Planet Harvard

2012-02-08T07:13:46+00:00

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Admissions Controversy: It’s 2006 All Over Again!

2012-02-08T02:00:14+00:00

Remember that Yale freshman (and soon-to-be Harvard transfer) who filed a civil rights complaint against Princeton because he believed that Old Nassau had rejected him for being Asian? After which The Daily Princetonian mocked the complainant by, um, making fun of him for being Asian? 2006: stellar year for race relations in the Ivy League!

Minus the race-baiting Prince column, it’s happening all over again, this time with an unnamed Asian-American of Indian descent, who has filed complaints with the Office for Civil Rights against Harvard and Princeton for discriminating against Asian applicants. The complaints have stirred sundry responses of equally mild outrage. Even the more right-wingy op-eds read as though their authors are posed in perpetual shrugs.

There may be a decent explanation for the befuddling lack of concern, as Daniel de Vise of the Washington Post argues. The entire basis for the 2006 complaint, and the current complaints against Princeton and Harvard, is that Asian applicants whom either school admits almost always possess the highest SAT scores of their class. However, as de Vise points out:

[R]emember that Asian-Americans outscore all other racial and ethnic groups on the SAT. A college where Asian students have lower SAT math scores than whites would be a statistical oddity.

Which means the whole problem is more likely found in that sinister totem of elite colleges: holistic admissions. As both a phrase and an idea, “holistic admissions” is sort of misleading: it describes the method whereby colleges admit a carefully calibrated freshman class, not individual applicants. Such a process contradicts the bizarre caricature that statistical studies paint of college admissions. To draw a meaningful conclusion from, say, this Princeton study, you’re required to imagine that admissions committees serially pit the applications of two students against each other, much like an episode of Celebrity Deathmatch. (Which would be really exciting to watch, no?)

Probably the biggest concern is that if Harvard and Princeton can be found to discriminate against Asians based on statistics alone, then pretty much every elite college (with the exception of Berkeley, and apparently CalTech) can be found to discriminate against Asians. If that’s true, it would be an enormous (and very newsworthy) conspiracy. And if it is a conspiracy, then Harvard and Princeton appear to be exceptionally incompetent conspirators: though Asians account for some 5% of the U.S. population, they make up, respectively, 17% and 19% of Harvard’s and Princeton’s undergraduate bodies.

My love affair with code reviews

2012-02-07T21:58:00+00:00

One of the most life-altering events in my move from academia to industry was the discovery of code reviews. This is pretty standard fare for developers in the "real world", but I have never heard of an academic research group using them, and had never done code reviews myself before joining Google.

In short: Code reviews are awesome. Everyone should use them. Heck, my dog should use them. You should too.

For those of you not in the academic research community, you have to understand that academics are terrible programmers. (I count myself among this group.) Academics write sloppy code, with no unit tests, no style guidelines, and no documentation. Code is slapped together by grad students, generally under pressure of a paper deadline, mainly to get some graphs to look pretty without regard for whether anyone is ever going to run the code ever again. Before I came to Google, that was what "programming" meant to me: kind of a necessary side effect of doing research, but the result was hardly anything I would be proud to show my mother. (Or my dog, for that matter.) Oh, sure, I released some open source code as an academic, but now I shudder to think of anyone at a place like Google or Microsoft or Facebook actually reading that code (please don't, I'm begging you).

Then I came to Google. Lesson #1: You don't check anything in until it has been reviewed by someone else. This took some getting used to. Even an innocent four-line change to some "throw away" Python script is subject to scrutiny. And of course, most of the people reviewing my code were young enough to be my students -- having considered myself to be an "expert programmer" (ha!), it is a humbling experience for a 23-year-old one year out of college to show you how to take your 40 lines of crap and turn them into one beautiful, tight function -- and how to generalize it and make it testable and document the damn thing for chrissakes.

So there's a bunch of reasons to love code reviews:

Maintain standards. This is pretty obvious but matters tremendously. The way I think of it, imagine you get hit by a truck one day, and 100 years from now somebody who has never heard of your code gets paged at 3 a.m. because something you wrote was suddenly raising exceptions. Not only does your code have to work, but it also needs to make sense. Code reviews force you to write code that fits together, that adheres to the style guide, that is testable.

Catch bugs before you check in. God, I can't count the number of times someone has pointed out an obvious (or extremely subtle) bug in my code during the code review process. Having another pair of eyes (or often several pairs of eyes) looking at your code is the best way to catch flaws early.

Learn from your peers. I have learned more programming techniques and tricks from doing code reviews than I ever did reading O'Reilly books or even other people's code. A couple of guys on my team are friggin' coding ninjas and suggest all kinds of ways of improving my clunky excuse for software. You learn better design patterns, better approaches for testing, better algorithms by getting direct feedback on your code from other developers.

Stay on top of what's going on. Doing code reviews for other people is the best way to understand what's happening in complex codebase. You get exposed to a lot of different code, different approaches for solving problems, and can chart the evolution of the software over time -- a very different experience than just reading the final product.

I think academic research groups would gain a lot by using code reviews, and of course the things that go with them: good coding practices, a consistent style guide, insistence on unit tests. I'll admit that code quality matters less in a research setting, but it is probably worth the investment to use some kind of process.

The thing to keep in mind is that there is a social aspect to code reviews as well. At Google, you need an LGTM from another developer before you're allowed to submit a patch. It also takes a lot of time to do a good code review, so it's standard practice to break large changes into smaller, more review-friendly pieces. And of course the expectation is you've done your due diligence by testing your code thoroughly before sending it for review.

Don't code reviews slow you down? Somewhat. But if you think of code development as a pipeline, with multiple code reviews in the flight at a time you can still sustain a high issue rate, even if each individual patch has higher latency. Generally developers all understand that being a hardass on you during the review process will come back to bite them some day -- and they understand the tradeoff between the need to move quickly and the need to do things right. I think code reviews can also serve to build stronger teams, since everyone is responsible for doing reviews and ensuring the quality of the shared codebase. So if done right, it's worth it.

Okay, Matt. I'm convinced. How can I too join the code review bandwagon? Glad you asked. The tool we use internally at Google was developed by none other than Guido van Rossum, who has graciously released a similar system called Rietveld as open source. Basically, you install Rietveld on AppEngine, and each developer uses a little Python script to upload patches for review. Reviews are done on the website, and when the review is complete, the developer can submit the patch. Rietveld doesn't care which source control system you use, or where the repository is located -- it just deals with patches. It's pretty slick and I've used it for a couple of projects with success.

Another popular approach is to use GitHub's "pull request" and commenting platform as a code review mechanism. Individual developers clone a master repository, and submit pull requests to the owner of that repository for inclusion. GitHub has a nice commenting system allowing for code reviews to be used with pull requests.

I was floored the other day when I met an engineer from a fairly well-known Internet site who said they didn't use code reviews internally -- and complained about how messy the code was and how poorly designed some pieces were. No kidding! Code reviews aren't the ultimate solution to a broken design process, but they are an incredibly useful tool.

But What Does the Patrick Witt Story Mean?

2012-02-06T11:02:53+00:00

So, it’s been ten overheated days since the New York Times openly flogged the former hero of Yale, Patrick Witt ’12, for dissembling about his Rhodes Scholarship candidacy to the same reporters who devised his honorable appearance. At this point, we apparently want to believe that Witt’s swift transformation from saint of college football into avatar of dishonesty is no longer about the person named Patrick Witt. No, no—the story is so much bigger! Rather, it’s about “the media”. Or newspaper journalism. Or Title IX.

Actually, though, it’s about people being really stupid and unethical.

Take, for example, how the whole drama began. How in the world did the Rhodes Trust obtain personal details from Yale’s “confidential” reporting process? Via an informal tip furnished by an unnamed Yale official, of course. That’s not even the dumbest part. A Yale spokesman told the Times that the university “very strongly believes in the confidentiality policies we have in place.” As if those policies had meant anything to begin with! As if they weren’t right then self-destructing!

Consequently, it is beyond doubt that more people now know the identity of Witt’s accuser than if she had remained silent. Witt has described her with enough words that any of his 3,520 Facebook friends could probably figure out her name:

Patrick is aware that the informal complaint was filed by a person he had known for many months prior and with whom he had engaged in an on-again, off-again relationship beginning in the Spring of 2011 and ending about two months before the informal complaint was filed.

Witt’s initial story, in which he was cast as the scholar-athlete stuck between a Rhodes and a hard place—a.k.a. Hamlet, as Bloomberg News called him—was considered, ironically, “the perfect antidote to the Penn State morass.” As it turns out, Yale’s capacity to lie was not limited by the incompetence of its football team. (You may recall that in the game for which Witt supposedly sacrificed his Rhodes candidacy, Yale lost by 38 points.) Like Penn State, Yale’s first and perhaps only interest was its own. That is the only imaginable reason why Yale “unofficially informed” the Rhodes Trust of the complaint, and why it continues to pretend that it didn’t.

The comparison to Penn State is apt in another way, too. The media valorized Patrick Witt in the same manner it crucified Penn State: with relentless and sometimes unthinking coverage (like when the Times accidentally revealed the identity of one of Jerry Sandusky’s victims). Unlike Penn State, however, Patrick Witt is more than just the subject of media attention. He is also largely created by it. Perhaps that’s why certain members of the press—including and especially the staff of the Yale Daily News—appear so invested in maintaining his image, and why other members seem so determined to expose it.

Transitioning from Communism

2012-02-05T15:55:41+00:00

Seven lessons from my Harvard colleague Andrei Shleifer.

Do Manufacturers Need Special Treatment?

2012-02-05T08:57:46+00:00

No, says Christy Romer in today's NY Times. I agree.

The Turkish economy after the global financial crisis

2012-02-03T15:51:37+00:00

This paper of mine on the Turkish economy was completed more than a year ago but has just been published in the new journal of the Turkish Economic Association. Re-reading it, I feel it captures well the missed opportunities of the last few years.

