In an earlier post I’ve talked about how ‘performing’ government drives a range of pathologies – in the case of the post I was suggesting it generates a kind of soft-secrecy. But it drives other pathologies – like bullshit. I put it thus:
Imagine you’re a journalist who has to cover a story on red tape and regulation. Or a politician who has to have something to say on it – or a bureaucrat within government or the BCA who has to come up with a policy on it. What are you going to do? You can’t just sit there and say “I don’t really know”, or “nobody knows more than a tiny part of the puzzle”. Deloitte will be putting its finger I the air and estimating the cost of regulation to the whole economy ($250 billion p.a. since you ask). Why saving just 10 per cent of it would be a huge micro-economic reform. What are you going to say? (Quick, you’re on Insiders on Saturday, cameras will be rolling. Remember, John Kerrin got sacked in the early 90s recession when journalists asked him when the recession would end and he said “Your guess is as good as mine”).
Well there’s only one way through.
And here’s an example of the power and the subtlety of the phenomenon. The other night I did an interview. I was rung at around 4.30 and asked if I’d talk about unemployment. The HALE index had received a lot of publicity about long-term unemployment the previous weekend. I was extremely pressed for time when rung, but said I’d be happy to do so when rung back at 6.15 when the program would be live. I’d been very busy ever since that weekend.
As the presenter voiced over the intro he said that new unemployment numbers had come out that day. “Holy crap” I thought. I didn’t know. What was I to do? Fortunately as the introduction went on, the announcer did introduce long-term unemployment as a major theme. But he’d be reasonably entitled to think that I knew that there had been some fresh numbers out. I was trying to work out what I’d do. The incentives were to brazen it out and bullshit on. But before it became clear that he was going to talk about long-term unemployment I had decided I would just have to come clean and say that I was there to talk about LTU and not the numbers that day. It turned out he was happy with me focusing on what I’d thought I was agreeing to talk about.
Of course one incentive I’m facing is not looking like a nincompoop myself. But I’m also trying not to embarrass the host. And that fact subtly draws one into a role play that isn’t entirely comfortable. In this interview the host said Lateral Economics had done a ‘study’ of long-term unemployment. Well the segment was only five minutes and everyone’s busy pumping out the programs. So that was said on the fly. It wasn’t true. We’d got ABS numbers and run them through the HALE methodology and the story was what that methodology told us – that long-term unemployment had cost the economy nearly $4 billion that quarter – more than the terms of trade. Obviously I wouldn’t have lied if pressed, but I let it go through to the keeper. And so was drawn into the not-entirely-accurate narrative.
Sesame Street is one of the largest early childhood interventions ever to take place. It was introduced in 1969 as an educational, early childhood program with the explicit goal of preparing preschool age children for school entry. Millions of children watched a typical episode in its early years. Well-designed studies at its inception provided evidence that watching the show generated an immediate and sizeable increase in test scores. In this paper we investigate whether the first cohorts of preschool children exposed to Sesame Street experienced improved outcomes subsequently. We implement an instrumental variables strategy exploiting limitations in television technology generated by distance to a broadcast tower and UHF versus VHF transmission to distinguish counties by Sesame Street reception quality. We relate this geographic variation to outcomes in Census data including grade-for-age status in 1980, educational attainment in 1990, and labor market outcomes in 2000.
The results indicate that Sesame Street accomplished its goal of improving school readiness; preschool-aged children in areas with better reception when it was introduced were more likely to advance through school as appropriate for their age. This effect is particularly pronounced for boys and non-Hispanic, black children, as well as children living in economically disadvantaged areas. The evidence regarding the impact on ultimate educational attainment and labor market outcomes is inconclusive.
NBER Working Paper 1229 by Melissa S. Kearney, Phillip B. Levine - #21229 (CH ED LS)
The HALE index got a bit of attention this weekend owing to the way in which it highlights the cost of long-term unemployment. It’s certainly a graphic illustration of the way in which GDP hides important developments from us. Mostly what people like about the HALE is the way in which it tries to adjust GDP to take account of large and strong impacts on subjective wellbeing that are not picked up by GDP.
Because it’s an index and will ultimately be published as a single number, there’s no point in including things that are not large – as they’ll never get their signal through the noise of everything else. So the main things which are adjusted for known, large and widespread non-economic wellbeing effects are inequality, unemployment, obesity and mental illness. But these things rarely change sufficiently between quarters to generate much news unless the journalist covering the story decides to make them the focus of coverage in some way.
