growth..” in my original version eventually became “Democracies not only out-perform dictatorships when it comes to long-term economic growth..” in the published piece. The change imparted a superiority to democracy in terms of growth which the evidence does not find and which I did not intend to express. Thanks to Dr. Emmanuel Yujuico for taking me to task over this change, which I had not noticed until he pointed it out.

Book Review - The Victorian Internet

2010-08-08T18:04:54+00:00

I just finished reading The Victorian Internet: The Remarkable Story of the Telegraph and the Nineteenth Century's Online Pioneers by Tom Standage. (I read most of it on my iPhone using the Kindle app.) The book was first published in 1998, and it's a great read about the development and impact of the telegraph. Of course, there are a lot of uncanny similarities between the development of the telegraph and that of the Internet. It's really interesting to imagine what living in a world before the telegraph must have been like: information could only travel as fast as a messenger on a horse, train, or steamship.

The book is not targeted at a technical audience and I was disappointed that there was not enough said about how messages got relayed through the telegraph network -- what was the routing protocol? There is some discussion of different signaling methods and Morse code, of course, as well as the many variations on Morse's telegraph design (including some really far-out designs that included multiplexing multiple operators over a single wire, essentially using TDMA to avoid conflicts).

There is some interesting discussion on the precursor to the electric telegraph, namely optical telegraphs, which amounted to networks of towers placed on hilltops using visual signals to convey information. These were fairly widespread in Europe in the 18th century and in some places it took a while for the electric telegraph to supplant them.

Some interesting tidbits are strewn throughout the book:

A wide range of crazy schemes were devised to compress and encrypt information sent via telegraph, especially for business purposes. This caused problems for telegraph operators who were more prone to introducing errors when keying in unfamiliar strings of letters, and decreased the sending rate as well. At one point the ITU imposed a 15-letter limit on code words and required that they be composed of pronounceable syllables. This led to bogus code words like "APOGUMNOSOMETHA" (I am proud to report that Google offers zero results for this word -- I guess I just Googlewhacked it).
There was a 19th century equivalent of the DNS: in Britain, individuals and companies could reserve a special "telegraphic address" that allowed others to send them a message without knowing their real, physical address. These were assigned on a first-come, first-served basis and each telegraph office had a giant book listing all of the addresses that had been registered.
It took years for the telegraph to be recognized as anything other than a novelty. Morse and others struggled to convince the governments of US and Britain that they should invest in the development and deployment of the telegraph; early demonstrations did not convince U.S. Senators who (obviously) couldn't read strips of paper printed in Morse code.
The original Transatlantic telegraph cable took years to complete, and broke four times while the ships were laying it out. It failed after only a few months of use.
A period of fifty years elapsed between the development of the telegraph and the telephone.

Among many others. It's a good read, short and sweet, and makes me want to outfit my DSL router in an oiled wooden box with brass dials and steam valves, like a good steampunk retrofit.

A Wise Passage

2010-08-07T11:50:38+00:00

From Paul Seabright, via Peter Gordon:

Politicians are in charge of the modern economy in much the same way as a sailor is in charge of a small boat in a storm. The consequences of their losing control completely may be catastrophic (as civil war and hyperinflation in parts of the former Soviet empire have recently reminded us), but even while they keep afloat, their influence over the course of events is tiny in comparison with that of the storm around them. We who are their passengers may focus our hopes and fears upon them, and express profound gratitude toward them if we reach harbor safely, but that is chiefly because it seems pointless to thank the storm. (p. 25)

How is Medicare doing?

2010-08-07T09:24:49+00:00

Worse than official projections suggest:

Administration officials can always be counted on to praise President Obama's health care law. But Rick Foster, the chief actuary of Medicare, offers an unvarnished assessment of how the new law affects 47 million Medicare recipients, as well as the federal deficit.

"There is a strong likelihood that the cost projections in the new trustees report under current law understate the actual future cost that Medicare will face. A strong likelihood," he says. "I've gone so far as to say that I don't think it's a reasonable projection of what will really happen." Rick Foster made a rare public appearance at the American Enterprise Institute Friday to discuss the latest projections of Medicare which are required by law.

