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Archive for March, 2011

Does this Count?

March 19, 2011 Leave a comment

About a week ago Ezra Klein asked, “Why don’t more pop songs include accordions?” He included Edward Maya & Vika Jigulina’s hit song. I’m not sure if this is exactly pop music, but it’s close and I like it. So there.

Categories: Music Tags:

Broken Window Fallacy Fallacy

March 16, 2011 Leave a comment

So lately I’ve been hearing Bastiat’s broken window fallacy repeated in order to retort some liberals’ thoughts that the Japanese crisis may help the economy. It was also a common argument – for some reason – against the stimulus.

Veronique de Rugy:

In the Daily Caller, Ryan Young explains why [the Keynesian argument] makes no sense. Sure, Japanese workers will have no choice but to rebuild, and people will have to spend their savings to rebuild their houses or replace possessions destroyed in the quake. That spending will be captured in GDP measurements and it will look like Japan’s economy is boosted. However, Ryan notes:

. . . if the tsunami had never happened, people would still have all the buildings and cars that they had in the first place. They would be able to spend their money on other, additional goods that they want.

And those new construction jobs the tsunami will create? Every last one of those workers could be making something else instead. They could be producing computers, televisions, almost anything.

As not to let the great Bastiat be used so crassly, allow me to point out that, yes, fixing a broken window or a destroyed city won’t make more wealth than we originally started with. It will only get us back to where we previously were. Now let me just clear this up to the anti-stimulus crowd: Bastiat wasn’t arguing to stop fixing broken windows. We had a recession – the economy shrunk. Japan is going through a catastrophic disaster. It helps the economy to fix things.

So when de Rugy says the GDP measurements make it “look like” a boosted economy, what she fails to notice is that it looks like GDP is growing because it is growing. Ryan Young stumbles on the whole reason why we need stimulus when he writes, “those workers could be making something else.” The problem during a recession and our currently weak economy is precisely that lots of idle workers are not making anything. De Rugy smugly wonders why stimulus advocates don’t “recommend that we send our military to destroy New York, and some bridges and roads along the way” in order to improve the economy. Well, Veronique, doing that would commit the broken window fallacy. Thinking that we shouldn’t pay jobless construction workers to fix our naturally crumbling infrastructure is the broken window fallacy fallacy.

Categories: Stimulus, Veronique de Rugy Tags:

Matching Reforms

March 12, 2011 1 comment

It’s surprisingly difficult to find dispassionate arguments for reforms that harm teachers’ interests. I imagine this might be due to most academics having a strong pro-teacher bias so the type of people arguing against teachers usually are rabid crazies on the right. But I suspect that I’m susceptible to bias since both my parents, my sister, and my sister-in-law are all teachers and I like teachers. Therefore, I do my best to search out sober arguments to penetrate that potential bias. Megan McArdle does an admirable job at presenting clear arguments for weakening certain teacher benefits without demonizing teachers and while acknowledging reform pitfalls.

Her whole piece is worth reading so I encourage it, but even if we accept her argument that making it easier to fire teachers outweighs its downsides, she rests her argument on the matching reform of being able to compensate teachers much differently.

At a minimum, making teachers easier to fire needs to be paired with extensive reforms: a move towards defined contribution rather than defined benefit plans (which make a mid-career job loss catastrophic); elimination of seniority and useless credentials as the primary criteria for setting pay; broadening the recruiting base by eliminating a requirement for ed degrees; and a shift towards paying teachers more, especially in math and science.  I also think it’s absolutely crucial to set up some sort of Federal bonus to recruit high-performing teachers to the lowest-performing districts–a bonus sizeable enough to attract top teachers, and available only on one-year contracts.

Note that she says, “at a minimum”! Does she believe that if these extensive reforms aren’t linked together that we should still dissolve teachers’ benefits in the way she suggests. Despite some of her wording, I actually suspect she would say, “yes,” but I can’t be sure. It seems difficult to believe that we could sustain public support for paying teachers even higher wages in order to maintain administrative flexibility without teacher quality suffering mightily. I’m sure it is exaggerated because of the economic climate, but there is already consistent complaints that teachers get paid too much even though we pay our teachers so little compared to other countries.

Paying teachers high enough wages to entice attractive candidates and keep the best performers is challenging in a institution that isn’t committed to making profits. In business it makes sense to pay competitive wages because if you don’t you lose out on the profits those extra wages pay for. But the bottom line for schools isn’t profits, it’s education. It’s much more difficult to determine what the marginal dollar buys in student learning so it’s easy for political support for higher wages to dry up. Think recessions.

