Thursday, February 28, 2013

THE DAWN OF INNOVATION - a review

http://www.nytimes.com/2013/02/03/books/review/the-dawn-of-innovation-by-charles-r-morris.html?smid=pl-share

In 1886, according to Charles R. Morris in “The Dawn of Innovation: The First American Industrial Revolution,” “Bloomingdale’s catalog — 160 pages, stuffed with some 1,700 products, from ladies’ corsets to pistols — advised its clients to send a follow-up inquiry if they had not received an order confirmation within 10 days after they had posted it, but to allow 15 days if they lived on the Pacific Coast.” The variety of goods offered by Bloomingdale’s and also the ease of ordering and transporting them were results of a century of rapid development of the country’s factories, canals, railroads and telegraph lines.

THE DAWN OF INNOVATION

The First American Industrial Revolution

By Charles R. Morris

Wednesday, February 27, 2013

Selling Federal Assets

Should the Federal Government own natural resources?

Selling Federal Assets

Friday, February 22, 2013

Government spending and economic growth

For those not familiar with the work of Robert Higgs, the most recent Reason Magazine provides both a nice application of his fine work in economic history as well as a very timely set of argumentation presented in an accessible manner for interested citizens who are reflecting on some rather important changes in the scale and scope of federal government activity in American society.

In talking about the role of the government in society and the impact of that government involvement on economic growth and standards of living, Sidney Richmond looks again at the widely held belief that WW 2 spending lifted the US out of the great depression:

Their bottom line: "Whatever the war's effects on seemingly booming conventional macroeconomic aggregates, it entailed a retrogression in the average American's living standards, and that disconnect should alert us to those aggregates' limitations."

Keep this in mind the next time a politician or pundit exhorts you to support more government spending in order to restore prosperity. Rising living standards comes from saving, entrepreneurship, and innovation—in a word,freedom—not politicians' self-indulgent schemes with your money.

See previous post for link to full Reason Article.

An update of the Higgs analysis of WW2 and the impact of expansive government spending is, a must read for high school social studies teachers as well as a cautionary note on interpretation of aggregates:The debate over World War II’s role in ending the Great Depression has enormous relevance in connection with the current anemic recovery from the Great Recession.

We have offered evidence to support Robert Higgs’s argument that the wartime macroeconomic data significantly overstated the degree of genuine economic recovery. Higgs’s evidence rests on his reinterpretation of several traditional macroeconomic indicators to compensate for the distinct features of a wartime economy. We show that if one digs below the aggregates and looks at how American households lived during the war, as shown in the media, letters, and journals, Higgs’s case appears to be even stronger. Whatever the war’s effects on seemingly booming conventional macroeconomic aggregates, it entailed a retrogression in the average American’s living standards, and that disconnect should alert us to those aggregates’ limitations.

Whenever government commands resources, those who finance this acquisition, whether through taxation or purchase of government bonds, incur opportunity costs. Whether the diverted resources go toward building tanks and guns or toward repairing bridges and roads does not alter this fact. As we continue to debate the effectiveness of large-scale government expenditure to speed recovery from the Great Recession, we should not be looking at the wartime experience of the 1940s as a guide.

http://www.independent.org/pdf/tir/tir_17_03_01_horwitz.pdf

Wednesday, February 20, 2013

ASET Book club - The Grand Pursuit

Last night the ASET book club engaged in a lively discussion of Sylvia Nasar's The Grand Pursuit. An added bonus was an appearance by our friend Alice Temnick, former ASET book club leader and now a resident of the Big Apple.

The discussion included analysis of the role played by Beatrice Webb, Joseph Schumpeter, and Charles Dickens in Nasar's history of economic thought.

Our next meeting is April 4, 2013 to discuss Ed Glaeser's book The Triumph of the City.

Possible book titles considered for future meetings:

The Righteous Mind - recommended by Al, this 528 page book had the following comment:

“Highly readable, highly insightful. . . . The principal posture in which one envisions him is that of a scrappy, voluble, discerning patriot standing between the warring factions in American politics urging each to see the other’s viewpoint, to stop demonizing, bashing, clobbering. . . . Haidt’s real contribution, in my judgment, is inviting us all to sit at the table.”