The single greatest uncertainty in the projections are the cuts to Medicare that the administration is counting on to pay for new benefits.The Obama plan assumes health care can accomplish the same kinds of increased efficiency, or productivity improvements, usually seen on production lines -- like manufacturing cars. But few analysts believe that is possible. Joe Antos, a scholar at AEI, says, "they're productivity improvements if productivity happens. If productivity doesn't happen, they're still cuts."

And Foster adds that, "every single expert we talked [to] has told us they did not think these productivity adjustments were viable. They thought they just would not work."

The Science of Succor and Moral Hazard

2010-08-06T18:22:00+00:00

I love TED talks, and in my post bar-exam I watched this great video on TED: ... and it raised for me an interesting question. Normally, I'm pretty aggressive in demanding performance metrics from public policy proposals. However, the more...

On Congressman Paul Ryan

2010-08-06T17:12:36+00:00

Princeton's Paul Krugman plays offense.
Brookings's Ted Gayer plays defense.

Christy Romer Steps Down

2010-08-06T08:33:01+00:00

CEA Chair Christy Romer is leaving the White House.

From my own experience in that job, I know she must be experiencing mixed emotions. On the one hand, it is an exhilarating experience to be a member of a White House team, a part of history, and the leader of a staff of smart, hard-working economists at the CEA. On the other hand, in jobs like this, one loses a great deal of autonomy. People who choose academia as a career often do so because they enjoy the personal and intellectual freedom it offers. Having spent two years without it, I appreciate that freedom all the more. I bet Christy will feel the same, after she recovers from Beltway decompression.

Bye-bye, Prop H8

2010-08-05T23:14:18+00:00

photo by Jeff Chiu/The Associated Press

California’s Proposition 8 was overturned yesterday by US Federal District Court Judge Vaughn Walker on the basis of it violating the due process and equal protection clauses of the US Constitution. The opinion is a blast to read – a truly feminist piece of legal writing. Here is one of my favorite excerpts:

The marital bargain in California (along with other states) traditionally required that a woman’s legal and economic identity be subsumed by her husband’s upon marriage under the doctrine of coverture; this once-unquestioned aspect of marriage now is regarded as antithetical to the notion of marriage as a union of equals. FF 26-27, 32. As states moved to recognize the equality of the sexes, they eliminated laws and practices like coverture that had made gender a proxy for a spouse’s role within a marriage. FF 26-27, 32. Marriage was thus transformed from a male-dominated institution into an institution recognizing men and women as equals. Id. Yet, individuals retained the right to marry; that right did not become different simply because the institution of marriage became compatible with gender equality.

WHAT!?!? The meaning of marriage has changed over time? Women are no longer property? They aren’t even required to stay in the home? Radical.

All jokes aside though, it was a great ruling and a great opinion – along with a great record of the facts for when the decision is appealed, which it surely will be. Ironically, Judge Walker was appointed to the bench by Bush 41 (after a failed nomination by Reagan, blocked in part by Nancy Pelosi and Ted Kennedy, who were concerned with Walker being anti-gay). I’m not one of those people advocating for Judge Walker to be appointed to the next available Supreme Court Seat – I’m not too familiar with his approach to judging, law and economics – but I do have another prediction about the Supreme Court. I think that when it comes down to it, the Court – the Chief Justice included – will be on the right side of history. After all, as Judge Walker’s clerks painstakingly laid out in the opinion, legal precedent is on our side. An explanation of legal terms after the jump.

Thanks to Erika Rickard HLS ’10 for this explanation of the different levels of scrutiny used by our court systems.

There are three levels of scrutiny that the courts apply to different types of cases:

Strict Scrutiny – the highest level of scrutiny, which means that the burden is on the government to prove that they really need to be doing what they’re doing, consequences be damned.

The court only applies strict scrutiny in two situations:

1) where the government is somehow constraining a fundamental right (like marriage, voting, or interstate travel), or

2) where the government is discriminating against what they call a suspect class – a weird term for a group that has been systematically discriminated against in the past, and therefore any action that a government does that discriminates against them is automatically suspect. Under the federal constitution, the only two groups that have ever been considered a “suspect classification” are race and nationality.