Unwillingness to use fiscal policy in a countercyclical manner (tighten when times are good), discourage capital inflows, and prevent real exchange rate appreciation until it becomes too late have once again placed the Turkish economy on an unsustainable course. Worse, with an external deficit reaching close to double-digit levels, the economy is poised for a painful hard landing as soon as confidence turns south – triggered, for example, by bad news in the Eurozone.

As recent experience shows, the countries that are worst hit by sudden flight to safety in financial markets tend to be those caught with large external deficits:

Governments that engineer growth accelerations on the back of unsustainable foreign borrowing booms like to repeat the mantra “this time it is different.” Unfortunately, few current account deficits as large as Turkey’s end well.

Good News (both for job seekers and for one person trying to hold onto his job)

2012-02-03T10:57:31+00:00

Good news today about employment. The 243,000 increase in jobs is a very solid number. The graph below shows how the prices at Intrade reacted when the news was released at 8:30 am. President Obama's probability of being reelected rose by about 2 percentage points. Click on the graphic to enlarge.

Swashbuckling Columbia Professor Marries His Student in Ceremony Emceed by Elena Kagan

2012-02-02T19:45:20+00:00

Above the Law reports the thoroughly amusing courtship of Columbia Law professor and James Bond impersonator Philip Bobbitt and Columbia 3L Maya Ondalikoglu Bobbitt, whose “very intimate” wedding was officiated in December by former Harvard Law dean and sitting Supreme Court Justice Elena Kagan. Maya was a student in one of Bobbitt’s classes before the pair drove down to D.C. together for an academic conference. Upon their return, Maya withdrew from Bobbitt’s class, because “it just seemed improper for her to remain in the class, given what [the Bobbitts] knew about where [they] were heading.” (They married about four months later.)

The couple’s competing pedigrees—Princeton B.A., Yale J.D. vs. Penn B.A., Columbia J.D.—raise just one very, very important question: why wasn’t this announced in the Times wedding section two months ago? Seriously. The Bobbitts are genetically engineered for Sunday Styles. (Where else can anxious Ivy Leaguers scrutinize the mating rituals of their peers?) Well, it wasn’t for either spouse’s desire for privacy. Oh, Lord no:

Professor Bobbitt asked Justice Kagan if she would be willing to officiate, and she readily agreed. “She’s the most delightful person,” he said of Justice Kagan. “She said it was a terrific idea and she’d love to do it.”

The ceremony itself, held in the chambers of Justice Kagan, was very intimate, with fewer than a dozen guests. Two of Professor Bobbitt’s college classmates from Princeton — Jerome Davis, the Secretary of Columbia University, and Greg Treverton, former vice chair of the National Intelligence Council — were present. Maya was joined by some of her classmates from Penn.

Justice Kagan officiated. Her clerks had created a homemade “Just Married” sign for the occasion (which you can see in the photos below). Another old friend of Professor Bobbitt’s, Yale law professor Akhil Reed Amar, sent down several bottles of Veuve Clicquot.

“It was lovely,” Professor Bobbitt recalled. “Unfortunately, we had to come back to New York that night because we had to fly out the next morning to Europe for our honeymoon.”

“Just Married”! Delightful! Very intimate! Too bad, though, that the bride is not, as rumored, a Turkish princess:

In response to this rumor, Professor Bobbitt quipped: “A charming thought — she definitely has a royal attitude toward my closets — but as far as I know, she is not a princess to any recognized authority other than her Jack Russell.”

Distributive politcs, economic growth, and the Simpsons

2012-02-02T16:05:16+00:00

Many moons ago, I wrote a paper (with Alberto Alesina) called “Distributive Politics and Economic Growth,” which remains one of my most heavily cited publications. The paper has a simple idea: in highly unequal societies, the median voter is more likely to demand high taxes on capital, which in turn can be adverse for growth. So high inequality leads to redistributive politics, which is bad for growth. We also supplied some cross-country empirical evidence that is consistent with the theory.

This idea has been resuscitated in recent discussions on the consequences of the rise in American inequality. In a speech that has received much attention, for example, Alan Krueger highlighted this line of thought (referring to a paper by Torsten Persson and Guido Tabellini contemporaneous with ours as well as more recent supportive empirical research at the IMF).

So it was particularly timely when Jose Tavares from Universidade Nova de Lisboa in Portugal sent me a report on the paper prepared by two of his students, Luís Fonseca and Miguel Aguiar. Ingeniously, the students explicate the paper using the Simpsons as a backdrop. It’s very well done, and worth a look. Here it is.

Fameball Libertarian Peddles Harvard Daughter for Fame and Money, Again

2012-01-31T19:00:05+00:00

According to his own website, Columbia grad Wayne Allyn Root ’83 (pictured right, next to Bob Barr) is “one of the most dynamic, charismatic, colorful, passionate, fiery, and outspoken Libertarian-conservative political personalities in America today.” He’s also a “business star”, a “small businessman extraordinaire”, and a “passionate capitalist evangelist.” Root’s most significant accomplishment, however, is being famous for writing paranoid emails in which he vigorously doubts Barack Obama’s graduation from Columbia.

He’s also famous for treating his daughter, who was admitted to Harvard in 2010, as a show animal. In 2008, he enlisted Dakota Root ’14 to deliver his own nomination speech for the Libertarian Party’s presidential candidate. And after Dakota got the big envelope from Harvard (and Yale, and Columbia, and elsewhere) Root immediately trotted her out on Fox News Channel—the entire story being that Dakota was homeschooled, and she got into Harvard. Also: Las Vegas’s public schools are really bad, so there. Unfortunately, Root did not seem to understand the irony of a radical libertarian sending his human issue to the least libertarian university imaginable, and bragging about it.

Two years after using his daughter to score political points, Root has written a magisterial essay on libertarianism’s idea of how education ought to work. (Root’s sole qualification here is the fact that his daughter got into Harvard, so you can trust his judgment.) Essentially, his big plan is: just be rich enough already to hire an army of private tutors for your children. So that’s how Dakota Root got into Harvard. Amazing. How has no one thought of this before?

While other kids spent their school days being indoctrinated to believe competition and winning are politically incorrect and hurt people’s feelings, Dakota was learning to relish competition and value winning.

While other kids were becoming experts at partying, Dakota was learning about sacrifice and discipline. While other kids were busy getting their drivers license at age 16, Dakota was studying for SAT exams, taking piano lessons, Spanish and French lessons, swimming lessons, tennis lessons, fencing lessons, and being tutored for academic excellence.

Listen, folks:

(It goes on.)

My advice as the home-school dad of a Harvard superstar scholar and athlete?

Take control.

Take charge.

Take action.

Be pro-active.

Become the CEO of your child’s future. “If it’s to be, it’s up to me.”

Only through self-reliance, personal responsibility and rugged individualism, can a parent change their child’s direction and super-charge their future.

Self-reliance: of course. Though we’re unsure how an eighteen year-old tended to by her “devoted Christian homemaker mom” and polished by a personal battalion of coaches and tutors is self-reliant, exactly. We’re also unsure how studying for the SAT at 16, or attempting to be trilingual, or participating in three sports (one of which is fencing), distinguishes Dakota from every other Harvard applicant from Riverdale. We’re pretty confident, however, that piano lessons have nothing to do with individualism—rugged or otherwise.

Why would Root—why would any politician—subject his daughter to public scrutiny? This is the Libertarian Party, so the answer probably has to do with money. Dakota is great publicity—Harvard! Homeschooling! Ayn Rand!—which means money. And Root really needs the money: since the Root Family Robinson bought a comically enormous, 7,000 square-foot McMansion for 1.725 million dollars, in 2002, the house’s value has depreciated 70%. Presumably, Root is trying to pay off the losses of his now-underwater mortgage with the profits of his second-greatest investment: his own children.

Which is kind of sweet, perhaps. But it’s also a little disgusting to watch a politician turn his own daughter into a stream of income, while making a caricature of his own party.

We're number 1!

2012-01-31T11:19:44+00:00

Ec 10 is still the largest course at Harvard.

Toby Roxane Designs

2012-01-31T07:20:40+00:00

Just designed a new website & logo for my friend Toby Roxane, a trés chic knitwear designer. Check it out and hit me up if you too are looking for a simple website, logo or illustration.

tobyroxanedesigns.com

Are federal government workers overpaid?

2012-01-30T15:23:35+00:00

Yes, says CBO:

Differences in total compensation—the sum of wages and benefits—between federal and private-sector employees varied according to workers' education level.
Federal civilian employees with no more than a high school education averaged 36 percent higher total compensation than similar private-sector employees.
Federal workers whose education culminated in a bachelor's degree averaged 15 percent higher total compensation than their private-sector counterparts.
Federal employees with a professional degree or doctorate received 18 percent lower total compensation than their private-sector counterparts, on average.
Overall, the federal government paid 16 percent more in total compensation than it would have if average compensation had been comparable with that in the private sector, after accounting for certain observable characteristics of workers.

How much would a Buffett Tax raise?

2012-01-30T12:28:18+00:00

Robert Samuelson has the numbers:

Obama’s still-vague Buffett Tax would apparently impose a minimum 30 percent tax rate on incomes exceeding $1 million....In September, the Congressional Budget Office estimated the 10-year deficit at $8.5 trillion. The nonpartisan Tax Foundation estimates that a Buffett Tax might now raise $40 billion annually. Citizens for Tax Justice, a liberal group, estimates $50 billion. With economic growth, the 10-year total might optimistically be $600 billion to $700 billion. It would be a tiny help; that’s all.

