Pursuit of Truthiness

my gut tells me I know economics

Archive for February 2010

Same Facts: The Power Elite

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A recent David  Brooks column had an interesting analysis of the new power elite.  He claims they are more diverse, meritocratic, and talented than ever, but at the same time less trusted and perhaps less successful than ever.

Are government, finance, and journalism really run no better than they were 50 years ago?  It is hard to say, or even to come up with a good metric to judge this by.  But society is much richer than it was 50 years ago, and these institutions may have had something to do with that.

Brooks continues, “To leave a mark in a fast, competitive world, leaders seek to hit grandiose home runs. Clinton tried to transform health care. Bush tried to transform the Middle East. Obama has tried to transform health care, energy and much more.”  But most 20th-century presidents attempted major transformations.  The attempts of recent presidents are a dim shadow of the breadth and speed of transformations brought about by Franklin Roosevelt and Lyndon Johnson, members of the old-style elite.

This seems more on target to me: “Third, leadership-class solidarity is weaker. The Protestant Establishment was inbred. On the other hand, those social connections placed informal limits on strife. Personal scandals were hushed up. Now members of the leadership class are engaged in a perpetual state of war. Each side seeks daily advantage in ways that poison the long-term reputations of everybody involved.”

But again, do I really know how dirty and competitive politics was 50 years ago compared to now?  No.  It is easy to go astray when we rely on vague impressions, especially about the past since the “other side” isn’t around to correct us.  Most good datasets do not go back beyond the 70’s, but there must be some adequate proxies available.

Written by James Bailey

February 21, 2010 at 11:42 am

Philosophy is Pointless

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There are three kinds of philosophy:

1) Natural Philosophy

2) Ethics

3) Answers to made-up questions like ‘how many angels can dance on the head of a pin’ that show the answerer is really clever.

If most philosophical questions were definitively resolved one way or another, should people act any differently as a result?  I think not, and if not, I submit that philosophy is pointless.

Except, of course, as a way of showing how clever you are.  That is to say, most philosophers are just in it for the chicks and the money.

So, philosophers, tell me why you do it and what would change if you got definite answers to non-scientific, non-ethical questions.

Written by James Bailey

February 18, 2010 at 11:24 am

It’s a Liquidity Trap!

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I’m not proud of this, but its seems no one in the whole wide internets had done it yet, and it needed to be done:

Ackbar realizes he's trying to push on a string

The best part is that our solution to the liquidity TRAP was a TARP.  Now let’s hear the Bernanke/Ackbar jokes.

Written by James Bailey

February 16, 2010 at 11:30 am

When is status non-zero-sum?

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It seems obvious to me that free-market societies work well because there are many situations in which the self-interested acquisition of wealth benefits society as a whole.  When someone discovers a new technology or thinks of a more efficient way to do something, they don’t merely redistribute wealth to themselves (though theirs may increase and their competitors’ decrease), they increase the total wealth / total utility of society.

Competition over status, on the other hand, seems to me obviously zero-sum.  People only have a fixed amount of admiration to give; if your status is being raised in their eyes, someone else is having theirs lowered or at least crowded out.  We have tried to increase everyone’s status by handing out awards for eveything to everyone, especially kids; the awards become less meaningful in response.  Outside of Lake Wobegon, half of the kids are always below average (along with half the doctors, half the engineers…).

But is it really so obvious that status is always zero-sum?  After all, before the free market was ubiquitous, only a few visionaries realized how often wealth-acquisition could be non-zero-sum.  Most people looked around and saw that the way to get rich was by oppressing peasants and invading neighboring states.  Only the oddballs like Bernard Mandeville and Adam Smith could imagine a drastically different world.  Even now when markets and trade are everywhere and the world is vastly richer than ever, many people have trouble seeing this.

So while it seems obvious to me that status must be zero-sum, perhaps I just suffer from a lack of imagination.  The proliferation of subcultures and specialization means that there are many more groups for people to be at the top of.  Better communications mean that information about all the admirable people in the world is easily accessible; it is possible that more time is spent thinking about the status of others.  If you live in a small village with little outside influence for many years, there aren’t many people to think about; but with modern global media people are always talking about actors, musicians, athletes, and politicians.

So with scale and scope of status-heirarchies growing, it is possible that there is more admiration and therefore more status to go around.  This actually starts to sound like Adam Smith: specialization is powerful but is limited by the extent of the market.  Anyway, I’d love to hear from someone with more imagination about how status can be non-zero-sum.

Written by James Bailey

February 11, 2010 at 12:43 pm

Posted in Economics, status

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