tag:blogger.com,1999:blog-17232051.post728281124097825713..comments2024-03-28T03:16:14.104-04:00Comments on Noahpinion: Big TFP data mystery! Noah Smithhttp://www.blogger.com/profile/09093917601641588575noreply@blogger.comBlogger52125tag:blogger.com,1999:blog-17232051.post-60778083110206346522015-11-06T19:33:57.346-05:002015-11-06T19:33:57.346-05:00Slavery or serfdom or other kinds of forced labour...Slavery or serfdom or other kinds of forced labour are indeed a common response to situations where labour is scarce relative to land or other opportunities. But this points to the third factor: the structure of society (hierarchy, roles, ability to collect rents and taxes..). The Russian problem for instance, was not just that landlords could be left without labour; it was that the Russian state could not function without the military and administrative services from the landlords and, without the state, Russia was basically fodder for the neighbours (the Crimean Tatars, for instance, lived from raiding Russia for people, who they then sold to the Ottomans). So the Russian state coerced the lower classes into serfdom and the upper classes into compulsory state service.<br /><br />This is an area where economists could learn much more from sociologists, historians and anthropologists, as the core doctrines of economy do not have much to say about social structure (a market is basically socially flat).Peter Thttps://www.blogger.com/profile/13289172253358199028noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-26724891106887762322015-11-05T22:59:53.774-05:002015-11-05T22:59:53.774-05:00What b.s....this is becoming my favorite blog. Li...What b.s....this is becoming my favorite blog. Like Scott Sumner's blog and Tyler Cowen's blog, this idiot says things that are provocative, that make you want to reach out and comment even when you wish to just lurch!<br /><br />"the real takeaway here, though, is that TFP measurements are HIGHLY suspect, and will continue to be so for the foreseeable future" - yes, and I knew that as a non-economist. TFP is measured as a 'residual' meaning it's not directly measured, hence prone to error due to everything and the kitchen sink included in it, as a residual. It's a fudge factor, akin to 'expectations' in macro models, or "natural interest rates", that also can't be measured. Actually even physics has this, with occult variables in quantum entanglement, but the difference is physicists can actually test their models, instead of just debating them online, and achieve results. Peace!Ray Lopezhttps://www.blogger.com/profile/11134761834999705305noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-73379439244773332502015-11-05T20:17:09.040-05:002015-11-05T20:17:09.040-05:00The plantation system was highly resistant to capi...The plantation system was highly resistant to capital investment. It was profitable, but far from optimal. For example, after a vacuum based sugar extraction system was developed, it was never adopted. Slave labor was incrementally cheap enough so that there was no need for expensive equipment upgrades like this. (This is a common problem with investment. Burger joints could be much more efficient and heavily automated, but labor is too cheap to make this worthwhile.)<br /><br />In the north, where labor was relatively expensive, there was all sorts of automation. McCormick's harvester, pulled by teams of horses using swingleback hitches, was called Lincoln's ace-in-the-hole during the Civil War as it dramatically reduced the need for harvest manpower. Expensive labor has always been the main driver of automation.<br /><br />Kaleberghttps://www.blogger.com/profile/05283840743310507878noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-61300849461691784162015-11-05T12:38:54.568-05:002015-11-05T12:38:54.568-05:00The residuals (TFP)are just the composite of the e...The residuals (TFP)are just the composite of the effect of variables for which you don't account. Why don't you account for them? Because economists can't be bothered to systematically investigate the unknowns.<br /><br />Example of TFP<br /><br />A guy already working in a company and already being paid for doing X comes up with an idea (Y) that will improve labor productivity at no measurable additional cost of either labor or capital, and with no additional input labor effort, difficulty, stress, moral, etc.. but simply by utilizing an already highly developed labor skill set that nobody prior had thought of using in this application.<br /><br />Two simple examples of Y:<br /> 1. Utilizing intricate sewing skills in an industrial high volume fine wire winding application. -- a 200% productivity improvement occurred. Real life example.... no exaggeration.<br /> 2. Rearranging points in a process to weed out stuff that would ultimately fail quality criteria at points further along in the process at higher value added loss. Net greater productivity per unit produced and shipped by 100%. Another real life example, no exaggeration. This can be called "paying more attention to detail".