By contrast the things in the index that really drive substantial deviations from GDP are related to the ways in which GDP is a bad measure of economic wellbeing. Because it’s an index of wellbeing, the national accounts series on which the HALE is based is real net national disposable income. This picks up the terms of trade which has been an important part of our economic story particularly lately and the depreciation of capital. This quarter falling terms of trade reduced national income by around 0.7% reducing the quarterly GDP figure from 0.9% to 0.2%.
And one of the things I was most pleased to work out in the methodology of the HALE index was trying to take into account the growth and decay of human capital or the economic value of knowhow on a quarterly ‘accruals’ basis something GDP assiduously avoids as it measures recurrent or income transactions and not capital transactions. I had been highly critical of the leftist stitch up index – the GPI for this reason. Continue reading
Hold the presses – Coal may not be good for humanity. OK that was a cheap ideological shot – the kind you might see on our rival ideologically aligned blogs but surely not here at Club Pony.
In any event, the graphic above is a remarkable illustration of the long lived effect of the culture and economy that grew up around coal in the eighteenth and nineteenth century. If your area mined coal, chances are you voted Labour in the election and you’re more likely to die young (the map on the right being one of life expectancy).
This is the framework all Troppo authors use in their online reputation management (ORM). KPIs are reported monthly. If you notice any Troppo authors going off track, please shoot an email to [email protected]
This article by Maureen O’Dowd on the stress of getting a good rating as a user of a service like Uber is worth pondering. It’s important what ratings are for. They’re supposed to be for the exchange of information. But sometimes they become strategic – like they are, or can become on RateMyProfessor where professors get threatened with strategic strikes against their ratings if they won’t give students what they want – ie good marks or whatever else they’re after.
There’s another problem. Even when the players are not motivated by strategic considerations, they might not be rating each other in a way which is generating the most important information for those who stand in their shoes and who are influenced by their ratings. I had one bad experience on oDesk where a guy I’d hired got irritated with me because I wasn’t giving him clear directions. For me that was a feature, not a bug. I was both trying to optimise my time but also seeking to just gradually explore whether I could work with the guy – was he resourceful, could he figure out what I was after etc. I also asked him to look up some material on a paywalled site. I told him that he could subscribe free for an introductory period of two weeks.
Anyway, all this ended badly. He thought I was trying to exploit him and was insisting that he pay subscriptions to work for me – which I wasn’t. And he was frustrated that my instructions were not clear and copious. But here’s the thing. I was buying a service from him. So the way I see it, so long as I was prepared to underwrite any horsing around, any incomprehension of his of my mysterious ways, that is so long as I was paying him for all the time he claimed to be taking, then I think it’s not that relevant to my rating as an employer if, on the first project, he found me less clear than he would like. (A lot of jobs on oDesk, and a lot of the jobs people are looking for, involve instructions like “copy the data from this website, and paste it into this spreadsheet from cell A1 down to cell A1000.)
Over time if we develop a working relationship and he continues to find my style a pain in the arse, well then that might be relevant to other contractors. In the upshot, while I’m all for the democratisation/equalisation of the employer/employee | contractor/contractee relationship and see ratings as a very powerful mechanism for doing so (why didn’t economic reform develop in that direction years ago?) that has to be oriented around their respective and different needs. People paying for services generally want quality work and a range of ancillary attributes to do with effective cooperation with the person paying. The overwhelming need for the contractor is to have an contractee who won’t be trying to pressure or short-change them – and in the case of my situation on oDesk who will underwrite their claims to work, however useless, while they work out whether they can work together.
Paul Krugman has an interesting blog post on the extent to which there might be contagion from one area of social capital (or lack thereof) to another. He’s responding to the claim CEOs made to him that they only started arcing up their pay demands when they saw sportspeople doing it. And we can all understand the micro-foundations for rises in superstar sportspeople – local sub-urban live audiences morphing into TV audiences at the city, national or global level.
One of the things that’s gradually been happening over the same period is a kind of leeching away of general social solidarity. The most striking aspect of this is a stat I heard on Radio National’s All in the Mind. Asked of the importance of “being very well off financially”
The latest data from 2013 for entering university students here in the US, 82% say that that is an important life goal. And back in the late ’60s and early ’70s only about 45% said that was an important life goal.