The standard is technically like this: the government must prove that whatever they’re doing is NECESSARY to achieve a COMPELLING government interest. That’s a two-part test: the interest that the government is supporting must be a compelling one, and the action that they’re taking must be necessary to achieve that interest.

Intermediate Scrutiny / Mid-level Scrutiny – a vague, ambiguous no-man’s land that isn’t as harsh on the government as strict scrutiny, but also isn’t as protective as rational basis review.

Intermediate scrutiny pretty much has been applied to gender discrimination, in situations like men trying to get into state university women’s nursing programs

The government in an intermediate scrutiny case must prove that whatever they’re doing is SUBSTANTIALLY related to an IMPORTANT government interest. See how ambiguous that is? The same two-part test, just a little watered down.

Rational Basis – the most common level of scrutiny, the way that government actions are most often looked at.

To get a law overturned under rational basis review (which is what the judge applies throughout the case, just to be safe), the person who was discriminated against has to prove that the government’s actions are not RATIONALLY related to a LEGITIMATE government interest. The burden is on the plaintiff here, not the government, so it’s usually really hard to get a government action (law / policy) thrown out on this basis.

The first part of the opinion (p. 109, the “due process” part) is about marriage, which as been considered a fundamental right per the Constitution.

The second part (the longer, “equal protection” part) is the part that focuses on discrimination against people based on their sexual orientation, and whether the government interest is worth the discrimination that results.

Former HLS Dean Elena Kagan confirmed to the Supreme Court!

2010-08-05T22:43:07+00:00

Today, former Harvard Law Dean Elena Kagan became the fourth woman ever confirmed to the Supreme Court (Sandra Day O’Connor, a Reagan nominee, was the first, followed by Ruth Bader Ginsberg – a Clinton nominee – and Sonya Sotomayor, also appointed by Obama). Two-thirds of the Supreme Court Justices are now Harvard Law graduates (with the exceptions of Clarence Thomas, Samuel Alito, and Sonya Sotomayor, who all went to that other school in New Haven).

Photo from the New York Times

Kagan was confirmed by a 63 to 37 Senate vote, with 1 Democrat voting against her and 5 Republicans and two Independents voting in favor. A full breakdown of the vote can be found here.

Congratulations, Elena!

President Obama's Pro-Union Stance

2010-08-05T14:52:04+00:00

Nobelist Gary Becker concludes:

Are the Democratic-controlled Congress and President Obama very much pro union? Unquestionably. Do the economic effects of unions on the welfare of workers as a whole justify that union bias? No. Has their pro-union orientation seriously retarded the recovery from the recession? Probably....The real threat to a robust recovery on the labor side has come from employer and entrepreneurial fears that once the economic environment improves, a Democratic Congress and administration will pass pro-union and other pro-worker legislation that will raise the cost of doing business and cut profits. In this way the obvious pro-union-pro-worker bias of the present government has contributed to a slower recovery, especially in labor markets.

Rogoff on the Current Policy Challenge

2010-08-04T11:52:27+00:00

Ken says we should focus on productivity and aggregate supply, not just aggregate demand.

The Risk of a Fiscal Crisis

2010-07-31T11:25:32+00:00

CBO offers a useful issues brief.

Stocks Look Cheap

2010-07-31T11:17:13+00:00

Proposal: Abolish faculty offices

2010-07-30T12:37:51+00:00

Posited: faculty offices are detrimental to the advancement of scientific knowledge.

At Google, everyone sits out in the open at clusters of desks (not cubicles, God no). It looks a little something like this:

(This appears to be a picture from Google's Kirkland, WA office, but we have a similar setup in Cambridge.)

Today I swung by Harvard to my big, empty office, which looks like this:

Of course, it's an awesome office, one of the most spacious that I've seen in an academic CS building. You could easily pack eight grad students in there, sitting on top of a large pile of undergrads.

