1. PUBLIC GOODS MINI-BONANZA!
1a. Mark Thoma says we should be taking advantage of low interest rates to spend big on infrastructure. I agree.
1b. John Cochrane laments the fact that our government spends a lot more on transfers (mostly health care) than on infrastructure. Can he be joining the new Thiel/Tabarrok conservatism? I hope so!
1c. Eric Rauchway notes that much of the productivity improvements during the Depression were due not to great exogenous leaps in technology, but simply due to massive infrastructure creation. That is cool, and I didn't know that.
1d. Tyler Cowen links to an Ed Glaeser column on how to improve U.S. infrastructure spending.
2. Brad DeLong discusses the forward march of human liberty. Upshot: the post-WW2 20th century was pretty much all good.
3. DeLong also cites some very interesting thoughts on the British industrial revolution. The idea is that technological progress was made necessary by high labor costs and made possible by cheap capital. Does this mean that the flood of cheap Chinese labor might be holding back innovation right now?
4. Steve Williamson reveals why his antipathy toward Paul Krugman is so strong. Basically, he sees Krugman as anti-intellectual and anti-math.
5. Robert Waldmann and Mark Thoma discuss the differences between New Keynesian and Old Keynesian models of the macroeconomy.
6. Simon Wren-Lewis has a great discussion of the splintering of the macro field into "schools of thought."
7. Mark Thoma presents some alternatives to Tyler Cowen's ideas for the big banks.
8. Matt Yglesias harps on one of my very favorite topics - the fact that building and land-use restrictions have retarded the growth of Silicon Valley.
9. There are many worse things you could read than the writings of Menzie Chinn on global imbalances.
10. Greg Mankiw points out that I am his grandstudent.
11. Last but not least, an oldie but goodie: Scott Sumner on why the lack of small-sized recessions casts doubt on the idea that real shocks cause business cycles.
Williamson's piece on Krugman is unfair. Krugman freely admits that he was traumatized by the early Bush years and does not pretend that his blog is a serious academic discussion of economics.
ReplyDelete"3. DeLong also cites some very interesting thoughts on the British industrial revolution. The idea is that technological progress was made necessary by high labor costs and made possible by cheap capital. Does this mean that the flood of cheap Chinese labor might be holding back innovation right now?"
ReplyDeleteYes.
Specifically, the single largest opportunity at any given time tends to absorb all the management attention. But this effect operates differently in different industry segments.
In software, the need for more productive development tools is as important as ever, but the pain is not felt by management because so many cheap developers have become available in India and elsewhere in "low cost countries".
The cost imbalance is gradually closing, but while the big labor arbitrage is there to be exploited it takes precedence over messy innovations like new programming techniques that can't reliably provide as large and predictable an improvement in margins.
"Does this mean that the flood of cheap Chinese labor might be holding back innovation right now?"
ReplyDeleteDo you have a measure of innovation? Cos if not, its all just pictures and talk as Lucas would say.
"Do you have a measure of innovation? Cos if not, its all just pictures and talk as Lucas would say."
ReplyDeletePutting a number to innovation is hard but that does not mean the number does not exist. I think a measure like "minimum publishable result" which tries to measure the intellectual achievement of an idea (rather than economic importance) could be fun.
Scientific papers would probably follow a power law distribution of how many "MPR"s a given paper represented. Einstein's photo-electric effect, brownian motion and special relativity papers would each have scored a huge number of MPRs, as would Godel's incompleteness theorem and some other works.
I agree on the Chinese labor shock decreasing the incentives to introduce labor saving technology. But as Seth wrote above I think the trend is probably already past it's peak. We will be importing inflation from China in the future, not deflation.
ReplyDeleteUnfortunately, a disproportionate amount of innovation will probably need to go into the energy sector just to stay reasonably still in per GDP energy cost for some time.
Thanks for the link. It is currently almost the only source of traffic to my blog. However, I do have to point out one little detail. I didn't write about old Keynesian models.
ReplyDeleteI wrote about The General Theory of Employment Interest and Money (Keynes 1937). This is very very different. The old Keynesian Models were based on Hicks's simplification of Keynes (roughly Keynes and the Classics tried to be The General Theory as The General Theory ... tried to be to the economy). Also they added a Phillips curve. The General Theory ... contains as clear a warning against doing this as was possible writing decades before Phillips.
As far as I have been able to tell, each and every one of new insights added to old Keynesian models based on decades of work with New Keynesian models are described in "The General Theory of Employment Interest and Money" Notably no one but I (except for a commenter at mostlymacro.blogspot.com) ever refers to that book in the course of the discussion.
I might add that the answer to my querries about what event or macro variable has been predicted using new Keynesian models has consistently been answered with predictions that useful predictions will be made when the models are improved. I have been reading this for 30 years now (OK to be honest for 29 years and 4 months).
"2. Brad DeLong discusses the forward march of human liberty. Upshot: the post-WW2 20th century was pretty much all good."
ReplyDeleteIf you're interested, Foucault problematizes modern conceptions of freedom.
http://en.wikipedia.org/wiki/Discipline_and_Punish#Discipline