Saturday, August 31, 2013

The Tragedy of Economath, David Henderson | EconLog | Library of Economics and Liberty

The Tragedy of Economath, David Henderson | EconLog | Library of Economics and Liberty

The tag line is, sadly true.  I am very fortunate to teach at an institution that is an exception, with talented and very, very econ literate faculty who can teach the economic way of thinking without the blizzard of math that infects far to many classrooms.

Friday, August 30, 2013

Economath Fails the Cost-Benefit Test, Bryan Caplan

Caplan writes:
The main intellectual benefit of studying economath, though, is that it allows you to detect the abuse of economath.  
Amen . . .

Thursday, August 29, 2013

C-Span BookTV

Great 1 hour presentation of The Righteous Mind by the author. If you don't have time to read the book before our Sept. 12 book club discussion, this is a close substitute.

Jonathan Haidt presented his thoughts on the current political and social divisions that he contends separate the Left and the Right. The social psychologist examines the origins of these fissures and explains that people’s moral intuition, the initial perceptions we have of others, propagates the idea that people who view the world differently from how we do are wrong. Mr. Haidt discussed how the populace can engage in a more civil debate on the issues of the day. He showed slides during his presentation and then responded to questions from members of the audience at Sixth and I Historic Synagogue in Washington, D.C.

Wednesday, August 28, 2013

Education and creative destruction

Our ASET book club struggles with Goldin and Katz's The Race between Education and Technology - an important book worth the effort.

How Technology Wrecks the Middle Class


Computerization has therefore fostered a polarization of employment, with job growth concentrated in both the highest- and lowest-paid occupations, while jobs in the middle have declined. Surprisingly, overall employment rates have largely been unaffected in states and cities undergoing this rapid polarization. Rather, as employment in routine jobs has ebbed, employment has risen both in high-wage managerial, professional and technical occupations and in low-wage, in-person service occupations.

So computerization is not reducing the quantity of jobs, but rather degrading the quality of jobs for a significant subset of workers. Demand for highly educated workers who excel in abstract tasks is robust, but the middle of the labor market, where the routine task-intensive jobs lie, is sagging. Workers without college education therefore concentrate in manual task-intensive jobs — like food services, cleaning and security — which are numerous but offer low wages, precarious job security and few prospects for upward mobility. This bifurcation of job opportunities has contributed to the historic rise in income inequality.

The entire piece is worth a read.

Tuesday, August 27, 2013

President Obama’s Plan for College Reform—Posner

Posner writes and unfortunately I tend to agree:

Most American colleges and universities are nonprofit, but that just means that are don’t have shareholders; profit residuals are dissipated in generous salaries for administrators and faculty, student amenities designed to attract rich kids and thus increase (along with high-powered sports programs) future donations, and lavish building programs. The colleges compete with each other with Darwinian ferocity. Federal financial aid has them to increase tuition at an astonishing rate, which has funded the competitive extravagances. The nonprofit colleges and universities seem just a tad less avaricious than the profit-making ones.

The competition has greatly increased the number of college graduates—to the point where many cannot find a job requiring a college education. IQ is a limiting factor in the value of a college education in the job market.

So below the very top tier of institutions, the picture of American higher education has become rather depressing. The President’s newly announced program seems unikely to work any significant improvement.

Monday, August 26, 2013

Information About Colleges and Student Loans-Becker

As always, Becker makes a valuable contribution to the current "debate". I can't help but think of Bob Higgs and his dead on characterization of the crisis manufacturing tendency by the state when I see the president responding.

Student debt has grown rapidly during the past 25 years, due to the rapid increase in school tuition during this time period, the significant subsidy to most loans, and the growth in high school graduates who attend college. Even though many in the media and elsewhere are complaining about this expansion in student loans, the average student loan of about $26,000 is not large relative to the average income of college graduates of about $70,000. Young families often take on mortgage debt that is twice or even a larger fraction of their earnings.

There is a legitimate concern about those persons with much larger student debt, and about those who make much less than the average college graduate, such as students who drop out of college, or who attended proprietary schools. The federal law that excludes student loans from personal bankruptcies makes the burden for these students still much harder to manage.

Sunday, August 25, 2013

The College Loan Scandal

This Stones article and the book mentioned yesterday really provide a foundation to understand the crisis we are experiencing in education. While it is tempting to blame the Fed government (and that expansive institution certainly has contributed mightly to the current debacle in education) the answer lies in the emergence of a set of informal institutions (conventions, norms and beliefs) that are now prevalent in US society - education is a right for all and as a right must be insured by the state. So, the Fed government is merely responding to this informal institution - this conviction on the part of most.