<br /> 3. Similar to 2) above: Implementing ongoing statistical trend data in real time processes to identify systematic drifts and spurious outliers followed by rigorous identification of root cause(s) and tooling adjustments to eliminate them. No additional engineering effort -- just more productive use of same. Imperceptible increase in labor with 1000% productivity improvement over 2 years. Real life example... no exaggeration. And BTW, Japan used this in a far more systematic and rigorous form which did add measurable labor and capital following WWII and was the predominant reason for Japan's post-war production machine and exports. The common name for it was "control charting". <br /><br />These productivity improvements spread rapidly intra-company and then even more rapidly thereafter inter-company, then inter-industry and ultimately inter-globally.<br /><br />These end up in the residuals (TFP). They only become apparent economically in creeping form over time as the effects spread from one unit of company to the entire company, then to more company's in an industry, then to more industries, etc.<br /><br />These types of improvements can be simply classified as "human efficiency" or " human factor yield improvement", where there is no perceptible or measurable increase in human effort applied, no or virtually no measureable capital expense. I simply refer to them as "attention to detail". A early example of this kind of efficiency gain which was widely proliferated for a long time was known as "time & motion" implementations... Smith's "pin" production example is probably the earliest reference to it in macro economics. Longtoothhttps://www.blogger.com/profile/08844066558431822440noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-2682199839344494942015-11-05T06:51:54.428-05:002015-11-05T06:51:54.428-05:00Duh, of course the OECD TFP numbers converge. They...Duh, of course the OECD TFP numbers converge. They have set 2010 as 100 for all countries. By design all countries must then converge (and have not hsd much time to diverge). It's an issue of relative vs absolute effects .....Anonymoushttps://www.blogger.com/profile/12030040792260806514noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-77088384456875062422015-11-05T06:12:06.188-05:002015-11-05T06:12:06.188-05:00While I don't like Mike's selfcongratulato...While I don't like Mike's selfcongratulatory tone (on the other hand, other people here are not much better in that), he has a point. It's a while since I read Anwar Shaikh's paper, "Laws of Production and Laws of Algebra: The Humbug Production Function." I found it pretty disturbing. I read similar papers since then, and they dramatically reduced the attractiveness of macro or at least growth theory. If somebody writes a blog article with the title "Lazy econ critiques", this suggests that the econ aren't "lazy". My impression in this respect is different (even though I would not call myself "econ critique"; I am just a micro guy).Achimnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-6733351071750169392015-11-05T04:13:11.501-05:002015-11-05T04:13:11.501-05:00Noah,
I'm not so sure why you are so keen on ...Noah,<br /> I'm not so sure why you are so keen on Cochrane. My view is that good guys are:<br />1. honest<br />2. want rising median welfare<br />Bad guys are<br />1. dishonest<br />2. uninterested in distribution of benefits.<br /><br />I'm not sure how Cochrane comes out a good guy on that basis.reasonhttps://www.blogger.com/profile/10958786975015285323noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-25711314450711924242015-11-04T23:59:55.897-05:002015-11-04T23:59:55.897-05:00Are there any established methodological problems ...Are there any established methodological problems with PPP?<br /><br />I became somewhat suspicious of the CIA Factbook and World Bank measures because they apparently don't include locally produced services that are public goods in many countries outside the USA. (Like Sweden and the UK.)JJFhttps://www.blogger.com/profile/11948014831964413383noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-82283725731871153102015-11-04T23:46:57.050-05:002015-11-04T23:46:57.050-05:00If the think fate of macro hangs on the accuracy o...If the think fate of macro hangs on the accuracy of measuring TFP "shocks," then yes, of course, you have been miseducated and you need to start over from scratch. There are no TFP shocks driving business cycles, unless maybe that once if you counted the oil embargo as a TFP shock, in which case you probably don't need to measure it in terms of TFP.<br /><br />I'm not sure if it's one of the reasons for that particular dataset to be nonsense, but generally the main reason the Penn World Tables are garbage is the PPP.Tom Warnerhttps://www.blogger.com/profile/11247836188106712069noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-8369344906227261262015-11-04T22:41:32.557-05:002015-11-04T22:41:32.557-05:00How many times do I have to tell you that TFP is j...How many times do I have to tell you that TFP is just the geometrically share-weighted factor prices? I know you've seen my paper on twitter: https://ideas.repec.org/p/new/wpaper/1513.htmlVulgar Economicshttps://www.blogger.com/profile/02732213110359339737noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-56570056378283237642015-11-04T22:40:26.270-05:002015-11-04T22:40:26.270-05:00This comment has been removed by the author.Vulgar Economicshttps://www.blogger.com/profile/02732213110359339737noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-68190163594946671992015-11-04T21:33:11.486-05:002015-11-04T21:33:11.486-05:00If you are David Pechacek below, see below.
