Democracy in the mirror. Why is democracy something people should strive for? And how are we doing with ours? Consider first the fundamentals. Why is there a role for democracy in any circumstances? Fundamentally democracy is a form of group decision-making. Political institutions are needed in circumstances in which decisions must be made that affect all members of a group. Each member of a group has his or her own set of preferences about choices that affect the group; so there needs to be a process for arriving at a set of social preferences -- a social choice function. In addition to the aggregation of individual preferences, democratic values consider as well the circumstances under which the members of a group form their beliefs and preferences. The most fundamental reasons, then, to value democracy are its correspondence to the value of the moral equality of all persons and the capacity it creates for non-elite groups' struggles for fair treatment.
So how about the formative benefits of democracy? . The Laffer Curve and the Kimel Curve. By Mike Kimel People always talk about the Laffer curve, but have you ever seen it estimated? Have you ever wondered why you don’t? If you’re a quant guy, you know the answer to that. Because if you’re a quant guy, at some point curiosity must have gotten the best of you. That means you pulled out some data and you plugged it into whatever piece of software happened to be handy. What happened next depends on what sort of a quant guy you are. If you’re the sort that let’s the numbers do the talking, you spotted the joke and probably left it at that. Today, by coincidence, I got two e-mails asking me about the Laffer curve. So here’s how it works.
. (1) tax collections / GDP = A + B*tax rate + C*tax rate squared + some other stuff if desired A, B, and C are estimated statistically using a tool such as regression analysis. When you have such a shape, you look for the top of the upside down U and there’s your maximum. So I started with the obvious: So I reran (2) as follows: Population growth: the baby bomb | Editorial. The UN will announce the arrival of the 7 billionth human a week today.
It seems not to regard the day as one to be celebrated. Why else declare what is, after all, only a guesstimate on 31 October, a solemn day of mourning in the Christian calendar and of ghoulish Halloween partying in the Anglo-Saxon world? Some demographers warn of catastrophic environmental degradation, most acute in the areas where the population grows fastest – the ecologically fragile sub-Saharan Africa – while policies to tackle poverty and disease stall. Others argue that population growth is not necessarily a bad thing: it is only 12 years since the birth of the six billionth person was announced and, for a majority of the world's population, more things have got better than worse. If it is too soon to panic, there is a clear case for informed debate around a complex subject laden with cultural and ethical considerations. Take the case for the benefits of continuing population growth.
Civilization. Experimental economics: evolution, methods and achievements. Economist's View: "Is The American Dream A Myth?" We've known for some time that the degree of social mobility in the US is much less than people believe. But given how widespread the mobility myth is -- the false perception that there is equal (enough) opportunity allows us to be more accepting of unequal outcomes than we would be if we knew how stagnant social outcomes actually are -- the evidence that rebuts this belief is worth repeating: Is The American Dream A Myth?
, by Ronald Brownstein, National Journal: One tenet that separates the United States from other countries is our belief in upward mobility. A study of attitudes in 27 countries found that Americans, more than people elsewhere, tend to believe that intelligence, skill, and effort will be rewarded with success. This faith is vibrant even among groups to which opportunity has often been denied:... African-Americans and Hispanics were more likely than whites to believe that children of all races had adequate chances to succeed in America. P2P practices as condition for the next long wave. This article, previously published in Re-public (and written in cooperation with Franz Nahrada and Gleb Tyurin), takes at hypothesis that a new long wave of strong capitalist growth is still in the realm of possibilities.
My own position is that this still can happen, provided strong structural reforms would be undertaken, which is not very likely at this very moment, but could still take place a few years down the road under stronger social pressure. I do not believe however, that humanity has the time for a full Kondratieff wave of 50-60 years, given present danger signs for the biopsphere, and energy and resource depletion generally. In other words, if a there is a uptake of Kondratieff, it is likely to go only half-way before a truly systemic crisis occurs, and humanity has to choose between either regression, or a phase transition to a new political economy. Michel Bauwens: Why is that so? These waves have a certain internal logic. What are the elements of a long wave? Mind on Money. Economics has been around for almost four hundred years as a field of study.
For most of its existence, it was known as “political economy.” Glasgow University was the last academic holdout, only changing the name of its department to “Economics” in 1998. Too bad. Or maybe not. Maybe we’ll need to save that name to be able to describe our Supreme Court and the results of its wildly activist view of free speech and the “persons” who have that right. The 2012 Presidential campaign will begin Wednesday this week, and it will be dirtier and more expensive than any campaign in our living memory. //Rant On, and fair warning not to continue if you want to believe the Tea Party isn’t just another way to manipulate us by a pack of even greedier thieves than the current bunch It’s all become a matter of maximizing shareholder value, after all.
That’s seriously asymmetric as a return profile. Not all cases will be that simple. That’s enough money to be a kingmaker in small ponds. Jobs Taxes The Economy.