I got to thinking. In most academic settings, faculty are isolated in their own separate offices -- isolated from one another, from the students, from the rest of the world. This can't possibly be good for cross-fertilization of ideas. Although I leave my office door open whenever I'm there, people hardly ever drop by -- I guess I am pretty intimidating. (Or maybe it's my ferocious guard dog that I bring with me to work.)

Of course, having my own office is great for meetings, but there are plenty of places I could hold meetings instead. And it's nice to have a place for all of my books and journals, but really, shouldn't those be in a communal library anyway? And I guess the office is nice for when I want to shut out the world and try to concentrate, but that's nothing a pair of noise-canceling headphones can't fix.

So here's the idea -- let's get rid of faculty offices. Get everyone sitting together in open-floorplan space, interacting, communicating, innovating. Just like startups. Why not? This is the model that the Berkeley RADLab uses. All of the faculty sit together in an open space. Here's a picture of Randy Katz at his desk in the lab, surrounded by British war paraphernalia:

Doesn't he look happy? (You can read more about the RADLab design philosophy here.)

To be honest, when I started at Google I was pretty concerned about the lack of an office. I was sure that I would be unable to concentrate sitting out in the open, and would get annoyed at all of the distractions and bodily odors of the people around me. On the contrary, I've found that it actually helps my productivity to be in an active space with other people hacking away around me. Also, the noise level is rarely an issue. People are generally respectful and it's a little like working in a coffee shop.

When I get back to Harvard, I think I'll move into the lab with my grad students. (I can hear the groaning now.)

Do Kindergarten Teachers Matter More than Parents?

2010-07-30T07:00:20+00:00

New research on the value of kindergarten teachers is remarkable.

In fact, it seems a bit hard to believe. If kindergarten teachers matter as much as this new research suggests, then you would think that parents would have a large influence on their kids' adult outcomes. After all, you spend a lot more time with your parents than in your kindergarten class. But much research in behavioral genetics finds very little evidence for significant parental effects. (See Judith Harris's The Nurture Assumption.) So I am puzzled.

Update: Judith Harris emails me:

I guess it's been a while since you read my book. In Chapter 11 of The Nurture Assumption I described the case of a gifted first-grade teacher, "Miss A," who had a long-lasting beneficial effect on her students, and I proposed an explanation of how and why this happened.

Yes, it has been a while, and since I am now at the Jersey shore, I don't have a copy handy. I much appreciate the correction.

Update 2: From Raj Chetty, one of the authors of the study:

I'm writing in reference to your interesting comment about our Kindergarten paper. I think our results are actually consistent with your perfectly sensible intuition that parents should matter more than teachers, for two reasons:

(1) the Kindergarten class effects are large in aggregate but explain a small share of the variance in earnings (less than 5%) overall. A better class leads to higher average earnings (3% higher earnings for a 1 SD improvement in teacher quality), but there is a lot of variation around the mean.

(2) The best evidence I've seen on the long term impacts of parents is this quasi-experimental paper by Bruce Sacerdote published in the QJE. It shows that parental characteristics explain about three times more of the variation in adult outcomes than KG classes, consistent with your intuition.

Thanks!

Harvard Extension School Gets Their Own Aleksey

2010-07-29T17:14:07+00:00

I’ve heard plenty of job application tips, some of which I would try (bringing in writing samples, arriving on time), some of which I wouldn’t (bringing fresh-baked cookies to the interview, making a video résumé, wearing a low-cut top), and some of which make me cringe. Like this offer from a Harvard extension school grad [...]

Readings for the Pigou Club

2010-07-27T11:45:03+00:00

Gib Metcalf makes the case. (He suggests that club members email their support for higher Pigovian taxes to the National Commission on Fiscal Responsibility.)
USA Today joins the club.