Other...If you are David Pechacek below, see below.<br /><br />Otherwise I can't be expected to sort one Anonymous from another.<br /><br />I also have absolutely no idea what you are talking about in your claims to have started the discussion, since you don't appear to be Noah Smith, the author of this blog.<br /><br />Insofar as I can tell you are making a completely irrelevant and hysterical response to an extremely bad joke I made above.JJFhttps://www.blogger.com/profile/11948014831964413383noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-2973085644808297002015-11-04T21:26:58.513-05:002015-11-04T21:26:58.513-05:00Yeah, so I lost my temper.
It happens.
I apologi...Yeah, so I lost my temper.<br /><br />It happens.<br /><br />I apologize for the tone of the above, but not necessarily the content.<br /><br />I'm not entirely sure how many of the posts up and down the comment chain are cases where Anonymous equates to David Pechacek, but I'll try and explain my exasperation with you in this comment because, frankly, I don't want to engage with you any more.<br /><br />To the extent that there's an agreement that I know of in the economics field on the microecon of slavery as a labor source, it's reflected here in this very old Paul Krugman article from before the Times.<br /><br />http://www.pkarchive.org/theory/serfdom.html<br /><br />The relevant passage is: "Indeed, my old teacher Evsey Domar wrote a classic paper arguing that serfdom and slavery often were the response of ruling classes to labor shortage. Thus Russia imposed strict restrictions on the mobility of peasants from the late 16th century onward, precisely because the availability of rich new farmland on the expanding frontier would otherwise have increased their bargaining power against landlords. (The frontier expansion itself was probably the result of the growing effectiveness of firearms, which turned the military balance against the steppe nomads; so gunpowder, which contributed to the rise of the bourgeoisie in the West, created serfdom in the East). And, of course, slavery - which, along with serfdom, had died out in the West during the labor-abundant high Middle Ages - was reintroduced in the land-abundant conditions of the New World."<br /><br />As Ben Wheeler notes above, the slavery system only lent itself to a few cash crops with a high dollar value per acre. Once labor got more plentiful in America though, that system is likely to have become less and less profitable compared to hired hands, and died slowly over the course of urbanization as serfdom did in the high middle ages. The reason there were no plantations in the North was the rapidly increasing population density driving down the cost of labor there. (And the climate was unsuited to Cotton, Rice, Sugar and Tobacco.)<br /><br />You clearly don't accept that view, but I can sense no valid economic reasoning in your arguments against it above. You just invoke symmetry without taking into account the local population densities involved.<br /><br />So then come the moral questions.<br /><br />I don't mean to sound callous, but I find the application of absolute deontology to moral questions to be a waste of time. I don't accept your dictum that economic reasoning can ever be a justification for moral norms because I'm a utilitarian. So there is basically no point in the two of us arguing on that matter.<br /><br />It's the apparent position on your side that any appeal to market forces is a slippery slope downward to a market fundamentalism that I find pigheadedly stupid. It strikes me an as anti-market fundamentalism, just as dumb as the freshwater prejudice that markets always get things right.<br /><br />The thing regarding Chomsky is a simple expression of frustration at the apparent grandstanding on your part. Suppose that you are correct and my attitude towards the bad economics of slavery is morally wrong. How does you confronting me with that fact on a semi-obscure economics blog help anyone who is economically disadvantaged?<br /><br />Who, to put it bluntly, the fuck cares what either of us think?JJFhttps://www.blogger.com/profile/11948014831964413383noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-75898889192671869522015-11-04T21:15:44.613-05:002015-11-04T21:15:44.613-05:00I think the subject here is Wisconsin policy in th...I think the subject here is Wisconsin policy in this district.<br /><br />Where are these people? Sean, want a debate?<br /><br />Fellows, want a debate?<br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-57968461648285007472015-11-04T20:48:13.243-05:002015-11-04T20:48:13.243-05:00I started this discussion. If you don't know ...I started this discussion. If you don't know that I did it, you're fucked up or misinformed.<br /><br />I know personally the people on the opposite side, and I'm going to defect because I don't like you people.<br /><br /><br />Give me a reason to like you…<br /><br />Your'e fuckin history…<br /><br />I'm joining the opposition.<br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-29360305221446694922015-11-04T20:34:52.229-05:002015-11-04T20:34:52.229-05:00John, I started this thread.