Harvard Student Hates Harvard for Being Harvard

2012-01-27T19:30:58+00:00

Harvard: we get it. You hate Harvard. But, at this point, it feels a tad bit old when professional illusionist Mitt Romney complains about Harvard’s “faculty lounge”, or aggrieved alumna Kaya Williams bleats about having to discuss Plato, or Canadian performance artist Misha Glouberman whines about living in a dorm. Because, come on.

Can we move on? Maybe let others complain about Harvard, or other things? (Like Yale professors, about not being able to talk to plumbers?)

We ask because the latest barrel of Harvard haterade, supplied this time by Nation intern and Harvard sophomore Sandra Y.L. Korn (pictured), isn’t another screed against Harvard’s elitism or intellectualism or insularity. It’s complaining about Harvard being Harvard, or something:

Why do so many Harvard graduates work in finance? Most students contend that they need the assured income of a finance job to justify their expensive Ivy League degrees or support their families. For some, this may be true. However, in reality, finance may often simply be an easy career choice for undecided students. Ivy League universities have institutionalized the culture that makes finance jobs so ubiquitous among graduates.

In a nut shell: Korn’s beef with Harvard is that she goes to college with future inhabitants of Greenwich, Connecticut.

Harvard, tell us: Isn’t that why people go to Harvard? To be among your swath of humanity? Korn isn’t some kind of . . . she couldn’t . . . OHHHH. Oh no. “Sandra Korn is a sophomore at Harvard College studying History of Science and Studies of Women, Gender, and Sexuality.”

That’s your problem right there. Unless you’re pre-law, Harvard really ain’t the place for the humanities undergrad. Think of Harvard President Drew Faust, who went to Bryn Mawr—wherever that is!

After protesting a recruiting event for Goldman Sachs, the international baby-panda rescue society, Korn tells Harvard to see the light:

This sparked an informative and important discussion on campus about the ethics of Wall Street jobs and also encouraged Harvard’s Center for Public Interest Careers to host a conference for students interested in pursuing public service careers. While these steps are important, destroying the well-paved road between the Ivy League schools and Wall Street will take a more dramatic cultural change on the part of students and administrators. Until we come to our senses, finance firms will continue to hire Ivy League students in disproportionate numbers.

Alright. Not to get too preachy, but the reason Goldman Sachs recruits Ivy League students is because (deep breath) the Ivy League heavily selects for students who excel at following rules and obeying authority. You don’t get into Harvard unless you enthusiastically heed the instructions of others, for years. That’s what makes the Ivy League so awesome: it’s filled with successful people! (As IvyGate’s Eve Binder once said: “Skip the kumbaya and go straight for the bonus!”)

And duh: Such unthinking obedience, much more so than intelligence, is the secret sauce of high finance. (There is really no other explanation for the apparently real Conde Elevator rip-off set at Goldman Sachs.) That being said, Harvard still needs scholars of feminist theory for the same reason Goldman still hires compliance officers: to burnish its image. We suspect, however, that it’s the Harvardian on his sleigh ride to the financial district, not Korn, who knows this best of all.

Star Yale Quarterback Lost Rhodes Scholarship Bid After Sexual Assault Allegation; Yale Daily News Buried the Story

2012-01-27T17:42:31+00:00

Last fall the national press fell in love with Patrick Witt, a Yale quarterback, and NFL hopeful, who gave up his finalist interview for a Rhodes scholarship so he could play in the Harvard-Yale game.

Now the New York Times reports that, in fact, Witt didn’t turn down the interview of his own accord: the Rhodes committee suspended his candidacy and cancelled his interview after someone (who was not a Yale official) informed it that Witt had been accused of sexual assault in September.

It’s not clear whether the Yale official who initially approved Witt to apply for the Rhodes knew about the sexual assault incident, for which Witt went through an informal disciplinary process (and seemingly faced no consequences?) — but it’s likely he did. Interesting factoid: Witt was a member of DKE, the Yale frat that made really horrible headlines for sexual harrassment a few years ago. So this is very ugly for Yale.

Witt is reportedly no longer enrolled at Yale (?) but is still finishing his thesis? Unclear.

But, wait. That the story was broken by the Times probably strikes you as odd; the Yale Daily News — second best collegiate paper in the land – is normally all over these types of scandals like white on rice. In fact, that might be the most amazing angle of this sorry story: Former YDN opinion editor (and IG editor emeritus) Alex Klein reports that the News had known about Witt’s Rhodes woes since as early as November, but the paper’s editor in chief, Max de La Bruyere, elected to sit on the story. We reached out to the News — asking “WTF???” — but haven’t yet heard back.

And, one last quick and relevant reminder: Witt’s football coach resigned in December after it was exposed that he lied about having been a Rhodes scholar finalist.

Support from Anonymous

2012-01-27T08:58:50+00:00

I don't know who this blogger is, but his or her first post is called "Mankiw is right. Buffett is wrong." And he or she puts the argument well (although I may not be objective here).

For High School Teachers and Students

2012-01-25T21:51:38+00:00

The Harvard Pre-Collegiate Economics Challenge is a competition for high school students studying AP economics. It is run by Harvard undergraduates and features one of my favorite economists as a guest speaker. This year it will be held on Saturday, March 31, 2012 from 9 am to 5 pm.

If you are interested in more information about this event, click here.

Two Reactions to the SOTU

2012-01-25T09:47:07+00:00

1. Last night President Obama continued his misleading claims about Warren Buffett's tax rate. David Leonhardt recalls that I rebutted those claims several years ago.

David usefully asks for a response to my rebuttal from the Center on Budget and Policy Priorities, a liberal-leaning research group in Washington. Chuck Marr, the center’s director of federal tax policy, emailed David back. Click through the link above, and read carefully what Mr Marr has to say. Does it respond to my arguments? No, not at all. Mr Marr just changes the subject. He follows the age-old advice for politicians: Don't answer the question they asked, answer the question you wish they had asked. This might work for some voters, but I am sure it won't for the careful analysts who read this blog. One might reasonably take Mr Marr's non-response as an admission that President Obama's claims about the taxes of Mr Buffett and his secretary don't hold up under closer examination.

2. I was disappointed, and even a bit surprised, that the President adopted the xenophobic approach to outsourcing and international trade. Usually, on issues of international trade, the President plays the role of grown-up and leaves it up to Congress to gin up populist ire. That is true of both parties. Recall that President Clinton pushed NAFTA through.

When President Obama bragged that his administration had substantially increased trade cases against China compared with his predecessor, it made me proud to be one of President Bush's advisers. (Not that the Bush administration was perfect on trade issues. It is just good to know we were better.) These trade cases include such things as anti-dumping claims, which in many cases are just the modern face of protectionism. Phill Swagel and I wrote about anti-dumping laws here.

At least I am consistent

2012-01-24T11:06:01+00:00

Here is the memo that Larry Summers sent to President Obama when the 2009 stimulus package was being debated. It was originally confidential, but somehow it has recently been made public and is now going viral.

I make a brief cameo appearance on page 11: "Greg Mankiw is the only economist we have consulted with who refused to name a number and was generally skeptical about stimulus." I explained my skepticism here. Of course, the fact that I was "the only economist" expressing skepticism reflects the range of economists that Team Obama chose to consult.

Mitch Daniels Is the Stoner Princetonian Who Might Save the GOP

2012-01-24T09:31:09+00:00

So, Mitt Romney, huh? While Mittens continues to alienate pretty much everyone with his proletarian LARPing and overall blasé demeanor, elements of the GOP are still holding out hope that there could be a late-entry candidate to replace him. (We’re going to assume that Newt bursts like an overripe pumpkin before the Florida vote.) Who, though? Right now—indeed, at this very moment—those mysterious Establishment Republicans are probably wheedling Princeton alumnus, Governor of Indiana, and total stoner Mitch Daniels ’71.

Tonight, Daniels will deliver the GOP response to Obama’s State of the Union address. The occasion raises vital questions. Like: who is Mitch Daniels? What eating club did he eat at? Which and how many drugs was he on? Here’s your IvyGate Cheat Sheet Thing©, The Mitch Daniels Edition:

Princeton

Woodrow Wilson ‘71, then Georgetown Law ’79 (campaign website)
Member of Charter Club, which uses sign-in (Daily Prince)
“Active in the campus antiwar movement” (Ibid.)
Member of Princeton’s College Republicans (Ibid.)
Vietnam: Daniels “legally deferred his eligibility while in college and after graduation his draft number, 147, was high enough that he was not called.” (Republic Candidates)

Drugs

“Daniels was arrested, indicted and convicted on charges of drug use as an undergraduate in May 1970”. (Daily Prince)
Which drugs? Weed, LSD, and unidentified pharmaceuticals. (Ibid.)
How much weed? Two shoeboxes full of weed. (Ibid.)
Drugs were an “unfortunate confluence of my wild oats period and America’s libertine apogee.” (Ibid, Washington Post)
What did Daniels get? A night in jail and a $350 fine. (Ibid.)
Was that normal? Ha, no.“Six months after [Daniels’s] arrest, the New Jersey Supreme Court decided a case involving an 18-year-old who was caught with a tiny amount of pot (clearly just for personal use) and got a sentence of two to three years in prison. (Reason.com.)

Miscellaneous

Favorite color: blue (VoteSmart profile)
Governor of Indiana since 2004
Senior advisor to Ronald Reagan
Director of the U.S. Office of Management and Budget under George W. Bush
His marriage is a Jonathan Franzen novel (Republican Candidates)
Has a personal cheerleading section led by William Kristol, Harvardian and Weekly Standard editor/founder (The Weekly Standard)
Slight resemblance to William F. Buckley, Jr., he of God and Man at Yale fame, maybe? Yes? No? Come on, it’s obvious.

But will he run for President?

“For a Republican hero to ride in on a white horse, it would take a scenario that verges on political science fiction.” (TPM)

Making universities obsolete

2012-01-23T22:55:54+00:00

Sebastian Thrun recently announced that he was leaving Stanford to found a free, online university called Udacity. This is based on his experiences teaching the famous intro to AI class, for free, to 160,000 students online.