Healthcare. Credit. Immigration. Growth. Dissecting the social. The past dozen years or so have witnessed the emergence of a distinctive approach to the social sciences that its practitioners refer to as "analytical sociology. " Peter Hedström's Dissecting the Social: On the Principles of Analytical Sociology (2005) serves as a manifesto for the approach, and Pierre Demeulenaere, ed., Analytical Sociology and Social Mechanisms , and Peter Hedström and Peter Bearman, eds., The Oxford Handbook of Analytical Sociology provide substantive foundations for several areas of research within this approach.
And the European Network of Analytical Sociologists provides an institutional framework within which research approaches and findings can be shared (link). Hedström describes the analytical sociology approach in these terms: One important characteristic of the analytical approach is that it aims to gain understanding by dissecting the social phenomena to be explained. And here is how Hedström and Bearman describe the approach in the Handbook: .) ). Caballero: Pretense of Knowledge Syndrome. A Thought Experiment: The Boundaries of Neuroeconomics « Cheap Talk. Its a recent development that economists are turning to neuroscience to inform and enrich economic theory.
One controversial aspect is the potential use of neuroscience data to draw conclusions about welfare that go beyond traditional revealed preference. It is nicely summarized by this quote from Camerer, Lowenstein, and Prelec. The foundations of economic theory were constructed assuming that details about the functioning of the brain’s black box would not be known. This pessimism was expressed by William Jevons in 1871:I hesitate to say that men will ever have the means of measuring directly the feelings of the human heart.
It is from the quantitative effects of the feelings that we must estimate their comparative amounts.Since feelings were meant to predict behavior but could only be assessed from behavior, economists realized that, without direct measurement, feelings were useless intervening constructs. There are skeptics, I don’t count myself as one of them. Corruption Around the World. In numerous past posts that focused on development, I have stressed that progress can seldom be made when a country is weighed down by corruption. Corruption is perhaps the single most corrosive factor that keeps developing countries mired in poverty. Corruption also affects developed countries since it unproductively siphons off resources. Each year Transparency International publishes a Corruption Perceptions Index in which it ranks how well or how poorly countries are doing when it comes to eliminating corruption.
If you click on the link provided, it will take you to an interactive map and a table that provide a full listing of 178 countries. A quick glance at the map (a static version is shown below), shows that most of the countries that my colleague Tom Barnett places in the "non-integrating gap" (or "Gap" countries) remain extremely corrupt. In fact, the bottom 16 countries (i.e., the most corrupt) can all be found inside the "Gap. " Economist's View. Gauti Eggertson and Neil Mehotra have an interesting new paper: A Model of Secular Stagnation, by Gauti Eggertsson and Neil Mehrotra: 1 Introduction During the closing phase of the Great Depression in 1938, the President of the American Economic Association, Alvin Hansen, delivered a disturbing message in his Presidential Address to the Association (see Hansen ( 1939 )).
He suggested that the Great Depression might just be the start of a new era of ongoing unemployment and economic stagnation without any natural force towards full employment. This idea was termed the ”secular stagnation” hypothesis. One of the main driving forces of secular stagnation, according to Hansen, was a decline in the population birth rate and an oversupply of savings that was suppressing aggregate demand. Recently Hansen’s secular stagnation hypothesis has gained increased attention. In the abstract, they note the policy prescriptions for secular stagnation: Explainer: Why is deflation so harmful?
New column: The Banking Emperor Has No Clothes. Simon Johnson, the former chief economist at the International Monetary Fund, is the co-author of “13 Bankers.” Tami Chappell/ReutersTreasury Secretary Timothy F. Geithner. in a speech in Atlanta this week, said, “The U.S. banking system today is less concentrated than that of any other major country.” In a major speech earlier this week to the American Bankers Association’s international monetary conference, Treasury Secretary Timothy F. Geithner laid out his view of what went wrong in the financial sector before 2008, how the crisis was handled 2008-10 and what is needed to reform the system. Unfortunately, Mr. On history, Mr. More broadly, Mr. On logic, Mr.
But big banks in almost all other major countries have run into serious trouble, including those in Britain and Switzerland — where policy makers are now open about the potential scope of further disasters. Lawrence H. Mr. Mr. The right conclusion for Mr. Avant garde economics - macrobusiness.com.au | macrobusiness.com.au#comment-36512. My esteemed co-blogger Deep T made the comment that too little attention is being paid on MacroBusiness to creative solutions to the problems that are documented in great detail on MacroBusiness. I would go a step further. Economic analysis generally suffers from a deep flaw. Because it is a quasi-science (although in no respect truly scientific) is does not concentrate on what is new and unique. Science is not interested in the unique, only what is always the same. Having discovered what is always the case, then predictions can be made. Consequently it is a very poor tool for prediction.
This is, if not nonsense, at best only a part of the story. To show what I mean, consider two reports, one about the Australian stock market and one about the US market. The first is by Morningstar, and it shows how new the Australian resources boom has been for investors: This is new in the Australian context. 1. 2. 3. 4. The second report is from Prudential on the American stock market: Does This Ease Your Worries?: US GDP from 1870-2008. I just posted this at MoneyWatch: Does This Ease Your Worries? : US GDP from 1870-2008: As you can see from this picture, historically we've always recovered from recessions.