A Retrospective on SEDA

2010-07-26T19:25:32+00:00

I keep bumping into references online to my PhD thesis work on the Staged Event-Driven Architecture, or SEDA. I thought this had been long forgotten, but I guess not. It's been about 10 years since I did the bulk of that work (the major paper was published in SOSP 2001), so I thought it would be interesting to think back on what we got right and what we got wrong. Just to summarize, SEDA is a design for highly-concurrent servers based on a hybrid of event-driven and thread-driven concurrency. The idea is to break the server logic into a series of stages connected with queues; each stage has a (small and dynamically-sized) thread pool to process incoming events, and passes events to other stages. The advantages of the design include modularity, the ability to scale to large numbers of concurrent requests, and (most importantly, I think) explicit control of overload, through the queues.

Apparently quite a few systems have been influenced by SEDA, including some major components that drive Google and Amazon. I occasionally hear war stories from folks that tried the SEDA design and abandoned it when the performance did not meet up with expectations. The events-versus-threads debate continues to rage on. See, for example, this recent post comparing the performance of Node.js and Clojure. (Who knew that people would be talking about implementing high-performance servers in JavaScript and LISP? And I thought using Java for SEDA was crazy....)

Some historical context

It's important to keep in mind that I started work on SEDA around 1999. At the time, the server landscape looked pretty different than it does now. Linux threads were suffering a lot of scalability problems, so it was best to avoid using too many of them. Multicore machines were rare. Finally, at the time nearly all papers about Web server performance focused on bulk throughput for serving static Web pages, without regard for end-to-end request latency.

These days, things are pretty different. Linux threading implementations have vastly improved. Multicores are the norm. With the rise of AJAX and "Web 2.0," request latency matters a lot more.

Before we start splitting hairs, I want to emphasize that the SEDA work is about a server architecture, not an implementation. Yes, I implemented a prototype of SEDA (called Sandstorm) in Java, but I never considered Sandstorm to be the main contribution. Unfortunately, a lot of follow-on work has compared C or C++ implementations of alternate server designs to my original Java implementation. It is really hard to draw many conclusions from this, in part because Sandstorm was heavily tuned for the particular JVM+JIT+threading+GC combination I was using at the time. (I spent an incredible amount of time trying to get gcj to be robust enough to run my code, but eventually gave up after around six months of hacking on it.) Probably the best head-to-head comparison I have seen is David Pariag et al.'s paper in EuroSys 2007, where they do a nice job of factoring out these implementation effects.

What we got wrong

In retrospect, there definitely a few things about the SEDA design that I would rethink today.

The most critical is the idea of connecting stages through event queues, with each stage having its own separate thread pool. As a request passes through the stage graph, it experiences multiple context switches, and potentially long queueing at busy stages. This can lead to poor cache behavior and greatly increase response time. Note that under reasonably heavy load, the context switch overhead is amortized across a batch of requests processed at each stage, but on a lightly (or moderately) loaded server, the worst case context switching overhead can dominate.

If I were to design SEDA today, I would decouple stages (i.e., code modules) from queues and thread pools (i.e., concurrency boundaries). Stages are still useful as a structuring primitive, but it is probably best to group multiple stages within a single "thread pool domain" where latency is critical. Most stages should be connected via direct function call. I would only put a separate thread pool and queue in front of a group of stages that have long latency or nondeterministic runtime, such as performing disk I/O. (This approach harkens back to the original Flash event-driven server design that SEDA was inspired by.) This is essentially the design we used in the Pixie operating system.

I was never completely happy with the SEDA I/O interface. My original work on Java NBIO was used as the foundation for Sandstorm's event-driven socket library. (I was also one of the members of the Java Community Process group that defined the java.nio extensions, but I preferred to use my own library since I wrote the code and understood it.) However, layering the SEDA stage abstraction on top proved to be a real pain; there are multiple threads responsible for polling for request completion, incoming sockets, and so forth, and performance is highly sensitive to the timing of these threads. I probably spent more time tuning the sockets library than any other part of the design. (It did not surprise me to learn that people trying to run Sandstorm on different JVMs and threading libraries had trouble getting the same performance: I found those parameters through trial-and-error.) The fact that SEDA never included proper nonblocking disk I/O was disappointing, but this just wasn't available at the time (and I decided, wisely, I think, not to take it on as part of my PhD.)