Is this just Education for the Twitter Generation? Or truly a revolution in how we deliver higher education? Will this ultimately render universities obsolete?

I want to ponder the failings of the conventional higher education model for a minute and see where this leads us, and consider whether something like Udacity is really the solution.

Failure #1: Exclusivity.

In Sebatian's brilliant talk at DLD, he talks about being embarrassed that he was only able to teach a few tens of students at a time, and only to those who can afford $30,000 to attend Stanford. I estimate that I taught fewer than 500 students in total during my eight years on the faculty at Harvard. That's a pretty poor track record by any stretch.

It gets worse. I know plenty of faculty who love to give tough courses, in which they would teach really hard material at the beginning of the semester to "weed out" the weaker students, sometimes being left with only 2 or 3 really committed and really good students in the class. This is so much more satisfying as a professor, since you don't need to worry about tutoring the weaker students, and the fewer students you have, the less work you have to do grading and so on. There is no penalty for doing this - and rarely any incentive given for teaching a larger, more popular course.

Exclusivity is necessary when you only have so much classroom space, or so many dorms, or so many dining halls, so you have to be selective about who enters the hallowed gates of the university. It's also a way of maintaining a brand: even schools, like Harvard, with a "distance education" component go to great lengths to differentiate the "true" Harvard education from a "distance learning certificate," lest they raise the ire of the Old Boys' Network by watering down what it means to get a Harvard degree (not unlike the reaction they got when they started admitting women, way way back in 1977).

Failure #2: Grades.

Can someone remind me why we still have grades? I like what Sebastian says (quoting Salman Khan) about learning to ride a bicycle: It's not as if you get a D learning to ride a bike, then you stop and move onto learning the unicycle. Shouldn't the goal of every course be to get every student to the point of making an A+?

Apparently not. The common argument is that we need grades in order to differentiate the "good" from the "bad" students. Presumably the idea is that if you can't get through a course in the 12-to-13 week semester then you deserve to fail, regardless of whatever is going on in your life and whether you could have learned everything over a longer time span, or with more help, or whatever. And the really smart students, the ones who nail it the first time, and make A's in every class, need to float to the top so they get the first dibs on good jobs or law school or medical school or whatever rewards they have been working all of their young lives to achieve. It would not be fair if everyone made an A+ -- how would the privileged and smart kids gain any advantage over the less privileged, less intelligent kids?

It seems to me that this is completely at odds with the idea of education.

Failure #3: Lectures.

As Sebastian says, universities have been using the lecture format for more than a thousand years. I used to tell students that they were required to come to my lectures, and never provided my lectures by video, lest the students skipped class and watched it on YouTube from their dorms instead. Mostly this was to ensure that everybody in the class got the benefit of my dynamic and entertaining lecture style, which I worked so hard to perfect over the years (complete with a choreographed interpretive dance demonstrating the movement of the disk heads during a Log-Structured Filesystem cleaning operation.) But mostly it was to boost my ego and get some gratification for working so hard on the lectures, by having the students physically there in class as an audience.

Implications

I'm not sure whether Udacity and Khan Academy and iTunes University are really the solution to these problems. Clearly they are not a replacement for the conventional university experience -- you can't go to a frat party, or join a Finals Club, or make out in the library stacks while getting your degree from Online U. (At least not yet.)

But I think there are two important things that online universities bring to the table: (1) Broadening access to higher education, and (2) Leveraging technology to explore new approaches to learning.

The real question is whether broadening access ends up reinforcing the educational caste system: if you're not smart or rich enough to go to a "real university," you become one of those poor, second-class students with a certificate Online U. Would employers or graduate schools ever consider such a certificate, where everyone makes an A+, equivalent to an artium baccalaureus from the Ivy League school of your choice?

If not, is that because we truly believe that students are getting a better education sitting in a dusty classroom and having paid the proverbial $30,000 a year rather than doing the work online? This reminds me of my friends who have been through medical school, where the conventional wisdom is that doctors need to be trained using the classical methods (unbelievable amounts of rote memorization, soul-destroying clinical rotations and countless overnight shifts) because that's how it's been done for hundreds of years -- not because anybody thinks it yields better-trained doctors.

And I think universities have a long way to go towards embracing new technologies and new ways of teaching students. Sebastian makes a great point about the online AI class feeling more "intimate" to some students, in part because it really is a feeling of a one-on-one experience watching a video: you're not sitting in a big lecture hall surrounded by a bunch of other students, you're at home, in your PJs, drinking a beer and watching the video on your own laptop. A lot of this also has to do with Sebastian's teaching style, using a series of short quizzes that are auto-graded by the system. It is not just a lecture. For this reason I think that replacing live courses with videotaped lectures is not going far enough (and may in fact be detrimental).

Another benefit of the video delivery model is that you can replay it infinitely many times. Missed a point? Confused? Rewind and watch it again. What about questions? In large courses almost nobody asks questions, apart from the really smart students who should shut the hell up and not ask questions anyway. There are plenty of ways to deal with questions in an online course format, just not live, during a (limited time) lecture in which your question is likely going to annoy the rest of the class who almost certainly gets it already.

Risks

I'm going to close this little rant with a few caveats. It's fashionable to talk about "University 2.0" and How the Internet Changes Everything and disruptive technologies and all that. But a shallow, 18-minute video on the first 200 years of American History can't replace conventional coursework, deep reading, and essays. You can't tweet your way through college. Learning and teaching are hard work, and need to be taken seriously by both the student and educator.

Although expanding access to education is a great thing, it's simply not the case that everyone is smart enough to do well in any subject. For example, I'm terrible at math (which is why I'm a systems person, natch), and damn near failed to complete my CS theory course requirement at Berkeley as a result. Education should give everyone the opportunity to succeed, but the ultimate responsibility (and raw ability) comes down to the student.

Finally, it goes without saying that the most important experiences I ever had in college were outside of the classroom. I'm not just talking about staying up late and watching "Wayne's World" for the millionth time while drinking Zima, I'm talking about doing research, building things, learning from and being inspired by my fellow students. Making lectures obsolete is one thing; but I'm not sure there can ever be an online replacement for The College Experience writ large. Though 4Chan seems to be a pretty close approximation.

Penn World Table Bleg

2012-01-22T16:02:22+00:00

I need some help from the growth empiricists out there. If you aren't one of them, stop reading. Continuing will be a waste of your time.

For researchers studying economic growth, one of the standard resources for cross-country data has been the Penn World Table. My 1992 paper with David Romer and David Weil (my most cited paper by a large margin) used this resource, as have numerous other papers in this literature. In my intermediate macro book, I present a couple of figures presenting some of these data.

Here's the problem: It seems that the data have changed substantially in the most recent revision, and I cannot figure out why.

My intermediate macro text shows a scatterplot of per capita income and the investment share of GDP. These two variables are strongly positively correlated. When revising this figure with the newest data, I found that the correlation declines substantially (though is still positive). When I looked into the source of the change, I found that the historical estimates of the investment share of GDP have changed, in some some cases by a lot.

Let me give you an example. Take the investment share for Ghana in the year 2000. According to version 6.2 of the data, the investment share was about 5 percent. In version 7.0, it was about 21 percent. This is one of the larger changes I have found, but it is not the only country for which there are sizable changes in the reported investment share of GDP.

I understand that the changes may be related to new information about the relative price of investment goods. But the changes seem too large to be explained so easily, although perhaps I am wrong about this. If anyone can shed light on the matter, I would be greatly appreciative. Send me an email if you can help.
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Update: I have not yet fully figured this out, but readers have sent me some useful links. If you are interested, click here, here, and here.

How to Reform the Tax System

2012-01-21T18:53:53+00:00

Click here to read my column in Sunday's NY Times.

Mitt Romney and His Economic Advisers

2012-01-21T08:00:31+00:00

An article in the National Journal.

A Conference for Undergrads

2012-01-20T15:02:30+00:00

In international economics.

Five Observations about Progressivity

2012-01-20T10:15:09+00:00

There has been a lot of discussion recently about tax progressivity. A few observations on the topic:

1. The U.S. personal income tax is generally progressive, and substantially so. Click here to see the numbers. The average tax rate for tax returns with over $1 million in income is 25 percent. The average tax rate for returns with income between $50,000 and $75,000 is 7 percent.

2. It is arguably better to use an average tax rate that is all-inclusive. That is, we should include not only personal income taxes but also payroll and corporate income taxes. CBO analysts regularly do that. They find a substantially progressive tax system, as I have pointed out before.

3. If we added transfer payments (which are essentially negative taxes), we would find an even more progressive fiscal system. Those data are harder to come by, as data on transfers are rarely integrated with data on taxes.

4. It make little sense to aggregate payroll taxes with personal income taxes and ignore corporate income taxes. A corollary: Paul Krugman should be more careful when reproducing graphs from partisan think tanks.

5. All of these calculations are static. They ignore the general-equilibrium effects that arise as the true burden of taxation is shifted by behavioral responses. In essence, these calculations are made under the implicit assumption that factors of production are supplied inelastically, so the tax stays where legislators put it. Of course, that assumption is implausible, especially in the long run. True general-equilibrium tax incidence is very hard, and as far as I know, reliable estimates on it are not readily available.

----
Update: Oddly, rather than admitting an oversight, Paul Krugman continues with the same misleading claims in his column in Friday's paper. Even more oddly, at his blog, he uses the tax-shift argument (my point 5 above) to justify the exclusion of the corporate tax. Of course, tax shifting because of behavioral responses applies to all taxes, not just corporate taxes. The implication of tax-shifting is not that one should just ignore corporate taxes, as Paul chooses to do, but rather that all static analyses of the distribution of the tax burden should be taken with a grain or two of salt.