—Washington Times

The Signal and the Noise by Nate Silver

Nate Silver built an innovative system for predicting baseball performance, predicted the 2008 election within a hair’s breadth, and became a national sensation as a blogger—all by the time he was thirty. The New York Times now publishes FiveThirtyEight.com, where Silver is one of the nation’s most influential political forecasters.

Drawing on his own groundbreaking work, Silver examines the world of prediction, investigating how we can distinguish a true signal from a universe of noisy data. Most predictions fail, often at great cost to society, because most of us have a poor understanding of probability and uncertainty. Both experts and laypeople mistake more confident predictions for more accurate ones. But overconfidence is often the reason for failure. If our appreciation of uncertainty improves, our predictions can get better too. This is the “prediction paradox”: The more humility we have about our ability to make predictions, the more successful we can be in planning for the future.

In keeping with his own aim to seek truth from data, Silver visits the most successful forecasters in a range of areas, from hurricanes to baseball, from the poker table to the stock market, from Capitol Hill to the NBA. He explains and evaluates how these forecasters think and what bonds they share. What lies behind their success? Are they good—or just lucky? What patterns have they unraveled? And are their forecasts really right? He explores unanticipated commonalities and exposes unexpected juxtapositions. And sometimes, it is not so much how good a prediction is in an absolute sense that matters but how good it is relative to the competition. In other cases, prediction is still a very rudimentary—and dangerous—science.

Silver observes that the most accurate forecasters tend to have a superior command of probability, and they tend to be both humble and hardworking. They distinguish the predictable from the unpredictable, and they notice a thousand little details that lead them closer to the truth. Because of their appreciation of probability, they can distinguish the signal from the noise.

With everything from the health of the global economy to our ability to fight terrorism dependent on the quality of our predictions, Nate Silver’s insights are an essential read.

The Passion and the Interests by Albert Hirschmann

Click here for previously considered titles including recommendations by Bill Boyes.

http://libertyandresponsibility.blogspot.com/2012/09/2013-book-club-titles-for-consideration.html

Sunday, February 17, 2013

Arnold Kling speaks February 20

February 20 - Arnold Kling - MCCCD Honors Lecture - Competition in Education

Competition in Education: Is it a Solution or it is a Problem?

Arnold Kling received his Ph.D. in economics from the Massachusetts Institute of Technology in 1980. He was an economist on the staff of the Board of Governors of the Federal Reserve System from 1980-1986. He was a senior economist at Freddie Mac from 1986-1994. In 1994, he started Homefair.com, one of the first commercial sites on the World Wide Web. (Homefair was sold in 1999 to Homestore.com.) Kling is an adjunct scholar with the Cato Institute and a member of the Financial Markets Working Group at the Mercatus Center at George Mason University. He teaches statistics and economics at the Berman Hebrew Academy in Rockville, Maryland.

Kling is the author of five books:

Unchecked and Unbalanced: How the Discrepancy between Knowledge and Power Caused the Financial Crisis and Threatens Democracy (Rowman and Littlefield, 2010).

From Poverty to Prosperity: Intangible Assets, Hidden Liabilities and the Lasting Triumph over Scarcity [FP2P] (with Nick Schulz, Encounter Books, 2009);

Crisis of Abundance: Rethinking How We Pay for Health Care (Cato, 2006);

Learning Economics (Xlibris, 2004);

Under the Radar: Starting Your Internet Business without Venture Capital (Perseus, 2001);

He was a contributing editor to TCSdaily.com. His web site at arnoldkling.com has been cited by The New York Times and in the Journal of Economic Perspectives as being entertaining and educational on the subjects of economics and technology.

Arnold Kling blogs on EconLog along with Bryan Caplan and David Henderson.

Location: Phoenix College, Bulpitt Auditorium 1202 W Thomas Rd Phoenix, AZ See map: Google Maps http://www.maricopa.edu/honors/forum/arnold-kling

Saturday, February 16, 2013

Is Nasar in the same league as Heilbroner?

"Grand Pursuit” is a worthy successor to Robert Heilbroner’s “The Worldly Philosophers,” a staple of introductory courses in economics. Nasar’s aim, however, is not to write intellectual history but to put the reader into the lives of the characters of a sweeping historical drama that extends from Victorian England to modern-day India. That she largely succeeds reflects the depth and breadth of her research but also the elegance of her prose.