If you agree that the pubic benefit demands a role for state funded education there is a need to maintain a constant level of support for competitive teacher compensation. I’d support testing McArdle’s extensive reforms, but worry that the diffuse benefits bought at the more concentrated cost to the taxpayer might be too difficult to keep those competing interests from pulling apart. I’m pessimistic on the prospect of the culture changing enough to entrench sustained support.

Categories: Education, Megan McArdle

Conflating Choices

March 11, 2011 4 comments

In this remarkable clip, Rand Paul goes off on deputy assistant energy secretary for efficiency on how she’s restricting consumers’ free choices yet doesn’t see the hypocrisy in being simultaneously “pro-choice” for abortion.

Senator Paul is echoing a very common argument among libertarians that they repeat amongst themselves to laugh at those inconsistent liberals! Ha ha ha. Oddly, Paul is against a woman’s right to have an abortion so it’s a bit strange for him to be making the argument but oh well. I could hammer him for his hypocrisy, but that’s not what bothers me.

PZ Myers, who I got the clip from, and Irin Carmon (PZ got it from her) bash Paul because of the degree of conflating a woman’s choice with a choice to buy a toilet. But it’s not the degree (or not just the degree) for why Paul is wrong. It’s quite simple. Having an abortion is a personal choice without large negative externalities that shape other citizens’ choices. Buying products that use wasteful amounts of energy, deplete common resources, or pollute the public environment affect other consumers, which restricts their choice to breath clean air and drink safe water. Conservation isn’t a leftist plot for capricious power to control; it’s to conserve scarce resources so the rest of us can make more choices.

Categories: Rand Paul

Real America: Home of the… Cry Babies?

March 10, 2011 Leave a comment

Everyone should check out this interview Ezra Klein had with Secretary of Agriculture Tom Vilsack after Klein praised cities. If you want the short version, rural people get generous yet economically inefficient subsidies and constant praise from politicians, but are sad because not enough journalists speak up for them. So now we know where this “Real America vs Coastal elites” complex comes from. You’d think they’d be happy with billions of dollars in subsidies and overrepresentation in Congress, but I guess we have to thank them for that too.

Categories: Ezra Klein Tags:

The March of the Machines

March 7, 2011 2 comments

Every morning that I wake up worried that I might end up in too positive a frame of mind to properly mope through my day, I make sure to read a Paul Krugman column. Today he further crushes my optimism for the future by explaining why increased innovation is reducing the demand for educated workers.

Computers, it turns out, can quickly analyze millions of documents, cheaply performing a task that used to require armies of lawyers and paralegals. In this case, then, technological progress is actually reducing the demand for highly educated workers.

And legal research isn’t an isolated example. As the article points out, software has also been replacing engineers in such tasks as chip design. More broadly, the idea that modern technology eliminates only menial jobs, that well-educated workers are clear winners, may dominate popular discussion, but it’s actually decades out of date.

[…]

[T]he notion that putting more kids through college can restore the middle-class society we used to have is wishful thinking. It’s no longer true that having a college degree guarantees that you’ll get a good job, and it’s becoming less true with each passing decade.

As computers and other technologies get better at preforming more complex tasks the more our labor markets will dramatically change. From reading this you might come away awash in despair at the prospect of the inevitable march of robots taking your good jobs away. But hold on a nanosecond. (I was so tempted I was to write an updated Candlemakers’ petition.) This march isn’t inevitable; we could become luddites and stop innovating – problem solved, right? Framing it that way concentrates the mind a bit: I’m not saying better technology and innovation don’t pose any problems for us, but those problems come linked to massive gains in productivity and material wealth. That we don’t need “armies of lawyers” to analyze legal documents is a good thing. When was the last time you thought, “man, getting good legal help was just too damn inexpensive!”? Yes, many jobs in the medical field may soon be obsolete; but, if our country’s finances face any problem right now it’s not cheaper medical costs.

These same “problems” also come with free trade and immigration. Policymakers need to help transition workers displaced by trade, technology, and immigration, but we can’t forget that these things bring enormous benefits. We could all go back to hiring lamplighters, typists, and switchboard operators yet somehow I think most people realize we’re better off because we don’t have to.

Categories: Paul Krugman Tags:

Here’s a Tip.

March 5, 2011 6 comments

 

(20% to the Daily Dish)

Categories: Uncategorized Tags:
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