On SOPA

2012-01-19T23:25:03+00:00

Several readers have asked me my opinion of SOPA, the Stop Online Piracy Act. I fear that in this case, the devil is in the details, so I find it hard to reach a strong view. But I have been disturbed by the relatively knee-jerk reaction of the anti-SOPA crowd. This is a hard issue, and when someone makes it sound easy, I feel like they haven't thought it through very thoroughly.

The anti-SOPA crowd argues that this is a matter of basic liberty. But it's not. In a free society, you don't have the freedom to steal your neighbor's property. And that should include intellectual property. Moreover, it is the function of the state to enforce those rights. We don't leave it up to civil litigation to protect property rights (although that is part of the solution). We give the state substantial powers to stop theft. Just as owners of tangible personal property have good cause to call for a police force and a system of criminal courts, owners of intellectual property have good cause to ask the state to stop those who would infringe on their rights.

This is an important economic issue for the United States. We are large producers of intellectual property: movies, novels, software, video games, TV shows, and even economics textbooks. If offshore websites find a way to distribute this intellectual property without paying for it, it is as if organized crime were stealing merchandise from a manufacturing firm at the loading dock. It is neither efficient nor equitable.

Maybe SOPA goes too far. As I said, I am not knowledgeable enough about the details to judge. But we need something along these lines. Believers in free enterprise, property rights, and economic liberty should be among the most vocal advocates of laws to stop intellectual piracy.

Should I put this award on my CV?

2012-01-18T17:58:54+00:00

Peter Wirzbicki reports:

I just got back from Chicago, where, along with attending the American Historical Association, I participated in a series of protests held by Occupy Chicago, along with CACHE (Coalition Against Corporatization of Higher Education) that targeted the American Economics Association (AEA). It's not everyday that the worlds of street protests and academic conferences blend so well. But then again, part of the point was to “puncture the bubble” that academic economists live in.

The protesters gave out “alternative” awards for Most Conflict of Interests (Columbia’s Glenn Hubbard), Intellectual Narrowness (Harvard’s Greg Mankiw), and top prize, the “Toxic Waste of Space Award” (Harvard/Obama administration’s Larry Summers). Other than a brief yelling match that one protester got in with a professor, the tone was light and fun. Protesters “accepted” awards acting as Mankiw, Hubbard, and Summers (who reminded us how much smarter he was than us) and served “Rahmon” noodles, in honor of the Chicagoans impoverished by Rahm Emmanuel’s neoliberal policies. Overall a lot of fun, albeit fun that might have gone over the heads of the random shoppers on Michigan Ave.

"Beggar-thy-neighbor" versus "beggar-thyself" policies

2012-01-18T15:22:52+00:00

There is an important difference between domestic economic policies that create benefits by imposing costs on other nations ("beggar-thy-neighbor policies") and those whose economic costs are borne primarily at home though they might affect others as well ("beggar-thyself policies").

Beggar-thy-neighbor policies need to be regulated at the international level because a nation, left to its own devices, has the incentive to pursue zero-sum policies at the expense of others. This is the strongest argument for subjecting China’s currency policies or large macroeconomic imbalances like Germany’s trade surplus to greater global discipline than currently exists.

However, “beggar thyself” policies are not the consequence of a failure of international cooperation. They reflect either a deliberate domestic decision to sacrifice economic efficiency to a competing social value, or, in the worst case, a failure of domestic politics.

Consider, for example, agricultural subsidies, bans on genetically modified organisms, or lax financial regulation. While these policies might impose costs on other countries, they are deployed not to extract advantages from them, but because other domestic-policy motives – such as distributional, administrative, or public-health concerns – prevail over the objective of economic efficiency.

The case for global discipline is in fact quite weak with beggar-thyself policies. After all, it should not be up to the “global community” to tell individual countries how they ought to weight competing goals. Imposing costs on other countries is not, by itself, a cause for global regulation. (Indeed, economists hardly complain when a country’s trade liberalization harms competitors.) Democracies, in particular, ought to be allowed to make their own “mistakes.”

For more, see here.

Home for the Holidays

2012-01-18T13:00:43+00:00

From a University of Minnesota graduate student:

Sad News

2012-01-17T09:43:56+00:00

Michael Mussa has passed away.

The Strategic Bequest Motive

2012-01-16T17:03:11+00:00

A user of my intermediate macro text writes to me:

I always teach the strategic bequest motive in intermediate macro, mostly because it gets the students to think more deeply about why people save. While I have never really thought that strategic bequests are an important determinant of savings behavior, this story in today's NY Times moved my priors somewhat.

If you don't recall what the strategic bequest motive is, you can look it up in my text, or read the original research at this link.

The Santorum Tax Plan

2012-01-15T13:37:04+00:00

As seen by economist Kevin Hassett.

Dear Student

2012-01-13T12:02:00+00:00

A letter from econ prof Art Carden to students everywhere.

Remarks on Proposed Middle School De-leveling.

2012-01-13T01:59:30+00:00

Context: The Maplewood-South Orange School District, which I attended my entire public school career, is in the process of de-leveling the middle school. The district belongs to a community with many wonderful and unique characteristics: suburban, easy public access to NYC, artistically vibrant, and both racially and economically diverse. But the leveling system reveals an uglier side, as the school is blatantly segregated along racial (and socio-economic) lines.

You can read the district’s proposal here. A paper profiling three case studies of successful elimination of “curricular stratification” can be found here. Its focus is on how to de-level, but the endnotes contain an overview of the literature on why, with two decades of papers discussing the benefits of heterogeneous grouping. Our district is in communication with one of the district’s profiled, and seems to be following the steps outlined in the paper.

Finally, I was inspired to prepare these remarks after attending a discussion of alumni last week. It was a powerful post-mortem on our public school experiences. Hearing first-hand the vastly different experience some of my peers had in the very same schools has motivated me to get involved in this issue (again). The discussion was hosted by a filmmaker and fellow district alumnus Cris Thorne, who is working on a documentary called Deleveling the System. Excerpts of the discussion are online here and here. Additionally, I highly recommend Cris’s earlier documentary (produced as a high school student!), One School, for more background.

Finally, I should note that I was unable to read the complete transcript, because I had prepared for the standard 3 minutes of public comment and found out upon arrival that we were restricted to two minutes.

My name is Rebecca Rojer, CHS class of 2005.

As a k-12 alumnus of this district, it is clear to me that the leveling system is not colorblind. In both the classrooms and the hallways, white students are consistently given the benefit of the doubt, while black students are assumed to be trouble-makers and low achievers. Students enter school with different degrees of preparedness, but the leveling system calcifies these differences into inequalities.

Worse, the leveling system turns prejudice into self-fulfilling prophecy. Low expectations correlate to low performance. For example, women perform worse on math exams after being told there is a genetic difference in math ability between the sexes.

There is clearly a place for grouping students by skill-level and motivation. But it is not always beneficial, even for “top” students. This is especially true of the turbulent and vicious middle-school years, where academic success is better predicted by behavior and obedience than by aptitude.

There are many styles of learning – fast, slow, deep, shallow, literal, abstract, disciplined, intuitive – yet we conceive of “high” and “low” achievers through standardized tests that are valued precisely because they simplify everyone onto a single metric. When testing becomes the end game of education, we all suffer. Excessive reliance on testing dehumanizes students and ultimately sabotages their education. Students who feel valued and respected are more apt to learn. The infuriating paradox in our district is that top-level classes are discussion based, encouraging of critical thinking and debate, while lower-level classes too often focus exclusively on test prep.

Education is about empathy, respect, creativity, and citizenship as much as it is about literacy and arithmetic. These values reenforce each other. Knowledge is power, and schools should empower students. Let’s teach compound interest alongside the history of redlining and predatory lending. Education is about life, not the GEPA.

There is much to be gained by heterogenous classes. One of the best ways to learn something is to teach it to a peer. And one of the best ways to be challenged, is to be confronted by someone who’s experiences and values are different from your own. That is what I most cherish from my education in this district. And for that, I really have to thank a group of my classmates, some of whom who are here tonight, for literally stopping classes my senior year to create a conversation among students in different levels.

Lets not forget, we’re all in this together. Today’s students are tomorrow’s voters, workers, mortgage-signers, taxpayers, parents, neighbors. Your children’s lives are affected not just by their own education, but by the education of everyone who participates in this society. To fret about the rigor of your special snowflake’s 6th grade social studies curriculum in light of massive, structural inequality is short-sighted and just plain wrong.

There is a wide-spread assumption that integrating classes will destroy our education system and wipe out our property values. Students can feel this very early on, and it is exactly this kind of attitude that perpetuates inequality. The best way to lift your property values is to do what’s right: work towards a system that benefits all students instead of only half. Lets reject the politics of fear, and instead move forward with empathy, creativity, and determination.

Harvard Faculty Immature, Harvard Professor Dramatic, The Sun Goes Up, The Sun Goes Down

2012-01-12T21:19:28+00:00

In the Mean Girls sequel that is Harvard’s Faculty of Arts & Sciences, people saying stupid things out loud, contriving secret meetings wherein others conspire to get rid of people they don’t like, and calling each other names (like “Ariel Sharon”), all form the everyday lives of mature, reasonable, career scholars of obvious purpose and resolve, because they teach at Harvard, and not the Extension School.

So, it’s no wonder that, after Harvard economics professor Subramanian Swamy wrote a strange, inflammatory article for an Indian newspaper in which, according to the Boston Globe, Swamy advocates that non-Hindus vote only “if they proudly acknowledge that their ancestors are Hindus” and for “a national law prohibiting conversion from Hindu religion to any other religion,” a coterie of Harvard professors conspired to get rid of Swamy, in some way!