Interesting assertion, look forward to the response of our ASET book club.

http://articles.washingtonpost.com/2011-09-15/entertainment/35274605_1_economics-grand-pursuit-sylvia-nasar

Thursday, February 14, 2013

The Grand Pursuit - 3 acts

I am looking forward to our February ASET book club discussion of The Grand Pursuit.

In anticipation of that disscussion, the review below might be of use.

James Grant writes of the February ASET book selection:

Ms. Nasar divides her book into three "acts," like a play. They are "hope," "fear" and "confidence." "Hope" is what the Victorian thinkers, including Dickens, in his role of social reformer, and Karl Marx (of all people), gave the world concerning the possibility of solving the economic problem through conscious effort. "Fear" is what the interwar economists—confronting first hyperinflation and then the Great Depression—had to wrestle with and surmount. "Confidence" is what returned after World War II, as governments implemented the allegedly constructive notions of the Keynesians and monetarists

Grant writes further about notable exclusions from the book:

here isn't room for every economist in this book or any other, but I myself missed the voice of Jacques Rueff, the 20th-century theorist who was able to demonstrate the superiority of the classical gold standard over the faux gold standard devised by Keynes (incorporated in the Bretton Woods system of 1944-71) or the paper-money regime advocated by Fisher and Friedman.

I missed, as well, Murray Rothbard, who blamed the Great Depression on the Hoover administration. It didn't intervene too little, Rothbard unconventionally sought to show in his 1963 book, "America's Great Depression," but rather too much. The economics profession just smiled at this contention, but the unsolved case of the depression of 1920-21 counts heavily for Rothbard's thesis. It was a deep and painful slump (a young Army veteran, Harry S. Truman, lost his Kansas City haberdashery to bankruptcy), with the wholesale price index dropping by 37% and the measured rate of unemployment tripling to 12%.

I wonder which other thinkers our ASET book group would have liked to have seen portrayed in a history of economic thought.

http://online.wsj.com/article/SB10001424053111904836104576557360442970594.html

Wednesday, February 13, 2013

Cost and Value of College Education

Interesting set of assertions including:

Autor said, the best evidence shows that a college degree leads to a lifetime earnings increase of $250,000 to $300,000, even after subtracting the cost of higher education. Those returns, Autor noted, apply to graduates regardless of their undergraduate majors: Humanities students benefit just as science, engineering or business students do.

And all evidence suggests education remains a key to social mobility in America, noted Janice Eberly... Moreover, Eberly said, “These benefits accrue not only to individuals but society more broadly,”...

Claudia Goldin, author of a previous ASET book club selection - The Race Between Education and Technology responses

Yet excellence in higher education requires a solid foundation of secondary education, observed Claudia Goldin, an economist at Harvard University. And while high school graduation rates in the United States soared in the first half of the 20th century, they have been virtually stagnant since about 1970.

“College completion just cannot advance much when high school completion does not,” Goldin said.

For those who do go to college, the amount of student-loan debt they accrue has increased, as Autor acknowledged: At graduation, today’s public-university graduates hold $32,000 in student debt, on average, while graduates of private, nonprofit schools owe $46,000, on average. Going into debt always entails risk, Autor said, while asserting that the worst-case scenarios, of students with massive debt and low income, attract disproportionate media attention.

In reality, virtually all college students, Autor said, will emerge with useful work-force skills. ... http://economistsview.typepad.com/economistsview/2013/02/whats-the-cost-and-financial-value-of-college.html

Tuesday, February 12, 2013

More on The Grand Pursuit - Feb. 19 ASET book club book

In a thoughtful commentary of Sylvia Nasar's book - The Grand Pursuit - Robert Lenzer writes:

The battles between right and left are still vibrant. No one economist has t he answer. There is Founding Father with solutions that are bound to work. That’s why there is a sense throughout “Grand Pursuit” of exploration into ideas. There must be some dyanamic balance between free enterprise and government oversight and regulation that could work. We have made a terrible mistake letting a libertarian view of finance dominate government– and cause untold misery. We are behind an Eightball– and in pursuit of answers. I just wish the delightful Ms. Nasar had found them in her elegant marvelous attempt.

So, Nasar has put another historic crisis in perspective for us, and given us history, grand characters instead of screaming tv pundits and the treatment of the debt debacle as if it was a ball game. We need new coaches with wisdom. Bring back Keynes and Schumpeter. Treasury Secretary Geithner is dead wrong that Keynesian principles of spending our way out of the doldrums is dead.