You have no idea whe...John, I started this thread.<br /><br />You have no idea wheat what you're talking about.<br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-63061180955142700822015-11-04T19:12:43.769-05:002015-11-04T19:12:43.769-05:00Plantations were the factories of the day. Most pl...Plantations were the factories of the day. Most plantations used upwards of 100 slaves working in a division of labor system where each group of 10 or so slaves performed a different task. The jobs were arranged in such a way that speed and precision mattered so that one group was always pushing the next group to get their job so the second group could do theirs. It resembled an assembly line. <br /><br />This system only leant itself to a few crops. It isn't that slave labor wasn't tried with corn and wheat. It's that it wasn't any better than using free hired help. The best crop for slave labor was sugar cane. Cotton wad second. Indigo, rice, and tobacco were marginally more profitable with slave labor. Ibnyaminhttps://www.blogger.com/profile/02200468798337178145noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-16551054198263514832015-11-04T18:34:33.641-05:002015-11-04T18:34:33.641-05:00May I suggest http://www.iariw.org/papers/2013/Wei...May I suggest http://www.iariw.org/papers/2013/Weipaper.pdfdavidhttps://www.blogger.com/profile/18149129058044597506noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-67743437172826836402015-11-04T18:10:57.632-05:002015-11-04T18:10:57.632-05:00And John, I was the one who started this conversat...And John, I was the one who started this conversation in the first place.<br /><br />I started the conversation on the blogs about TFP.<br /><br />Krugman responded and even got Solow involved. They're responding to what I said, and while I find it somewhat validating, I also find it alienating.<br /><br />I will never be part of this group. I can only say what I think. Why did I get involved in the first place? I was concerned. Perhaps I had something to add that few others understood. I'm not sure anymore.<br /><br />You're impenetrable as a group. Why did I try?<br /><br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-80650741282969164232015-11-04T18:06:34.860-05:002015-11-04T18:06:34.860-05:00I was going to respond with contempt, but I though...I was going to respond with contempt, but I thought otherwise.<br /><br />What is 'academic consensus' and why does it matter to reality?<br /><br />I would like to have a more lengthy discussion on this, and unfortunately, there is no appropriate forum for this.<br /><br />I have no idea what that last statement is about. I know who Chomsky is, and I agree with some of his assessments. Not all, but some. You've obviously read him, so I ask, to continue the conversation, what is your take on his viewpoints?<br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-71994888337515196372015-11-04T17:13:45.386-05:002015-11-04T17:13:45.386-05:00If you are so down on economists, you might want t...If you are so down on economists, you might want to consider finding another blog to patronize.<br /><br />You also commented in the wrong comment thread.<br /><br />Unless of course you are Russ Robertson, which seems unlikely.JJFhttps://www.blogger.com/profile/11948014831964413383noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-78172004561549594992015-11-04T17:03:11.222-05:002015-11-04T17:03:11.222-05:00Yeah, sure, whatever.
Believe what you want irres...Yeah, sure, whatever.<br /><br />Believe what you want irrespective of academic consensus.<br /><br />I do not believe that markets provide any guarantee of morality or fairness.<br /><br />Thanks for torturing my statements into an apparent affirmation of that.<br /><br />Thank you also for derailing an attempt to start a discussion on historic miscalculations of TFP to self-indulgently preach a sermon on morality, which I note, you are not willing to attach your name to.<br /><br />Keep on boldly speaking truth to power there, micro-Chomsky.JJFhttps://www.blogger.com/profile/11948014831964413383noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-88532739469026253682015-11-04T16:19:17.878-05:002015-11-04T16:19:17.878-05:00Somehow "measures" was omitted from my l...Somehow "measures" was omitted from my last comment. Oh well, nobody's listening anyway.<br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-37192627591230966302015-11-04T16:16:48.433-05:002015-11-04T16:16:48.433-05:00Oh, and to finish the last thought, productivity m...Oh, and to finish the last thought, productivity measures pretty accurately the exploitation of low wage labor.<br /><br />You have a robot that produces at X rate, and I have a robot that produces at 5X rate. Duh…<br /><br />The question for the ethically informed was always about whether our economy could absorb and help foreign workers without harming domestic workers. The clear answer is no. And the political instability that resulted might well end this union. Give it some time.<br /><br />These workers are just robots in this calculation. Do I agree? No. Is this how things are done? Yes.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-40087864869068844642015-11-04T14:51:50.214-05:002015-11-04T14:51:50.214-05:00In your update, I suspect that Groningen U is just...In your update, I suspect that Groningen U is just trying to cross its ts and dot its is. (How do you write this phrase properly?). If they're going to be getting a lot more attention they're going to need a new level of internal scrutiny that they don't have in place yet. I don't doubt their numbers in their general implications. I suspect they will be corrected somewhat closer to OEPC, but will they totally correct the problem?<br /><br />They could be mistaken in trying to address some things I've said in terms of productivity alone, and most likely productivity calculations are not going to show the problem we're trying to get at here. My main point is that productivity measures don't necessarily measure technology. They can measure other things, such as shifts in accounting methods due to corporate inversion.<br />Anonymousnoreply@blogger.com