I’ve written about what I call irreducibility at least twice before. Then along comes this nice article in the excellent new publication The Mandarin on the “19 reasons why agencies find it hard to hire technologists“. It’s a classic case of how top down systems don’t manage the irreducibility of work at the coalface. Anyway, I’ll leave the list below, though the further explanation of each point is in the original via the link. I also haven’t included all the reasons as they require explanation – which you can get from the original.
- You force developers to use tools designed for lawyers
- You distrust your employees
- You tether developers to their desk
- You prefer government-specific service providers
- You still see waterfall as a viable option [rather than agile development]
- You don’t place process on a pedestal
- You erect a moat between developers and servers
- New technologies are guilty until proven innocent
- You use open source as a verb
- Working in the open is a novelty, not a best practice
- Speaking at conferences is tightly controlled
- Geeks are the bottom of your food chain
- Culture only happens outside of your working hours
- You measure your hiring process in months
- Onboarding is an afterthought
- Recruitment is unheard of
- You block half the internet
I’ve written about the phenomenon of discursive collapse several times on Troppo. The engine behind the phenomenon is the desire of the discipline to get on with what it’s been doing – filling out some well recognised and somehow aesthetically pleasing research program. So when some problem comes up – like the theory of the second best for instance, there’s usually an interesting debate but it can be surprisingly short lived. If the problem threatens the logic of the research program it just fades into the background, largely ignored – but usually with a little sub-discipline starting up as a kind of ghetto in the discipline. The discipline exercises what Marcuse called ‘repressive tolerance’ which is to say it doesn’t directly repress the discussion, it tolerates it, and ignores its corrosive implications. Indeed the process can even lead to discursive reversal which is some travesty of the intentions and import of the original piece of work (on which also see this). In this post, after providing a further worked example, I’ll point to another brilliant explanation of what I take to be the same phenomenon in macro.
Lipsey’s and Lancaster’s ‘general theory of the second best’ illustrated the radical insufficiency of existing economic theory for generating robust policy conclusions by demonstrating that, where just one of the conditions for an optimum was violated, the other conditions of the optimum could no longer be assumed to be desirable. Given that in any actual economy there are endless violations of optimality conditions, Mishan’s concern that the new theory might represent a new “impossibility theorem” – in the tradition of Arrow – was understandable. The new theory initiated a vigorous debate about when one might still warrantably argue that the traditional principles of economic management – eg move pricing towards marginal cost, reduce or compensate for externalities, reduce asymmetric information to the extent possible or cost effective - in admittedly ‘second best’ situations, notwithstanding the corrosive implications of the theory of the second best (See Mishan reference above). If, from this point, the discipline was to move forward with theoretical integrity, it would have to have been by way of the development of this literature which was true to the theoretical foundations of neoclassical economics.
Today however the careful considerations explored in that literature are rarely confronted in contemporary discussions of policy problems to which the theory of the second best is relevant. Continue reading
Warning, this diagram came up in a Google image search and is not to be taken too seriously. It’s a jungle out there!
With parts one and two here and here . . . in which I conclude the previous two posts with a column for the Guardian which tries to condense the previous two posts as well as deliver on the tantalising ‘to be continued’ of Part Two. The flood of comments on both posts suggests you can hardly wait:
Call me old fashioned but I thought that, since the 1950s, the economic textbook had said that the job of macro-economic policy – broadly the suite of fiscal (the budget) and monetary policy (interest rates) – is to return the economy as rapidly as possible to the path that maximises employment growth without stirring inflation beyond its target band.
With policy rates set by central banks hovering around zero in most of the developed world, and economies depressed, the swing to austerity has been deeply misguided, as some international organisations like the IMF are recognising. At the very least the developed world could be funding a boom in infrastructure investment all financed at Western Governments’ cost of long-term borrowing – which is in many cases down around 2 per cent.
Things are different in Australia. In contrast to other countries, the aggressiveness of our fiscal stimulus, the absence of bank failures and (somewhat later) rising mining investment kept our Reserve Bank’s (RBA’s) cash rates well above zero. Given this, it made sense for Australia to tighten fiscal policy and to gradually return to surplus because interest rates could be lowered further if necessary to support growth. Continue reading