Maybe the tombstone should carry John Kenneth Galbraith’s always ironic ruling that “The experience of nations with well-being is exceedingly brief. Nearly all, throughout history have been very poor.”

http://www.forbes.com/sites/robertlenzner/2011/09/10/the-u-s-economy-needs-geniuses-like-keynes-and-schumpeter/

Possible discussion topics/questions

1. Do you view this book as a history of economic thought? Why or why not?

2. Which of the individual profiles did you find most

surprising

useful

reflective of current economic conditions

challenging to your own world view

3. What was your take on Nasar's analysis of A Christmas Carol and Dickens

4. What defense might you construct for Beatrice Webb, the queen of the welfare state based upon your reading

5. Which social thinker was absent from the book?

6. Were you surprised at the views of Hayek and Keynes post war?

7. React to the following - Nasar's view of the history of modern economic thought places Schumpeter at the heart of the evolution in economic thinking

Saturday, February 9, 2013

Arnold Kling on education

Kling will be the Honors Speaker at MCC on Feb. 20 speaking on education.

http://econlog.econlib.org/archives/2012/01/the_education_r.html

He concludes this bog post - I see the potential for a dramatic reduction in the labor intensity of teaching. I think we are at a point in education that reminds of what the Web felt like in 1994. A lot of excitement is coming, and change will sweep through faster than most people expect. Traditional colleges seem poised to be the Borders Books of the next round of technological change.

Friday, February 8, 2013

Kling on EconTalk

This EconTalk by Arnold Kling may well anticipate his remarks later this month at the MCCD Honors Presentaion.

http://www.econtalk.org/archives/2012/10/kling_on_educat.htmlArnold Kling, economist and teacher, talks with EconTalk host Russ Roberts about recent technological innovations in education and Kling's forecast for their impact on learning and how they might affect traditional education. Examples include the recent explosion of online lessons and classes, new teaching styles that exploit those offerings, and the nature of learning in various kinds of classrooms and student-teacher interactions.

Thursday, February 7, 2013

Brookings on one aspect of school choice

Fortunately, the solution to this challenge is straightforward. We can ensure that students make decisions that are in their best interest by making information about the investment value of various degrees available to them as they shop for college. In practice, this means that students should know about the outcomes previous graduates have faced (rate of employment, earnings, etc.). If students are armed with this information before choosing a college then we can be sure their choices reflect preferences rather than confusion over what they are buying.

A second reason to be concerned about this issue is government subsidies. Student aid programs (Pell grant and Stafford loans) base award amount on cost of attendance. This means that students attending schools with lots of amenities will receive more aid than students attending schools with similar instructional value but fewer amenities. This effect is mitigated by caps on award amounts in both programs, but it still creates bad incentives for both students and colleges. While we don’t want to restrict a student from purchasing a “Cadillac” college degree, we certainly don’t want the government to subsidize it. The simplest way to eliminate this bad incentive is to revise aid award formulas to ignore cost of attendance. Instead, aid awards could be based on average cost within the relevant set of comparable institutions (i.e. community college, four-year, etc.)

http://www.brookings.edu/blogs/brown-center-chalkboard/posts/2013/02/06-higher-ed-costs-akers?cid=em_brown020613

Tuesday, February 5, 2013

Requiring smart phones in class

Kling on education

http://stillwatergazette.com/2012/10/04/economist-expect-big-changes-in-education/

Kling, who earned his PhD in economics from MIT and is the author of five books, said the most effective educational process requires students to keep asking questions. Technology such as “miracle tablets” with software that adapts to a student’s needs and moods would enable this scenario.

“If a person can’t think of good questions to ask, I do not want them working for me,” said Kling. “You have got to show a love of curiosity.”

Currently, he said, earning a college degree shows employers that you have cognitive ability, you are able to conform to organizational expectations and you have the drive to finish what you start.

Monday, February 4, 2013

Education - recent views in Arizona

The February honors speaker, Arnold Kling will present an overview of competition in education. Two opposing views on this topic can be found in the January 28, 2013 Arizona Republic.

Arizona State Superintendent of Education John Huppenthal writes:

It was 1993 and my first year in the Arizona Senate. I was one of a handful of legislators who were enthusiastically committed to reforming education in Arizona.