The Stone article is a very nice review of the impact of blanket subsidy for higher education by the US government. While this surprises no economist, it is interesting that the general public, holding to the emergent view of education as a right, is blinded to the social cost of this subsidy. A conservative pundit used the phase civil rights industry to inflame those who were convinced that egalitarianism (equality of outcome) is a right. Matt Taibbi, uses the term education industry in his Stone piece. It is really the iron triangle (to borrow from Ike and McCain) of schools - financial institutions and the state that has created a mediocre, high cost, wealth inhibiting system that is characterized by rent seeking. Not that young people and their families are victims, they are willingly blind participants in this process. The data and analysis about cost of college, income generated by major, and the real cost of borrowing - is not obscure or difficult to locate.

Saturday, August 24, 2013

The Smartest Kids in the World: And How They Got That Way

Possible book club book . . .

“If you want the American dream, go to Finland.” These blunt words from a British politician, quoted by Amanda Ripley in “The Smartest Kids in the World,” may lead readers to imagine that her book belongs to a very particular and popular genre. We love to read about how other cultures do it better (stay slim, have sex, raise children). In this case, Ripley is offering to show how other nations educate students so much more effectively than we do, and her opening pages hold out a promising suggestion of masochistic satisfaction.

NY Times Review

Friday, August 23, 2013

ASET book club - Sept. 12

The Righteous Mind: Why Good People Are Divided by Politics and Religion Topics for Discussion

Hi guys:

These are just some suggestions to jump start our discussion on Sept. 12. As always the discussion will emerge, in ways that none of us can anticipate.

Why do you think Haidt selects Plato, Hume and Jefferson as the 3 exemplars of morality/philosophy? Do you think this selection "works" to support his thesis or, like me, do you wonder about the selection?

How well does Haidt make the case that "morality" is a result of nature and make the opposing case that it is the result of nurture. What do you think Hume would make of the analysis in the book?

What does the author mean by the "rider" and the "elephant" that reside within each person? What are the roles of each in the development of a person's righteous mind?

Haidt draws broadly from research in psychology, anthropology, and biology to develop a six-factor basis for morality (Care/Harm, Liberty/Oppression, Fairness/Cheating, Loyalty/Betrayal, Authority/Subversion, Sanctity/Degradation), and show that moral judgement is an innate intuitive ability accompanied by post-hoc justifications. What is your view of this model and do you find it helpful in understanding the divide between "liberals" and "conservatives"?

Thinking of the model above, how are they ranked in your personal moral code?

Haidt describes individual versus group morality? (see the previous question) What is the importance and purpose of each? Late the book, Haidt argues: Conservatives can fully appreciate the entire spectrum of human morality, while liberals cannot. How well does Haidt make this argument, do you think he is serious or does he seem to have another motive in making this assertion? If he is serious, do you agree?

Check out Politics, Odors and Soap by Nicholas Kristof, over at the New York Times. He writes a very enthusiastic little review of yet another book on the intersection of cognition and politics. No big surprise, it's by Jonathan Haidt, who's doing the pioneering research into how the brains of liberals and conservatives are wired in fundamentally different ways. Oh, also see the review in the Wall St. Journal, Conflicting Moralities. The longer, "official" Ney York Times review is at Why Won’t They Listen?, and explores the book in more detail.

And an excellent essay in the New York Times by the author himself: Forget the Money, Follow the Sacredness.

Sunday, August 11, 2013

After a housing bubble, do Americans really need subsidized 30-year mortgages?

There’s one important thing to remember about America’s housing-driven economic recovery: The government financed almost all of it.

Now American lawmakers are figuring out just how much it’ll pay for in the future—and whether it should cover the costs of the pricey 30-year home loans most Americans view as their birthright.

Today, the bulk of new mortgage loans are guaranteed by the US government. In the first part of 2012, it was nine in ten mortgages, up from three in ten in 2006.

Saturday, August 10, 2013

In Debtor Nation: The History of America in Red Ink

IN THE FIRST QUARTER of 2011, the average American household carried $115,000 of mortgage, credit-card, and other forms of debt—a huge sum, but less (because of the recession) than the figure for the third quarter of 2008, when the average family owed more than $125,000 to financial institutions and other organizations. This enormous ocean of red ink has become big, big business. In both the go-go years of 2006 and 2007, for example, the nation’s largest credit-card issuers earned more than $18 billion—more than Wal-Mart or Microsoft.