Of course, while Java is a great implementation language for servers, I didn't implement Sandstorm with much regards for memory efficiency, so it kind of sucks in that regard compared to leaner server implementations.

What we got right

I chose to implement SEDA using Java, in order to tie into the larger Berkeley Ninja project which was all in Java. It turned out that my Java code was beating servers implemented in C, so I saw no reason to switch languages. I still believe that had I tried to do this work in C, I would still be writing my PhD thesis today. Case in point: Rob von Behren, who did a follow-on project to SEDA, called Capriccio, in C, never finished his PhD :-) Never mind -- we both work for Google now.

The most important contribution of SEDA, I think, was the fact that we made load and resource bottlenecks explicit in the application programming model. Regardless of how one feels about threads vs. events vs. stages, I think this is an extremely important design principle for robust, well-behaved systems. SEDA accomplishes this through the event queues between stages, which allow the application to inspect, reorder, drop, or refactor requests as they flow through the service logic. Requests are never "stalled" somewhere under the covers -- say, blocking on an I/O or waiting for a thread to be scheduled. You can always get at them and see where the bottlenecks are, just by looking at the queues. I haven't seen another high performance server design that tries to do this -- they mostly focus on peak performance, not performance under overload conditions, which was my main concern. I also think that SEDA makes it easier to design services that are load aware, though I leave it as an exercise to the reader to determine how you would do it in a conventional thread or event-driven framework.

Honestly, we never took full advantage of this, and I struggled somewhat to come up with a good benchmark to demonstrate the importance of this idea. (When you're using SpecWeb99, you can't really drop or refactor Web page requests.) Benchmarks are tricky, but I think that many real-world services have the opportunity to leverage SEDA's explicit load conditioning model.

Some general comments

I'm not really working on high performance server designs anymore (although my stint at Google may or may not take me back in that direction). I'm also not up on all of the latest literature on the topic, so maybe there is a killer design out there that solves all of these problems once and for all.

One thing I learned doing this work is that one should always be skeptical of simple, "clean" benchmarks that try to demonstrate the peak or best-case performance of a given server design. My original benchmarks of SEDA involved fetching the same static 8KB web page over and over. Not surprisingly, it yields about the same performance no matter what server design you use. This benchmark hardly stresses the I/O, memory, threading, or socket layers of any system, and is more likely to highlight performance differences in the corner cases. (Believe me, I've read plenty of papers that use much dumber benchmarks than this. SpecWeb99, which we used in the SOSP paper, is only marginally better.)

It's harder to do, but I think it's important to evaluate performance in the context of a "real" application, one that involves all of the load and complexity you'd see in a real service. So I am not convinced by microbenchmarks anymore; it is like showing off a new automobile design running on a flat, even, indoor track with no wind drag, no adverse weather, no other traffic, and no need for seatbelts or airbags. Usually as soon as you load it up with realistic conditions, things start to break. Achieving good, robust performance across a wide range of loads is the real challenge.

Al Roth

2010-07-26T05:36:44+00:00

Forbes profiles my Harvard colleague.

The Mid-Session Review

2010-07-23T18:58:20+00:00

The Obama administration has just released the Mid-Session Review of the Budget. (As one of my friends snarkily puts it, "Release at 4 pm on Friday...who could have expected when we're living in a new era of fiscal responsibility?")

This budget document shows what would happen to the federal budget under the Administration's economic forecast and assuming that all the President's proposed policies are adopted. What does the document show? Based on a quick read, here is what I see:

The Administration believes we will have real growth about 4 percent over the next four years. Unemployment is projected to fall steadily, reaching to 5.5 percent at the end of 2015.
Deficits are projected to shrink but will not fall below 3.4 percent of GDP over the ten-year budget window.
The ratio of debt to GDP rises in each of the following ten years, with no end in sight.
The document once again holds out the hope that the fiscal commission will save the day by somehow finding a way to put the budget on a sustainable path.