We firmly believed that parents should have the right to choose the education environment that best suited the needs of their children. We shared a vision of a competitive school choice environment that would replace a one-size-fits-all, monolithic system that left many children behind.

http://www.azcentral.com/opinions/articles/20130124school-options-children-thrive.html

The opposing point of view by the establishment is presented by a member of the ASU education faculty:

It’s easy to understand why thousands of school-choice supporters from across the country are gathered in Phoenix for National School Choice Week. Arizona policy makers have steadily increased choice options for nearly 20 years, and today, Arizona parents have more publicly funded schooling choices than just about any other state.

However, what may get lost in the celebration this week is that after nearly two decades of expanding choice options in our state, traditional public schools continue to be the choice for nearly nine out of 10 Arizona students. Like my family, hundreds of thousands of Arizona families make the informed and conscious choice to send our children to our traditional public schools.

http://www.azcentral.com/opinions/articles/20130124traditional-public-school-legitimate.html

Friday, February 1, 2013

Packed February for Economic Discussion

This month offers a wide range of activities to discuss and explore economics.

February 4 - Amnity Schales - discusses her new book on Calvin Coolidge. http://goldwaterinstitute.org/events/silent-cal-book-forum-amity-shlaes

February 12 - State of the Union Address http://www.huffingtonpost.com/2013/01/11/state-of-the-union-2013_n_2456588.html

February 19 - ASET bookclub - the Grand Pursuit http://libertyandresponsibility.blogspot.com/2013/01/aset-bookclub-book-feb-19-grand-pursuit.html

February 20 - Arnold Kling - MCCCD Honors Lecture - Competition in Education

Competition in Education: Is it a Solution or it is a Problem?

Arnold Kling received his Ph.D. in economics from the Massachusetts Institute of Technology in 1980. He was an economist on the staff of the Board of Governors of the Federal Reserve System from 1980-1986. He was a senior economist at Freddie Mac from 1986-1994. In 1994, he started Homefair.com, one of the first commercial sites on the World Wide Web. (Homefair was sold in 1999 to Homestore.com.) Kling is an adjunct scholar with the Cato Institute and a member of the Financial Markets Working Group at the Mercatus Center at George Mason University. He teaches statistics and economics at the Berman Hebrew Academy in Rockville, Maryland.

Kling is the author of five books:

Unchecked and Unbalanced: How the Discrepancy between Knowledge and Power Caused the Financial Crisis and Threatens Democracy (Rowman and Littlefield, 2010).

From Poverty to Prosperity: Intangible Assets, Hidden Liabilities and the Lasting Triumph over Scarcity [FP2P] (with Nick Schulz, Encounter Books, 2009);

Crisis of Abundance: Rethinking How We Pay for Health Care (Cato, 2006);

Learning Economics (Xlibris, 2004);

Under the Radar: Starting Your Internet Business without Venture Capital (Perseus, 2001);

He was a contributing editor to TCSdaily.com. His web site at arnoldkling.com has been cited by The New York Times and in the Journal of Economic Perspectives as being entertaining and educational on the subjects of economics and technology.

Arnold Kling blogs on EconLog along with Bryan Caplan and David Henderson.

Location: Phoenix College, Bulpitt Auditorium 1202 W Thomas Rd Phoenix, AZ See map: Google Maps http://www.maricopa.edu/honors/forum/arnold-kling

Student Video Contest

The Hackley Endowment for the Study of Capitalism and Free Enterprise at Fayetteville State University is pleased to announce its “Economics Video Contest for 2012-2013.” Entries are due Wednesday, May 15, 2013.

Economics is so exciting that we want you to help convey the ideas in a fun way. Dr. Stringham’s college professor, Dr. Walter Block, once said that one of the problems for economists is that critics of markets have so many catchy folk songs, but economists don’t have any. Hence, this video contest about “Economic Value Is Subjective.” To read about economic value being subjective click here.

Summary of the Contest

1.Open to all students including teams

2.Prize is $2,500 to the winners; $500 to the professor;

$500 to the second place winners; and $250 to the third place winners.

3.Videos should be approximately three minutes

4.Lyrics can be added to any existing song

5.Video must be uploaded on YouTube

6.Videos will be judged based on quality and number of views and likes on Youtube (Click on the CONTEST RULES for more details)