In Debtor Nation: The History of America in Red Ink, Louis Hyman, Ph.D. ’07, reconstructs the history of personal debt in modern America. This is a fascinating, important, and at times ominous story. It begins around 1917, when personal indebtedness existed at the fringes of the economy, the province of struggling merchants and loan sharks, and ends in our own time, when personal debt has become a cornerstone of economic and capital-market activity, and the center of the recent financial crisis.

Friday, August 9, 2013

2013 ASET Conference

This year the annual ASET (economics) conference will be held in conjunction with the ACSS conference.

Keynote Address:

Dr. Mark C. Schug, Professor Emeritus University of Wisconsin-Milwaukee.

"Common Core in the Social Studies: Who Desegregated Major League Baseball, Jackie Robinson or Adam Smith?"

2013 ACSS Fall Conference

Saturday, Nov. 2nd

Grand Canyon University

"Common Core: Staking a Claim in the 21st Century"

A New Addition This Year - Pre-Conference Workshops!

Economics - Common Core - Geography and many more...

Friday, November 1, 2013

Thursday, August 8, 2013

The Second Annual ACHE Conference

The Second Annual ACHE Conference will be held on September 7, 2013 at the Mesa Arts Center

"A New Birth of Freedom"

Wednesday, August 7, 2013

We will never run out of oil . . . .

Becker makes an important analysis in a clear and accessible manner - too bad this message falls on deaf ears.

The long run picture is very different, for then opportunities to substitute away from the resources rising most in price are much greater because users have more time to adjust. For example, more permanent higher prices of gasoline induce consumers eventually to shift toward smaller more fuel-efficient cars, and drive less with the cars they have. They carpool more, make greater use of public transportation, or even take jobs nearer their homes. Cars are smaller and more efficient in Europe and Japan than in the US in good part because gasoline prices have been much lower in US.

Longer run adjustments on the supply side are also much larger, and some of them are game-changers.

Tuesday, August 6, 2013

AO Hirschman

I am reading this biography and agree completely with Warsh's assessment - both of the biography and the subject:
Thanks to Adelman’s magnificent biography, there may yet be an Ithaca, after all, for one of the greatest action-intellectuals of the twentieth century.
Certainly it is a gripping story, even if you don’t know anything about the history of development economics in the years after World War II. Hirschman was born in Berlin to a family of thoroughly assimilated Jews, and enjoyed a privileged youth in Weimar Germany. He left Berlin for Paris in April 1933, days after his father’s death, two month after Hitler’s accession to the German chancellorship. Already the seventeen-year-old law student’s friends were being arrested. Hirschman spent the next decade fighting the Nazis.

Sunday, August 4, 2013

Another review of Freaks of Fortune

But the story of risk, as Jonathan Levy shows us in Freaks of Fortune: The Emerging World of Capitalism and Risk in America, is anything but new. Levy traces the evolution and popularization of the idea of “risk” from the early nineteenth century, which he sees as the origin point of our contemporary American entanglement with finance.

In contrast to older histories of capitalism that focus on changes in property ownership, the class structure, or the expansion of the market, Levy deals with financial institutions and the rise of a network of financial relationships. His interest in these, though, is not so much their economic function as their cultural and intellectual influence. The question is not how futures contracts changed the economy, but how they both invented and were part of a new way of thinking about time and about material reality. Insurance is interesting to him as a way of understanding how people came to consider their lives and labors as assets—commodities to be insured. The interlocking history of the rise of accounting and the abolitionist movement suggests something important about new ideas of freedom. Levy’s purpose is to think about and take apart the daily reality and underlying assumptions of life and selfhood under capitalism, and to show the history that lies beneath our most mundane conceptions of ourselves. “Analyzing the nitty-gritty details of new financial practices demonstrates how risk burrowed into popular consciousness,” as he puts it.

In this way, Freaks of Fortune is an excellent example of the recent move in American historiography toward writing the “history of capitalism,” which promises to jettison the divisions between labor, economic, and business history, offering instead an expansive vision of how to write about the political, cultural, and intellectual meaning of the economy. These histories seek to undo the economist’s image of the market as a space that transcends history, in which categories such as “risk” are essentially timeless, by showing how much of what we take for granted as natural today is in fact the product of historical change. Freaks of Fortune is not just an important book in its own right, but a model of a new kind of scholarship—and accordingly it offers a chance to think about both the insights afforded and the questions raised by this new approach.

Saturday, August 3, 2013

NY Times review Freaks of Fortune

The dominant question in American politics today, scholars say, is the relationship between democracy and the capitalist economy. “And to understand capitalism,” said Jonathan Levy, an assistant professor of history at Princeton University and the author of “Freaks of Fortune: The Emerging World of Capitalism and Risk in America,” “you’ve got to understand capitalists.”