Rather than, you know, talk to him about it, or write an unnecessarily long article for the Chronicle of Higher Education, the rest of Harvard’s professoriate secretly canceled his summer classes, thereby removing him from the faculty’s cool-kid treehouse. Because that’s how grown-ups operate: in a clandestine bunker beneath Massachusetts Hall, furtively deleting certain classes from the course catalog. And this was after 40 of them called for his dismissal anyway, and after Harvard invited him back for next summer. Swamy found out he was fired via, yup, a Google News alert on his own name. (Haven’t we all, though?) Following which, Swamy took to Twitter, where he called his former colleagues “leftists”:

The people who cut me out are leftists who have nothing to do with economics. There’s no allegation that in my class I said anything offensive. There’s no allegation that it has affected my research. It’s almost like the Spanish Inquisition – they didn’t give me a chance.’’

Harvard’s Faculty: Almost Like the Spanish Inquisition. To his credit, Swamy offered to The Globe what is surely the saddest thing said about Harvard, or any Ivy League school, ever:

For his part, Swamy has moved on. He has no plans to sue Harvard. Actually, he said, he loves the school, where he has studied and taught on and off since 1962. He will not be seeking an academic position elsewhere: ‘It’s Harvard or nothing.’

Judging Presidents

2012-01-12T19:34:53+00:00

Ezra Klein polls CEA chairs.

The Union Jack Won't Be Missing The Cross of St. Andrew Anytime Soon

2012-01-11T20:28:25+00:00

On Feburary 4^th, the Scotland Rugby Team will stand on the pitch of Edinburgh’s Murrayfield Stadium and listen to “God Save the Queen.” The 60,000 tartan supporters, UK citizens, will remain largely silent throughout. A boo or two may even make its way through the stands. Then with saltires waving and bagpipes playing, the Scots will proudly sing:

O Flower of Scotland,

When will we see your like again

That fought and died for

Your wee bit hill and glen.

And stood proud against him,

Proud Edward’s army,

And sent him homeward

To think again.

On this day, just as at the Battle of Bannockburn in 1314, the opponent is England. The auld enemy. This ancient rivalry, once fought with pikes and guns, entered the sporting world long ago and now wages within Westminster and Holyrood.

First Minister Alex Salmond’s Scottish National Party is pushing for a referendum on independence for the home nation. Ironically, David Cameron and his Tories, the bastions of unionist politics are also pushing for a referendum on Scottish independence. As with so many things in life, it all comes down to timing. The SNP want the vote to occur in the fall of 2014; whereas Westminster prefers a vote within the next 18 months. Cameron’s call for an early referendum turns national self-determination—the very foundation of independence movements—against the SNP. It may just pay off.

It’s all-too tempting to say that this vote is a boon for Scottish nationalists. But in reality this vote offers the UK government the chance to put the national question to bed for the foreseeable future. According to UK law, a national assembly cannot simply hold a referendum on independence. Westminster must vote to give it that right temporarily, something which the standing government is willing to do. And soon.

David Cameron is no fool. At least not in this instance, he isn’t. Sure, he’s betting that the Scots will opt for the economic and military security of the UK over the allure of complete autonomy. But any betting shop from Aberdeen to Edinburgh will tell you Cameron has good odds. Only a third or so of Scots support full independence and that figure has stagnated over the 4 years the SNP’s held power in Scotland. The SNP is no doubt aware of these troubling figures, which partly explains its preference for a later vote. The party must rally supporters not just to the nationalist cause, but to the cause of independence—two ends that aren’t necessarily the same thing.

A vote for the SNP does not inevitably make one a champion of a future Scottish state. Scots might vote for the SNP because the party is deemed better than Labour or the Conservatives. Or because they are in favor, not of independence per se, but of more independence. Simply put, SNP voters want the increased devolution of powers from Westminster, including taxation policy and welfare programs. The Scots aren’t willing to sever historical ties just yet. It is quite possible that greater devolution will eventually beget the desire for full independence, though the aforementioned polling data states otherwise.

Some three hundred years have passed since Scotland last stood as an independent state. Though still part of the UK, Scots now control their own national destiny. That destiny appears to remain a home nation of the UK, barring any more Thatcher biopics or discoveries of oil in the North Sea. While it’s too soon to call Cameron’s move a masterstroke, it looks likely that he was able to use the very principles and instruments of the nationalist movement—namely self-determination and devolution, to preserve the union. When the referendum does come and the votes are tallied, Cameron will be left smiling. And Salmond?

He’ll be sent homeward.

To think again.

Angry Emailer Sara Ackerman: I am the Lawrence Summers of NYU

2012-01-11T14:14:01+00:00

Columbia University recently bested its chief rival in everything, NYU, by coming up with a slightly more complicated version of the Occupy Wall Street “course” NYU now offers. But NYU has won the much more entertaining prize of which is more pointlessly dramatic, after a senior there compared herself to Harvard’s former president, Lawrence Summers, for some reason.

Sara Ackerman (pictured), a student in NYU professor Caitlin Zaloom’s senior research seminar, recently turned the class into a strange theatrical production involving a 3,000-word script of craaaaazy emails to her professor and NYU administrators, in which she refuses, against Zaloom’s instructions, to visit Zuccotti Park, in the day time, because people there are rude and gross. Oh, and the drama. Bribery! Danger! Nepotism! Drama drama drama. To quote:

I have no history of mental health issues, I have never been written up by an NYU security guard, I have no criminal record, I have an above average GPA, impressive extracurricular activities, an amazing resume with great recommendations/references, 3 post-graduation job offers, and I have sustained wonderful relationships with many of my previous employers, and NYU professors, over the years.

And:

Now would be a good time to step in—unless of course, you still think that I am bluffing about going to the press–remember, I know people–close family friends, in fact–who work for:

1. WSJ
2. The NY Observer
3. NYT
4. The Washington Post

I have already written the op-ed, and a draft has been approved by one of the reputable newspapers listed above.

And!

I have over 1,000 friends on facebook, and if Professor Zaloom does not resign, or is not fired by 9 am tomorrow morning, I will publish every single email exchange we have had, on my facebook account.

Ackerman eventually email-bombed the listserv of NYU’s Department of Social and Cultural Analysis, at 3:30 AM, to ask them whether they’d heard of Harvard (and something about Cornel West):

On a side-note have you ever heard of that mega-university in Cambridge, Mass. called Harvard?Long story short, they had a few disputes between a tenured professor, and a big man on campus, and look what happened in the end:

They swapped him:

http://en.wikipedia.org/wiki/Lawrence_Summers

For him:

http://en.wikipedia.org/wiki/Cornel_West

And got a PR nightmare—does anyone see the parallels? Or do I have to continue tospell it out for you, as I have been for over 2 months?

Look, neither Summers nor West is perfect, but why don’t you do a little research to see who was more deserving of a prominent position at Harvard?

Sara Ackerman: The Lawrence Summers of NYU. Really, though: read the whole thing.

(In less absurd, Columbia-related news, Christopher Coles, male lead of last year’s Operation Ivy League, could get parole for selling pot to an undercover officer, if he finishes a year-long residency in rehab. Beat that, Ackerman!)

The Liquidity Trap may soon be over

2012-01-11T07:59:53+00:00

About a decade ago, I wrote a paper on monetary policy in the 1990s (published in this book). I estimated the following simple formula for setting the federal funds rate:

Federal funds rate = 8.5 + 1.4 (Core inflation - Unemployment).

Here "core inflation" is the CPI inflation rate over the previous 12 months excluding food and energy, and "unemployment" is the seasonally-adjusted unemployment rate. The parameters in this formula were chosen to offer the best fit for data from the 1990s. You can think of this equation as a version of a Taylor rule.

Eddy Elfenbein has recently replotted this equation. Here it is:

The interest rate recommended by the equation is the blue line, and the actual rate from the Fed is the red line.

Not surprisingly, the rule recommended a deeply negative federal funds rate during the recent severe recession. Of course, that is impossible, which is why the Fed took various extraordinary steps to get the economy going. But note that the rule is now moving back toward zero. As Eddy points out, "At the current inflation rate, the unemployment rate needs to drop to 8.3% from the current 8.5% for the model to signal positive rates. We’re getting close."

“A Handy Guide For The Easily Distracted”

2012-01-11T04:50:39+00:00

A Handy Guide For The Easily Distracted by Miranda July

How much are new econ PhDs paid?

2012-01-10T19:44:54+00:00

The results of a survey:

Responses from 90 institutions indicate that the average expected salary offer for the 2011-12 academic year is $89,155.... The average expected offer by Ph.D. degree granting institutions [is] $99,269.... The Top 30 institutions in the sample report an average expected offer of $115,000.... Bachelor and Master degree granting institutions report an expected offer of $74,520.

Penn Student’s Annoying Email the Latest in Ivy League’s Obsession with Numbers

2012-01-10T16:30:25+00:00

A few days before Christmas, some poor Penn student in computer science professor Steve Zdancewic’s “Programming Languages and Techniques” class didn’t like the grade Zdancewic (or, probably, one of his 16 assistants) posted for him, and, yup, immediately dashed off a bothersome email to say so.

Less important than how or why The Daily Pennsylvanian posted this email—the student sent it to the listserv for a class of 200-odd students, duh—is the dark, hilarious content therein. Shall we?

“It’s possible I’ve made a calculation error . . . but I do not believe so.” Or, YOU ARE WRONG. The two subsequent emails are sort of tedious—Zdancewic tells him what’s what and that’s that, then the student basically calls him incompetent, and that he (the student) is “confused.” And so on. Still, it’s sort of amazing to see this example, in fine detail, of the Ivy League’s historic and rather total obsession with its own quantification. This is a habit seen in the daily newspapers’ endless admissions coverage—e.g., see here, and here, and here, and here, and here—plus, it goes without saying, the U.S. News & World Report rankings and its imitators, which are always world-stoppingly important and intrinsically meaningful.