Eventually. But as you can also see from the Great Depression, recovery has not always been immediate -- the source of Keynes famous "In the long-run we're all dead. " I am confident that we'll return to trend this time as well, the question is how long it will take us to get there. At this point -- with the worrisome signs in recent data -- it's not looking to be anywhere near as fast as we'd like (source): Click here for a larger, clearer picture The graph only goes through 2008. Again, though we are beginning to grow at trend rate again and that's better than the free fall we were in, there is a lot of ground to make up. This looks about right to me (though I should note that in the past these forecasts have been overly optimistic): And the recovery of employment is likely to be even slower.
The Human Footprint - Friday, April 15, 2011. Humanity’s impact has spread unevenly but everywhere as we have transformed land and sea to meet the demands of a population that has doubled to 7 billion in 40 years. This map of the human footprint on land shows the combined impact of population density, land transformation, accessibility, and electric-power infrastructure, using nine data sets that researchers scored in terms of estimated contribution to human influence.
The corresponding map of the oceans shows the effects of 17 different human activities, such as commercial fishing and pollution from cargo shipping. Both sets of results factored in differences between Earth’s various ecosystems. On Land ... ... The coastal waters of highly developed regions have felt the effects of human activity most acutely.
Development’s Impact Developing countries are home to 80 percent of the world’s population but are responsible for only half of the world’s carbon dioxide emissions. Neo-Voodoo Economics - Friday, May 20, 2011. Turner ended with a plea: Mainstream economics needs to embrace the radical notion that people are not rational actors after all. “Good economics leaves us”—policymakers, regulators, and consumers—“with far wider degrees of freedom to make political and social choices than has frequently been asserted,” he told the gathering. “The role of good economics is to inform those choices, not to deny their possibility.” Good economics is in short supply in the wake of the financial crisis, particularly in Washington—and dangerously so.
The period of steady growth that economists once hubristically called the Great Moderation has become the “Great Mortification,” in the words of economic historian Philip Mirowski of the University of Notre Dame. The distrust and disarray among economists have left an intellectual vacuum in Washington’s fiscal and financial debate at a time when the stakes couldn’t be higher. That vacuum has created huge opportunities for discredited and dubious theories.
Billy blog » Blog Archive » When a nation stops growing. Philip Pilkington: Beyond growth – are we entering a new phase of economic maturity? There is Something Very Wrong with This Picture" Eight Facts about Social Security" Sticky prices, leverage, and Pascal’s wager. The Myth of Energy Breakthrough. Radioactive Surprise: Desert Oasis Water Traced Back to Nuclear Test Site | Water. Technology Review: Over the Horizon: A Moore's Law for Genetics. The Shape of Things to Come: Understanding the New Global Economy.
As Food Stamp Recipients Hit New Record, 400 Americans Account For 10% Of Capital Gains | zero hedge. The century of old age - macrobusiness.com.au | macrobusiness.com.au. America’s Middle Class Crisis: The Sobering Facts. Project Syndicate. Jeremy Has Spoken (But Rest Assured, Pro Money Management Isn't Listening) Op-Ed Contributor - Mr. Soddy’s Ecological Economy. David Sirota: "Barely Squeaking By On $300,000 A Year" Discussions about Energy and Our Future. A Wise Passage. Steve Keen’s Scary Minsky Model. Nihilism Alternatives - Patt 3. Nuclear Powered Desalination.
Observational Epidemiology. Think like a methodologist. Economist's View: "Crowding In" A Question of Causality. The misuses of Darwin | Simon Underdown. Aguanomics. The Automatic Earth. Kimberly Butler: Is the Medium the Message? The Dehumanization of the Medium. Does path dependence prevent real technological progress in energy?
The Long Wave Revisited, or Revisionist? The Dooh Nibor Economy (that’s “Robin Hood” backwards!) | Phil’s Stock World. Corruption, institutions, and firm productivity. Running on Emptiness: The Pathology of Civilization (9780922915750): John Zerzan. Rethinking the Mall - Opinionator Blog.
ClimateChange. On the End of Money. Clunkernomics Update. Education. HealthCare. More Than Meets the Eye. The Evolution of Foodspotting & its Plans to Expand Beyond Food. Franz Hörmann on the End of Money. 230 mpg? Reinventing Modernity: Reflexive Modernization vs Liquid Modernity vs Multiple Modernities -- Lee 9 (3): 355 -- European Journal of Social Theory. Ethnography. A perfect dystopian storm: Interview with "Flashmob Gone Wrong" speaker - O'Reilly Radar. The Changing Demographics of America. Excerpt: Zakaria’s ‘The Post-American World’ - Newsweek. The New Rules: America'sPlace in the World. Bin Laden, Terrorism, and the Economy - CBS MoneyWatch.com. All Together Now (or, Can Collective Intelligence Save the Planet?) - The Sustainability Initiative - MIT Sloan Management Review. The Law Of Unintended "Fair Value Option" Consequences. Inequality and the Right. The Universe at the End of the Restaurant.
Dan Gilbert on our mistaken expectations. Positions In Flux: On The Changing Role Of The Artist And Institution In The Networked Society (Intro) Friday Notebook: The New Simon-Ehrlich Teaching Story.