That doesn’t mean just looking in the executive suite and ledger books, scholars are quick to emphasize. The new work marries hardheaded economic analysis with the insights of social and cultural history, integrating the bosses’-eye view with that of the office drones — and consumers — who power the system.

“I like to call it ‘history from below, all the way to the top,’ ” said Louis Hyman, an assistant professor of labor relations, law and history at Cornell and the author of “Debtor Nation: The History of America in Red Ink.”

The new history of capitalism is less a movement than what proponents call a “cohort”: a loosely linked group of scholars who came of age after the end of the cold war cleared some ideological ground, inspired by work that came before but unbeholden to the questions — like, why didn’t socialism take root in America? — that animated previous generations of labor historians.

Instead of searching for working-class radicalism, they looked at office clerks and entrepreneurs.

“Earlier, a lot of these topics would’ve been greeted with a yawn,” said Stephen Mihm, an associate professor of history at the University of Georgia and the author of “A Nation of Counterfeiters: Capitalists, Con Men and the Making of the United States.” “But then the crisis hit, and people started asking, ‘Oh my God, what has Wall Street been doing for the last 100 years?’ ”

In 1996, when the Harvard historian Sven Beckert proposed an undergraduate seminar called the History of American Capitalism — the first of its kind, he believes — colleagues were skeptical. “They thought no one would be interested,” he said.

But the seminar drew nearly 100 applicants for 15 spots and grew into one of the biggest lecture courses at Harvard, which in 2008 created a full-fledged Program on the Study of U.S. Capitalism. That initiative led to similar ones on other campuses, as courses and programs at Princeton, Brown, Georgia, the New School, the University of Wisconsin and elsewhere also began drawing crowds — sometimes with the help of canny brand management.

Friday, August 2, 2013

The Great Persuasion: Reinventing Free Markets since the Depression

Just as today’s observers struggle to justify the workings of the free market in the wake of a global economic crisis, an earlier generation of economists revisited their worldviews following the Great Depression. The Great Persuasion is an intellectual history of that project. Angus Burgin traces the evolution of postwar economic thought in order to reconsider many of the most basic assumptions of our market-centered world.

Conservatives often point to Friedrich Hayek as the most influential defender of the free market. By examining the work of such organizations as the Mont Pèlerin Society, an international association founded by Hayek in 1947 and later led by Milton Friedman, Burgin reveals that Hayek and his colleagues were deeply conflicted about many of the enduring problems of capitalism. Far from adopting an uncompromising stance against the interventionist state, they developed a social philosophy that admitted significant constraints on the market. Postwar conservative thought was more dynamic and cosmopolitan than has previously been understood.

It was only in the 1960s and ’70s that Friedman and his contemporaries developed a more strident defense of the unfettered market. Their arguments provided a rhetorical foundation for the resurgent conservatism of Barry Goldwater and Ronald Reagan and inspired much of the political and economic agenda of the United States in the ensuing decades. Burgin’s brilliant inquiry uncovers both the origins of the contemporary enthusiasm for the free market and the moral quandaries it has left behind.

Thursday, August 1, 2013

Freaks of Fortune: The Emerging World of Capitalism and Risk in America

Listen to the author:

Until the early nineteenth century, “risk” was a specialized term: it was the commodity exchanged in a marine insurance contract. Freaks of Fortune tells the story of how the modern concept of risk emerged in the United States. Born on the high seas, risk migrated inland and became essential to the financial management of an inherently uncertain capitalist future. ,p. Focusing on the hopes and anxieties of ordinary people, Jonathan Levy shows how risk developed through the extraordinary growth of new financial institutions—insurance corporations, savings banks, mortgage-backed securities markets, commodities futures markets, and securities markets—while posing inescapable moral questions. For at the heart of risk’s rise was a new vision of freedom. To be a free individual, whether an emancipated slave, a plains farmer, or a Wall Street financier, was to take, assume, and manage one’s own personal risk. Yet this often meant offloading that same risk onto a series of new financial institutions, which together have only recently acquired the name “financial services industry.” Levy traces the fate of a new vision of personal freedom, as it unfolded in the new economic reality created by the American financial system. ,p. Amid the nineteenth-century’s waning faith in God’s providence, Americans increasingly confronted unanticipated challenges to their independence and security in the boom and bust chance-world of capitalism. Freaks of Fortune is one of the first books to excavate the historical origins of our own financialized times and risk-defined lives.