But take anything the Ivy League likes. Harry Potter, let’s go with. (Bear with me.) The New York Times once published an 18-year-old’s complaint about how the Ivy League and its array of imitators constantly compare themselves to HP. Or an element thereof, like Hogwarts. (To which some bothered Penn students replied!) A very big deal, all of it. Anyway: HP is attractive, and immediately so, to an adolescent child for the same reason the Ivy League is attractive, immediately so, a few years down the road. Both are bound by seemingly but not actually meaningful numbers. Which is sort of exhausting to explain, but let’s try. There are . . . SEVEN books . . . THREE magical schools . . . in one of which are FOUR houses . . . SEVEN hor-whatevers . . . THREE death things; there are . . . EIGHT schools . . . TWELVE colleges at one of them . . . TWELVE houses (different!) at another . . . THREE real schools . . . that accept TWO PERCENT of applicants, etc., etc.

Or take the Eduardo Saverin character in The Facebook Movie, humblebragging: “I made the second cut.” Not “the cut” or “the next cut”; “the second cut.” Or take your excessively groomed college tour guide mentioning, to the shared awe of every baby boomer parent born west of Pittsburgh, how many millions of books the university library contains, as though a prospective student might make a decision based on that figure. Or “self-help bro” (and ’00 Princeton alum) Timothy Ferriss’s The 4-Hour Workweek, which kind of makes fun of itself. Or, back at the turn of the century, Dr. Pierce’s Five Foot Shelf, and Princeton’s greatest invention, the SAT.

Never numbers as in grades, though. That implies a concern for the quality of one’s work or an interest in the material. Which, well! If you read the student’s email, it sounds like he’s negotiating the price of a plane ticket, or checking his taxes with his obviously incompetent accountant. Or, for that matter—in some distant, horrible future—wrapping things up at 200 West Street before cabbing it to his extremely classy West Village 2BR.

The Iraqi Christian's Dilemma

2012-01-09T22:15:34+00:00

Christians in Iraq belong to some of the oldest Christian sects in the entire world, but since the United States pulled out its troops last month, many believe that their future may be threatened. The rise of militant Islam has caused a Christian exodus from Iraq, even during the American occupation.

It is always hard to know how best to defend minority groups – especially religious ones – in hostile contexts. Considering the recent pullout, any pressure on the Iraqis by the American government may do more harm than good, since it could be miscontrued as an attempt to promote Christianity at the expense of the Muslim majority. There has certainly been a vocal anti-Muslim minority since the September 11th attacks in the U.S.; one needs only to look at the controversy over the construction of the Muslim Community Center at Ground Zero to see that. Though this has of course never been the official stance of the American government or even of the vast majority of the country, there is still a pervasive international view – especially in the Middle East -- of the United States as a country that often opposes Muslim interests. American foreign policy has already been damaged by these assumptions on the part of both Muslim and non-Muslim states; it would hardly help our already somewhat precarious position to “confirm” them.

Of course, the Iraqi government should promote the rights of Iraqi Christians independent of international pressure, but thus far the new government has failed to take decisive action on this critical issue. In the meantime, the Iraqi Christians have faced persecution. Many have already been driven from the country: there used to be 1.6 million Christians in Iraq, but now there are no more than 400,000. Most of them have fled to Turkey, seeking a more tolerant social and political climate. Nevertheless, these refugees continue to face a difficult road because the persecution of religious minorities is a problem that extends far beyond the borders of war-torn Iraq.

Owing to the fragile political situation in Iraq, the protection of Iraqi Christians poses a daunting challenge. International pressure from powerful countries will likely put the new Iraqi government on the defensive, and action from non-government actors may prove to be fruitless. Perhaps the solution is for the local, marginally more tolerant Muslim democracies (such as Turkey, Lebanon, and others) to put pressure on their newly independent neighbor. Of course, few of these largely Islamic governments have shown a strong inclination to defend the rights of religious minorities at all, however much they should from a human rights standpoint. Even if there is no expedient solution, the problem is not one that we can ignore. As we celebrate the end of the War in Iraq, we need to make sure that Iraq’s persecuted minorities are not forgotten. It is vital that Iraq’s fledgling democracy finds a way to avoid becoming a tyranny of the majority.

Kazakhstan and the "Road to Democracy"

2012-01-09T22:06:29+00:00

The riots that have been rocking Southwestern Kazakhstan since Friday have already led to forty casualties and at least fourteen deaths as protestors clash with police. Official government sources have referred to the rioters as mere “hooligans” and remain confident that the government will be able to put down the protests. They continue to assure outside observers that oil production will not be interrupted by the protests. Even so, the situation is reminiscent of the countless anti-government protests that have been spreading across the Middle East and Central Asia all year. Kazakhstan’s government seems to need only a small push to be on the verge of collapse – probably for the best. Whether it is the Arab Spring-esque protests spurred by disgruntled oil workers (reminiscent of the protests that started the situation in Libya) or the pervasive government corruption, there needs to be a stark shift in power if Kazakhstan is to continue on its quest to become a full-fledged democracy.

The Kazakh government shut down cell phone towers and Internet access in Zhanaozen following President Nazarbayev’s decision on Friday to declare a 20-day state of emergency in the province: Mubarak’s government acted similarly in the early days of the Arab Spring. The hacker network Telecomix has been attempting to secure Internet connection for people in the affected areas by providing free dial-up servers and publishing instructions on how volunteers can establish their own dialup service. The network has been successful before, creating modem connections for Egypt’s protestors earlier this year.

The two situations are not completely analogous, since as of now none of the protestors have been calling for Nazarbayev’s removal from the presidency of the former Soviet province. So far they have only been protesting mistreatment by the state-owned oil companies, including the waves of layoffs that occurred at the end of the summer. Nazarbayev’s hold on the presidency seems secure: though the government has held elections during his 20-year tenure, no one has run against him. Furthermore, in 2007, the Kazakh parliament lifted Nazarbayev’s term limit, effectively giving him the ability to remain in office for the rest of his life: all future presidents, however, will be limited to two terms. He has effectively become the state; as the only president since Soviet rule ended in 1991, it is unclear what would happen to Kazakh democracy were he to step down.

Corruption is an enormous problem in Kazakhstan, and the president himself is believed to have transferred up to $1 billion from the state-run oil companies to his own private bank accounts. He may also benefit from a friendship with a Kazakh-Israeli businessman, Alexnder Mashkevich, who may control up to one quarter of the Kazakh economy. The U.S. Justice Department investigated James Giffen, an American former advisor to Nazarbayev, on the charge of bribing the president for exclusive control over oil fields in northwestern Kazakhstan; Giffen pleaded guilty to one count of making an unlawful payment to a senior Kazakh official.

All this coupled with claims of mistreatment from the oil workers – all of whom work for state-owned firms -- does seem to indicate an important need for reform in Kazakhstan. It is as yet unclear whether the current riots will lead to a larger movement against the government, and as of now, it doesn’t seem that it will, though most information leaving the country is released by official government sources. Perhaps it is time that Nazararbayev take his own words to heart in an Op-Ed he wrote for the Washington Post in March of this year: if Kazakhstan’s road to democracy is “irreversible”, maybe he is an obstacle that needs to be overturned.

Taken For Granted: Brazil's Forgotten Laborers

2012-01-09T22:00:11+00:00

In 1888, Brazil became the last country in the Americas to abolish slavery. However, even today, many Brazilians – some say as many as 250,000 – are working under conditions not so dissimilar to those faced by slaves over a century ago.

In the northeastern state of Pará, slaves are commonly the ones who do the backbreaking work of turning wood into charcoal.

The men and women are often from neighboring states, most of which are extremely poor and have high unemployment rates. The charcoal farms send recruiters to poor villages, where the men are promised high wages: instead, they find that the companies have created massive debts for them at company stores, and the majority of their wages goes into paying it off. The conditions they live under are just as horrendous: they are not given any protective gear, live in wooden shacks, and many are constantly sick from malaria-infected mosquitoes that are rampant in the newly deforested jungle.

The Brazilian government has been vehement in pursuing those who use forced labor, setting up a Mobile Inspection Unit. The unit has freed 40,000 slaves since its inception, often only fifteen to twenty at a time. They compensate and send home workers and fine the farmers. This approach has discouraged some farmers from using forced labor by reducing their profit margins, but the fact remains that no one has ever been arrested or had their property confiscated. Furthermore, the sheer size of the area that the unit has to inspect makes total eradication of the practice unlikely: Pará is one of the largest states in Brazil, and its inner sanctum is practically inaccessible to most vehicles.

Pig-iron, an essential component of steel, is often produced using charcoal from these farms. These producers are extremely powerful. Brazil exports about 10 million tons of pig-iron each year, and the industry is worth over two billion dollars. There are some industry-based efforts to stem the flow of tainted charcoal: when evidence of slave labor was revealed in 2004, the government and producers established a national pact to monitor the entire production chain, and fifteen companies created the Charcoal Citizens’ Institute (CCI), a way for companies to ensure that no part of their production is supported by slave labor.

However, membership is completely voluntary, so many companies simply ignore it. COSIPAR, a large pig-iron plant that supplies over 300,000 tons of pig-iron to the United States each year, let its membership in CCI lapse in 2009. Its charcoal suppliers have been raided multiple times for using slave labor; it was even fined for purchasing charcoal from such farms. COSIPAR supplies National Material Trading (NMT), an American company to whom major American companies like General Motors, Ford, and Whirlpool were linked.

Since the issue first appeared on the international stage in 2006, General Motors and Ford have both stopped purchasing pig-iron from NMT. However, Whirlpool refused to comment when a recent Al Jazeera segment reached out to them. Though this does not necessarily mean that they continue to use it, they have not publicly rejected their claims to NMT nor released any statements declaring their intent to discontinue their association with the company or to monitor their supply chain more thoroughly.