PrezBo Tapped to Lead New York Fed

2010-07-23T17:04:18+00:00

Columbia University President Lee C. Bollinger has been selected to chair the Federal Reserve Bank of New York’s board of directors for 2011 after having served on the New York Fed’s board since 2007 and as the board’s deputy chairman since 2009. But with sizable academic, administrative and toupée maintenance responsibilities, how in the world is PrezBo going to find time to run a bank?

Surprisingly, not everyone is as excited about the pick as our friends up in Morningside Heights. The Wall Street Journal’s Deal Journal blog accused Bollinger of “heart[ing] big government” for his support of the use of eminent domain to acquire property for Columbia’s West Harlem expansion and for an editorial published earlier this month (in the, um, Wall Street Journal?) in which he argues in support of government-subsidized media companies.

The Journal also accuses Bollinger of hypocrisy for defending both Columbia’s 2007 speaking invitation to Mahmoud Ahmadinejad and the University’s ban on ROTC recruitment on First Amendment grounds. If only Bollinger’s appointment required some sort of confirmation hearing/media spectacle – it’s really been too long since we’ve had an opportunity to talk about ROTC recruiting on Ivy League campuses!

The Journal’s comment section brings the “heart[ing] big government” theme to a new level with commenters going so far as accusing him of “neo-marx[ism]” and decrying the “Bollingerization of America.”

The most entertaining objection to Prezbo’s selection, however, has (hopefully) yet to surface – Donald Trump said earlier this month that he thinks Bollinger’s “a total moron” and “a dummy” and, hey, we all know the Donald has some trouble holding back.

ChairBo, anyone?

Econ Jargon Watch

2010-07-23T09:07:07+00:00

A friend of mine who is an editor read the Solow piece I posted yesterday and emailed me this comment:

I was particularly interested to read the following sentence:

"But this is not a bad FIRST APPROXIMATION in many cases."

I don't think I have edited one econ manuscript that has not used the phrase "first approximation" many, many times. When econ PhDs are given out, are you all required to sign a secret agreement that says you must use this phrase in anything you write?

Note that I have not found a similar phrase in the other disciplines for which I've edited several books (chemistry, biology, anatomy, physiology, genetics, physics, political science, and history).

Fatherhood and professorhood

2010-07-22T18:36:13+00:00

My little boy, Sidney, turned a year old this past week. I've been reflecting a lot lately on how much my life has changed since having a baby. I've also met a bunch of junior faculty members who ask what it's like trying to juggle being a prof with being a parent. To be sure, I was pretty worried that it would be really hard to juggle my work responsibilities with having a kid. At first I screwed up royally, but now I've found a good balance and it really works. Best of all, I love being a dad -- it has been worth all the sleepless nights, cleaning up barf and poop, and learning how to steer a spoonful of beets into an unwilling mouth.

Of course, being a dad is totally different than being a mom, and I can't imagine how much harder it must be for women in academia who want to have children. My wife is also in an academic career. When Sidney was first born, she took 3 months off of work, but this was hard for both of us -- for her, because she never got a break from taking care of the baby during the day, and for me, since I wasn't doing a good job at balancing my job with being a new dad. Fortunately, Sidney was born about a week after I submitted my tenure case materials, so I could relax a little, but being a prof still involves a lot of day-to-day stress.

My biggest mistake was not taking teaching relief as soon as the baby was born. I was slated to teach one of our intro courses, which had around 80 students, so it would have been a real problem had the course not been covered that term. I figured since I had taught the class a couple of times before it would be easy -- I planned to lean heavily on the teaching assistants and mostly waltz in twice a week to give lectures I had already prepared. What I didn't account for is that with so many students there is always a fire to put out somewhere -- a student who needs special attention, allegations of cheating, TAs dropping the ball -- so you are still "on call" even if the lectures and assignments have been prepared well in advance. The biggest stressor was having to teach on days without having had any sleep the night before. In retrospect, trying to teach that term was a huge mistake, and I should have put my own sanity before the department teaching schedule.

Since then, things have improved greatly, and I am so happy and proud to be a dad. The thing that nobody tells you is that newborn babies aren't much fun. They can't yet smile, laugh, control their extremities, see more than 6 inches away, or do much of anything except eat, sleep, cry, and poop. Once they hit 10 or 12 weeks things really take a big turn, and now that Sidney is a year old he is a total hoot. He just started walking last week and it's the funniest thing in the world to watch.

