Saturday, July 13, 2013

The role of experts

Prof. Krugman has been writing a lot lately about the "puzzling" fact that those who were wrong about what the economy needed and how it would respond have neither been held to account for their inaccuracies, or felt any need to acknowledge their errors. I don't understand his confusion. Experts and pundits are never faulted or punished for being wrong, only for being disloyal. This is as true of economic policy as it was about war. It is true in every political environment, whether in public or within private organizations.

Rick Santelli's job at CNBC wasn't to be right. It was to provide arguments and rationalizations for CNBC's viewers. It was to give depth to the views those viewers already held, to give them more sophisticated arguments to advance the views they would have advanced, anyway. He did that job well, probably because he held very similar views himself. His performance wasn't cynical. He used his intelligence as most of us do, most of the time, to make arguments in support of our convictions. His convictions aligned with his audience. He was a reliable ally.

Pundits and experts don't lose their jobs or their standing for being wrong. They never have and never will. They lose their jobs for failing to provide support for their political allies. Writers at the National Review will never lose their jobs for expressing a conservative view, no matter how wrong they are proven over time. They will never hold their jobs by expressing a liberal view, no matter how right that view turns out to be. They need to be clever enough to make their readers more committed to the program, they need to be witty enough to be memorable. Accuracy is completely irrelevant.

Perhaps Krugman reacts more strongly to this phenomenon within economics because the lack of responsiveness to the real world is taking place within his own field, because he feels that the failure of economists to lose status for behaving like other experts puts the field into disrepute, weakening the claim of economics to be a science. I fear there is nothing to be done, however. Economics is and always will be the study of wealth and its creation. Its recommendations will always affect the fortunes of the powerful, and the powerful will always find those with the ability to make arguments on their behalf.

Tuesday, June 11, 2013

First, they came for the terrorists...

It turns out we've been building massive surveillance engines and stuffing them with phone data, social media conversations, search terms, and who knows what else. And it turns out that we're so afraid of terrorists that we think this is a good idea, even though the 9/11 attack killed less than a quarter of the number of homicides in any year from 2000 to 2010. And maybe it's even stopped an attack or two, in which case it's saved some lives.

If saving lives is the criterion for whether we should do this, however, I wonder why we'd stop there. Why wouldn't we use the same approach domestically? If we found people whose profiles suggested future murders, why wouldn't we go through their lives and contacts and find ways to get them off the streets? Wouldn't that be the responsible, prudent thing to do?



Tuesday, August 21, 2012

Growth, trade balance, and tax policy

Kevin Drum wonders how we can reduce trade deficits to increase growth, especially in a world where everyone else is trying to do the same thing. The simple answer is that we can't and almost certainly shouldn't try.

The US has been running a trade deficit for almost forty years now, leading to our enduring status as The World's Largest Debtor nation. That status only tells half the story. That debt doesn't reflect money we have to repay, in the normal sense of the word. It reflects the fact that foreign entities own more American assets than we own overseas assets. Some of those assets are bonds that require repayment, but others are factories or real estate with overseas owners. And while it's true that foreigners own more assets in the US than we own overseas, our foreign assets are also enormous. They're so large, in fact, that while we're a debtor nation, we earn more from our foreign assets than foreign owners earn from our domestic ones, a situation that has persisted for many years.

Why is this the case? It turns out that investments in the US are safer than similar investments abroad. As a result, investors are willing to accept lower returns. As long as other countries are rich enough to invest here and our assets are viewed as safe, the dollar will be stronger than our trade balance would suggest, and our trade balance will suffer as a result.

It's a form of Resource Curse, where investment safety inflates the value of our currency and makes other economic sectors less competitive, but the conditions that make investments safe are, in fact, good things. We don't want to get rid of them.

As Dean Baker concludes in the article Kevin referenced, we need to stimulate the economy through government spending. We can't borrow indefinitely to support that, so we should raise taxes. That's not what we'll actually do, of course. We'll keep lowering taxes on the rich, hoping that they'll stop hoarding money and invest it instead. They won't do so, because they'll see how poor everyone else is and conclude that there's not much profit to be made.

Tuesday, December 13, 2011

From today's Chronicle, three stories. The first covers the Occupy effort to disrupt port activities. The second talks about the disconnect between the Occupy movement and blacks. The third is a column by Chip Johnson, talking about how Occupy is doing it all wrong, because they're being disruptive.

The three articles share a common theme: Occupy protests are too disruptive. Disruptive activity hurts people and detracts from the message. If the protesters would behave themselves and not get in the way of people living their lives, they'd be more effective.

Buried in the second article, however, is the following passage:
"Why don't people come out here and Occupy about the violence in our neighborhood?" said Adams, a 44-year-old project manager at a substance-abuse clinic. Every Saturday, she and other members of her church stand on street corners and hold signs asking people to "Stop the Violence."
A search for Charlene Adams on sfgate showed up nothing prior to the article about Occupy. A search for "Stop the Violence" also came up empty.

The article about how blacks feel disconnected from the Occupy movement is right on many points. Black communities have been in crisis for a long time, and no one has reacted. No one started an Occupy movement on their behalf. No one took over downtown Oakland in protest of inner city violence. Protests against injustice that take place only when injustice personally affects the protesters do show moral weakness.

But all three articles miss a fundamental point. The Occupy protests have been successful at getting their point across precisely because they have been disruptive, because they didn't take place on sidewalks, on weekends, out of the view and out of the way of the powerful. The Occupy movement should champion the neighborhoods of Oakland, but if they do so in the neighborhoods of Oakland--rather than downtown--if they do so on the weekends when it doesn't interfere with business, the Chronicle will ignore it, just as they've ignored Ms. Adams' weekend protests against violence.

Wednesday, November 09, 2011

the narrowest result

Some Senators have introduced a resolution to reverse Citizens United. They draw their amendment as narrowly as possible, because everything else is hunky-dory. The Citizens United decision is the root cause of all our problems.

Thursday, November 03, 2011

it's not about objectivity

David Atkins complains about the behavior of Politico, reporting on the Cain and Perry camps as if it weren't part of the story, and says
The myth of objectivity in journalism can't die a fast enough death.
But it's never been about objectivity. It's been about the appearance of objectivity. It's always been OK (and unavoidable) to have political views, as long as you can claim that you don't.

Saturday, October 22, 2011

handing out free money

Atrios periodically suggests handing out free money. As he's pointed out, free money gets handed out all the time. Since January 2008, about $2T has been handed out. It could have done a lot of good if it had been given to those who needed it.