The issue of modern slavery is usually one that is associated with sex trafficking. It is often easy to forget that slavery exists in many other forms in the modern age, even those that seem outdated; we still use products every day that were created using the work of slaves, just as we would have two hundred years ago.

Pigovian taxes save lives

2012-01-08T06:23:18+00:00

New research via the NBER:

On January 1, 1991, the federal excise tax on beer doubled, and the tax rates on wine and liquor increased as well. These changes are larger than the typical state-level changes that have been used to study the effect of price on alcohol abuse and its consequences. In this paper, we develop a method to estimate some important effects of those large 1991 changes, exploiting the interstate differences in alcohol consumption. We demonstrate that the relative importance of drinking in traffic fatalities is closely tied to per capita alcohol consumption across states. As a result, we expect that the proportional effects of the federal tax increase on traffic fatalities would be positively correlated with per capita consumption. We demonstrate that this is indeed the case, and infer estimates of the price elasticity and lives saved in each state. We repeat this exercise for other injury-fatality rates, and for nine categories of crime. For each outcome, the estimated effect of the tax increase is negatively related to average consumption, and that relationship is highly significant for the overall injury death rate, the violent crime rate, and the property crime rate. A conservative estimate is that the federal tax reduced injury deaths by 4.7%, or almost 7,000, in 1991.

Europe's Not The Future For Turkey Anymore

2012-01-06T00:23:13+00:00

Maybe Turkey isn’t fit for Europe after all. And maybe, Europe isn’t fit for Turkey either. Many Europeans have long been hostile to Turkey’s bid for accession to the EU, while many Turks have always seen EU membership as central to the country’s future. Now the hostility is mutual.

As the EU bumbles from crisis to crisis, Turkey’s economy has grown tremendously, leaving many Turks no longer seeing the need for European integration. Despite the global downturn, Turkey’s GDP remains on pace to increase this year by a startling 8 per-cent. Long shunned by Europe, Turkey now thrives without the crushing debt of the eurozone. This newfound prosperity has delivered confidence and bravado. The Turks are reveling in the schadenfreude and who can blame them?

While the Bosphorus is not getting any wider, it’s clear that Turkey and Europe are moving farther apart. France looks likely to pass legislation that would criminally punish any person convicted of denying the existence of the early 20^th century’s Armenian genocide. Turkey continues to reject its role in the mass murder and deportation of hundreds of thousands, if not millions of Armenians. Ever defiant, Turkish President Abdullah Gul referred to the proposed law as being based on “unfair and groundless accusations.” Turkey has threatened to cut off diplomatic ties with France and a boycott of French businesses remains a distinct possibility. The upcoming vote in the French parliament will be a telling sign of Turkish influence in Europe.

Turkey’s response to proposed French law comes on the heels of the arrest of roughly 40 journalists throughout the country on suspicion of terrorism. The ruling Justice and Development Party is looking to eliminate any dissent, particularly any media outlets willing to give voice to the country’s Kurdish minority. Many sources are now claiming that Turkey, not China or Iran, has the most imprisoned journalists in the world. Brussels has long advocated for greater freedom of speech in Turkey, yet the Turks continue to ignore the demands of the EU. One thing is clear; the EU isn’t necessarily the future anymore.

The Turks’ bitter retort to the French and the recent clampdown on journalists is not just about stifling public criticism. These moves reflect the greater desire to construct a new narrative for modern Turkey. It is a narrative that ignores the sins of the past and the criticisms of the present, while elevating the accomplishments of the current government. Modern Turkey, so the story goes, is self-made (despite the incredible amount of foreign investment). She carved her own path to prosperity sans the EU. She prospers while around her Europe toils and the Middle East implodes.

Consolidating power via censorship does not endear Turkey to the liberal democracies of the world. Nor does it help Turkey portray itself as one of that number. But with the Turkish public getting wealthier and the West needing an ally in an otherwise unstable region, the misdeeds of Turkey’s government will be tolerated into the foreseeable future.

A Few Days in the Windy City

2012-01-05T10:02:44+00:00

This afternoon I will heading off to Chicago, to the annual meeting of the American Economic Association. I am scheduled for various private events while there, but I am also speaking in one public session. For those who are attending the meeting and might be interested, here are the details:

Friday, January 06, 2012 10:15 am
Hyatt Regency, Grand Ballroom CD North

Short-Term and Long-Term Consequences of Tax Reform (Panel Discussion)

Alan Auerbach (University of California-Berkeley)
Gregory Mankiw (Harvard University)
James Poterba (Massachusetts Institute of Technology)
Joel Slemrod (University of Michigan)

De Gustibus non est Taxandum

2012-01-04T09:04:26+00:00

Bryan Caplan quotes a passage from Daniel Kahneman's Thinking, Fast and Slow (which I have not read, but plan to):

A large-scale study of the impact of higher education... revealed striking evidence of the lifelong effects of the goals that young people set for themselves. The relevant data were drawn from questionnaires collected in 1995-1997 from approximately 12,000 people who had started their higher education in elite schools in 1976. When they were 17 or 18, the participants had filled out a questionnaire in which they rated the goal of "being very well-off financially" on a 4-point scale ranging from "not important" to "essential."...

Goals make a large difference. Nineteen years after they stated their financial aspirations, many of the people who wanted a high income had achieved it. Among the 597 physicians and other medical professionals in the sample, for example, each additional point on the money-importance scale was associated with an increment of over $14,000 of job income in 1995 dollars!

In other words, one reason that people differ in their incomes is that some people care more about having a high income than others. To put it in geekspeak, preferences over pecuniary goods (say, consumption) and nonpecuniary goods (say, leisure) are heterogeneous. Bryan goes on to suggest that to the extent this is true, it weakens the case for income redistribution.

He is absolutely right. Most of the literature on optimal taxation and redistribution, following Mirrlees, assumes homogeneous preferences. But Matthew Weinzierl has a recent paper on preference heterogeneity, which shows " to the extent that variation in income is due to preference differences rather than productivity differences, the optimal extent of redistribution is lower, and the neglect of preference heterogeneity biases the results of conventional optimal tax analyses in favor of redistribution of income."

By the way, the title of this post is taken from the Weinzierl paper.

The Reincarnation of Keynesian Economics

2012-01-03T19:50:22+00:00

The title of this post is the title of a short, relatively obscure paper I wrote twenty years ago. Here is the working paper version; here is the published (gated) version. To my surprise, Paul Krugman cites it over at his blog, but Scott Sumner wonders whether Paul really read it. In any event, it is delightful to see someone remember such an old paper.

Things I did not say

2012-01-03T09:06:45+00:00

One of the odd things about the blogosphere is that I often find myself being surprised by positions that are attributed to me. For example, Matthew Yglesias says:

Many proponents of low taxes on high-income individuals are "supply-siders" who claim that such a tax policy will maximize overall welfare. But other proponents of low taxes on high-income individuals such as Greg Mankiw deny that this is the relevant consideration, and simply say that progressive taxation is immoral.

If you follow the link that Mr Yglesias gives here, you will find it is to my paper "Spreading the Wealth Around: Reflections Inspired by Joe the Plumber." Does this paper say that progressive taxation is immoral? No. In fact, while advocating what I call a "Just Deserts" approach to taxation, it says the following:

Public goods and Pigovian subsidies lead naturally to a tax system in which higher income individuals pay more in taxes. Surely, those with higher income and greater property benefit more from a governmental system that protects property rights. Moreover, the monetary value attached to other public goods (such as parks and playgrounds) and to positive-externality activities (such as basic research) very likely rises with income as well. Indeed, if the income elasticity of demand for these services exceeds one, as is plausible, a progressive tax system is perfectly consistent with the Just Deserts Theory.

What about transfer payments to the poor? These can be justified along similar lines. As long as people care about others to some degree, antipoverty programs are a type of public good. [Thurow 1971] That is, under this view, the government provides for the poor not simply because their marginal utility is high but because we have interdependent utility functions. Put differently, we would all like to alleviate poverty. But because we would prefer to have someone else pick up the tab, private charity can’t do the job. Government-run antipoverty programs solve the free-rider problem among the altruistic well-to-do.

Does that sound like someone who believes that progressive taxation is immoral?

Economics Humor

2012-01-02T15:08:44+00:00

Yoram Bauman (the economist, translator, and cartoonist) tells me that the 4th annual AEA humor session is coming up. It's Saturday January 7, 8 pm, Hyatt Regency Chicago, room Crystal B, free and open to the public.

Unfortunately, I will miss it, but I am sure it will be much fun.

More Competition

2011-12-31T22:18:35+00:00

U Chicago economist John Cochrane is now blogging.

A Half Dozen Short Takes

2011-12-31T17:51:39+00:00

To bring in the New Year, Sunday's NY Times offers up short pieces by all six economics columnists, including yours truly.

The Burden of the Debt

2011-12-30T07:39:56+00:00

Paul Krugman has several posts discussing the burden of the national debt. Some readers have asked me for my take on the topic. Let me refer them to this old paper I wrote with Larry Ball. It provides a nontechnical overview. Even though it is 16 years old, I think it holds up pretty well.

Jeremy Stein to the Fed

2011-12-27T17:41:11+00:00

President Obama has nominated my Harvard colleague Jeremy Stein to become a Federal Reserve Governor. This is an excellent choice. Congratulations, Jeremy!

(The President has also nominated Jerome Powell, whom I do not know.)

How do the rich earn their livings?

2011-12-27T13:15:18+00:00

Here is an interesting paper that answers the question. Some highlights from Table 3 about the top 0.1 percent:

18 percent are financial professionals.
42 percent are executives, managers, or supervisors in nonfinancial businesses. More than half of those are in closely-held (presumably often small) businesses.
7 percent are lawyers.
6 percent are in medicine.
3 percent are in arts, media, or sports.
Less than 1 percent are professors or scientists. :(