Conversely, today is exactly the wrong day to declare that these broad and inexorable trends are not really big top-down trends at all, and in fact merely reflect the inability of individual workers to “access learning, retrain, engage in commerce, seek or advertise a job, invent, invest and crowd source”. And yet that’s Tom Friedman’s column this May Day:
If you are self-motivated, wow, this world is tailored for you. The boundaries are all gone. But if you’re not self-motivated, this world will be a challenge because the walls, ceilings and floors that protected people are also disappearing. That is what I mean when I say “it is a 401(k) world.”
This manages to be both incomprehensible and incredibly offensive at the same time. I have no idea what Friedman thinks he’s talking about when he blathers on about disappearing protective floors; I can only hope that he isn’t making a super-tasteless reference to the recent disaster in Bangladesh.
….which is that bitcoins are an uncomfortable combination of commodity and currency. The commodity value of bitcoins is rooted in their currency value, but the more of a commodity they become, the less useful they are as a currency.
Bitcoins were designed to be – and, in many ways, are – the perfect digital currency: they’re frictionless, anonymous, and cryptographically astonishingly secure. For anybody who’s ever suffered the incompetence of a bank, or bristled at the fees involved in just spending money, either domestically or abroad – that is to say, for all of us – the promise of bitcoin is the holy grail of payments. Especially since, to all intents and purposes, bitcoins are invisible to law enforcement and the taxman.
"Meritocracy” is a hazy subject, but as Tim Noah explained in a great Slate piece more than a decade ago, all this really goes to show is that the idea of meritocracy is overrated. If you take some field of endeavor where the concept of “merit” is pretty well-defined—professional golf, for example—what you see is an enormously inegalitarian distribution of income. Golfing ability is distributed very unevenly. The total set of people who golf is quite large, and most of them do it for negative wages. A tiny minority of people actually earn money golfing, and a much tinier subset of really good golfers dominate the tournament earnings. It’s both very meritocratic and very inegalitarian. What’s also true is that even as golf is a meritocracy where the best golfers win, it features major structural barriers to opportunity. Lots of kids don’t have a chance to golf growing up. That could be because their parents don’t have the money, or it could just be because their parents hate golf. But if you removed those barriers to opportunity—by implementing, say, a well-funded universal golf education program—the end result would be even more inequality in earnings since the golfing market would only become more cutthroat and efficient."
— Meritocracy is bad: It leads to massive entrenched inequality.
Given the data, they concluded that social scientists could not possibly have picked a worse population from which to draw broad generalizations. Researchers had been doing the equivalent of studying penguins while believing that they were learning insights applicable to all birds.
haha, soft sciences are fuuuuuuucked
This approach is disastrous both politically and economically. Progressives like myself believe strongly in the potential role of public investments to address society’s needs - whether for job skills, infrastructure, climate change, or other needs. Yet to mobilize the public’s tax dollars for these purposes, it is vital for government to be a good steward of those tax dollars. To proclaim that spending is spending, waste notwithstanding, is remarkably destructive of the public’s trust. It suggests that governments are indeed profligate stewards of the public’s funds.
Yet it’s even worse on the economic front. Spending is not spending. The U.S. needs productive public investments, not wasteful spending. We need to modernize our infrastructure, retool our energy system, make our cities more resilient, and help to train a new productive labor force. All of that is hard work. It requires careful government programs, working alongside the private sector, and good coordination with state and local governments. It requires facing down vested interests in both parties all too happy to continue the wasteful ways.
(via Instapaper)
I’m not sure why intrinsically a time allocation model would be superior to a market-price driven model, but at the very least it would only seem to have an advantage if the individuals were very smart. My hypothesis is not that this model is inherently superior, necessarily, but that it provides a critical recruiting edge which, in a market with constrained talent, is a massive advantage. That in turn provides Valve with the necessary star talent to make the time allocation model flywheel spin. The innovative games (e.g. Portal and Portal 2, Half-Life) and business models (Steam) Valve has produced may simply come from that superior labor pool.
Classical economists used to posit that, since consumers are rational, we make decisions to maximize our pleasure, end of story. But your paper reviews all the ways we know that consumers aren’t in fact rational but prone to all sorts of biases and habits that pull us from any strictly rational view of the consumer. Is that alright?
This is a good summary, but I think the final message is that neither the physiology of pleasure nor the methods we use to make choices are as simple or as single-minded as the classical economists thought. A lot of behavior is consistent with pursuit of self-interest, but in novel or ambiguous decision-making environments there is a good chance that our habits will fail us and inconsistencies in the way we process information will undo us.
To be sure, many economists, as Card puts it, still view their discipline as “a kind of mathematical philosophy” based on ideas about rationality and predictable responses to incentives. These scholars find pure empiricism “very alienating.” And some younger economists working in the mode of Angrist, Card, and Krueger have drawn criticism; they are sometimes depicted as opportunists looking for any topic that can yield a clear conclusion, even about something as seemingly inconsequential as the use of gym memberships.
"Macroeconomics is not a morality play. Macroeconomics is like the weather. Sometimes the weather is nice and sometimes there is a mighty hurricane. It just is. What we all need to do is adjust to the reality as it is, not pretend the weather is as we think it ought to be."
— There is no fiscal crisis. And macroeconomics is not a morality play.
Cowen is walking-talking-tweeting evidence for his theory. Why, then, apart from an early surge in the 1990s, hasn’t the internet led to more measurable economic gains? “My view of the internet is that it is way overrated in what it’s done to date but considerably underrated in what it will do.” He notes that it took decades for earlier major inventions to have institutions built around them, such as roads for cars and grids for electricity. “If you’re an optimist about what has come before, you tend to be a pessimist about what’s on the way.”
The economic and psychological implications of this are profound. It seems pretty clear that most people gain self-esteem and mental health from doing something useful, whether raising children or earning a salary. I am not predicting a utopian world in which everyone is equally valued. But it may be a world in which people use their Klout Score (a measure of one’s online influence), their Twitter following, or a similar measure to justify their existence, assign value to their activities, and measure their self-worth.
"In such “search models”, unemployment isn’t a puzzle; it’s the natural state of economic existence, just as being single is the natural state of romantic existence. All of us are born unemployed and single, and if we want that to change, sooner or later we will have to start looking for a suitable match."
— Tim Harford — Article — Working out the job market
Economists have been debating this topic for a century now, and a couple of broad camps have formed. Many argue that ads are ultimately beneficial, giving people more information about products and boosting competition. Others suggest that ads are essentially a psychological ploy, persuading people to buy things they wouldn’t otherwise want or need. And a few economists, notably Arthur Pigou, have argued that there’s too much advertising in the world, with rival companies merely bludgeoning each other to a standstill.
AND IN THE END EVERYONE WAS RIGHT.
The financial sector is a powerful lobby. What policies does it demand? Financiers want pro-bailout policies kept in place—particularly the massive implicit guarantees against failure that they receive. And they want continued deficits. Our financial titans pay lip service to fiscal responsibility, but they primarily want to pay fewer taxes—irrespective of what this means for government debt. Indeed, bigger deficits create larger markets for government debt and all of its derivative products, which in turn allow the financial sector’s profits to grow larger. Many politicians are only too happy to oblige.
Increasingly, however, it appears that future generations will not be the only ones harmed by our decisions; we are already feeling the negative impact. In recent decades, financial sectors throughout the rich world grew at historically unprecedented rates; now they are dangerously outsize relative to the rest of the economy. Changing that dynamic in any orderly way looks extraordinarily difficult. Yet history suggests it will change, and soon. The era of large-scale, uncontrolled financial booms and busts—last seen in the 1930s—is back.
ugh