The biggest change in my life is that I can no longer work in the evenings and on the weekends. When I'm home, I'm daddy, and finding time to sit down at the laptop to get anything done is pretty hard. After Sidney's 8pm bedtime I can get some things done, but by that time, my two priorities are having a nice cocktail and getting a good nights' sleep. (By the way, I am a big fan of the Ferber method for helping babies learn to sleep on their own. Greg Morrisett described the technique to me as "exponential backoff." We did this with Sidney when he was 4 months old and since then has consistently slept from 8pm - 6am almost every night. It works.)

On the flip side, when I'm in the office, I am very focused on getting work done, since I know I can't work as well in the evenings. So rather than put off things until after dinner, I try to knock them off during the day. As a result I'm a lot more productive and less scattered. I feel like a total slacker leaving the Google office at 5pm sharp every day, but I have to get home to meet the nanny. That's life. Now that Sidney is a little older we've been taking him out to restaurants and happy hour -- there's nothing like feeding the baby a bottle while nursing a nice cold beer of my own. So life is good. Professors can also be parents. I just can't wait to start teaching Sidney C++.

Solow on DSGE Models

2010-07-22T12:48:15+00:00

Bob testifies in front of Congress on the topic (believe it or not).

Thanks for Arnold Kling for the pointer.

Harvardians in the FT

2010-07-21T13:50:55+00:00

The Dodd-Frank Anti-Stimulus Bill

2010-07-21T10:42:15+00:00

The Wall Street Journal reports:

The nation's three dominant credit-ratings providers have made an urgent new request of their clients: Please don't use our credit ratings.

The odd plea is emerging as the first consequence of the financial overhaul that is to be signed into law by President Obama on Wednesday. And it already is creating havoc in the bond markets, parts of which are shutting down in response to the request.

Standard & Poor's, Moody's Investors Service and Fitch Ratings are all refusing to allow their ratings to be used in documentation for new bond sales, each said in statements in recent days. Each says it fears being exposed to new legal liability created by the landmark Dodd-Frank financial reform law.

The new law will make ratings firms liable for the quality of their ratings decisions, effective immediately. The companies say that, until they get a better understanding of their legal exposure, they are refusing to let bond issuers use their ratings.

That is important because some bonds, notably those that are made up of consumer loans, are required by law to include ratings in their official documentation. That means new bond sales in the $1.4 trillion market for mortgages, autos, student loans and credit cards could effectively shut down.

There have been no new asset-backed bonds put on sale this week, in stark contrast to last week, when $3 billion of issues were sold. Market participants say the new law is partly behind the slowdown.

Government Spending by Another Name

2010-07-20T22:55:40+00:00

Wise words from Marty Feldstein:

When it comes to spending cuts, Congress is looking in the wrong place. Most federal nondefense spending, other than Social Security and Medicare, is now done through special tax rules rather than by direct cash outlays. The rules are used to subsidize a wide range of spending including education, child care, health insurance, and a myriad of other congressional favorites.

These tax rules—because they result in the loss of revenue that would otherwise be collected by the government—are equivalent to direct government expenditures. That's why tax and budget experts refer to them as "tax expenditures." This year tax expenditures will raise the federal deficit by about $1 trillion, according to estimates by the congressional Joint Committee on Taxation. If Congress is serious about cutting government spending, it has to go after many of them....

If tax expenditures are not cut, taxes on households and businesses will have to rise to prevent an explosion of the national debt, which is now projected to increase to 90% of GDP by 2020 from today's 63%. When benefits for Social Security and Medicare are set aside, the rest of the outlay side of the budget is too small—7.5% of GDP—to provide much scope for reducing annual budget deficits that are now projected to average 5% of GDP for the rest of this decade. In contrast, total tax expenditures are now 6.4% of GDP.

Merle Hazard on the Greek Debt

2010-07-20T08:32:10+00:00