Memes of Ben Ho

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Me in businessweek

2010-03-03T10:23:00.000-08:00

More shameless self-promotion. A mention in businessweek.

No quotes from the interview. I haven't learned yet to give good sound bites.

A fundamental misunderstanding about the economy: Stuff

2010-02-26T08:01:00.000-08:00

Post recession, the mass media and people more broadly seem somewhat more economically literate, but one big misconception still lingers, that the economy is about producing Stuff. Pundits from both parties are deathly afraid of the loss of manufacturing jobs, because they think that if we're not producing Stuff, we're going to be poor. Pundits in all my science/technology magazines constantly say we need to train more engineers in order to produce the Stuff of the future. People worry that we will soon be spending 1/5 of our income on healthcare, leaving less money for Stuff.

(David Brooks column that inspired this).

My question is why? Do Americans need more stuff? People associate the Wealth of Nations with Stuff, but even today, the vast majority of our GDP is in services; the fraction of Stuff in GDP has been declining, and will continue to decline. Why should we be encouraging the production of more stuff when it is a dying industry.

Of course we will always want Stuff, we still eat food, even though the industry now only accounts for a percent or two of our labor force when it once accounted for nearly all of it. Just most of us shouldn't be making it. Services like healthcare, education, leisure, entertainment, these are the industries of the future. On any given day, I mostly am pretty happy with the Stuff I already have. But where I am stymied is finding a good movie to watch. Or a good TV show. There are a few good movies or tv shows that come out, but there could be more.

And some of the things I call services, are related to Stuff. Like iPhones. Yes, ths is an innovation in stuff, but it was mostly an innovation in design. The technology for the iPhone has long been around (so say people like Kodak, Creative Labs, and Nokia in their patent infringement lawsuits), what made it work was the design of it. Healthcare services require some new gadgets, but it is mostly the service that is valuable (as an aside, yes, wasted healthcare money is bad, but on the whole there seems to be little solid evidence that the US healthcare system is especially wasteful).

I'm not the first to note this of course. I suppose back in the 90's at the MIT Media Lab, they talked this in terms of Bits not Atoms. Apparently there's even a new book out on the subject. But it will take a while for this idea to percolate out there. (Analogously, I'm reading Stephenson's account about the century before Adam Smith, when the Wealth of Nations shifted from how much gold it had to how much trade. A professor of mine in grad school noted, that Adam Smith figured out the Wealth of Trade just when Wealth shifted from Trade to Industry. And then noted that Marx figured out Wealth from industry just when Wealth shifted from industry to human capital, which is building block of Memes, not Stuff)

Book Reviewlet: Logicomix

2010-02-20T09:13:00.000-08:00

What is Logicomix about? In 3 words: Godel, Escher, Bach. Of those 3 people, only the first appears in Logicomix, but like the Hofstadtler book by the same name, Logicomix is a comic book about the connections between the fundamental incompleteness of math (Godel), how we use paradox to understand that incompleteness (Escher), and how art reflects how humans can transcend logic (Bach).

On the surface, Logicomix is about the life of Brittish mathematician Bertrand Russell, drawn in a sophisticated and nuanced version of the art seen in Tintin. But really, is is trying to use a comic book story to convey deep ideas about the nature (limits) of logic/reason/mathematics and the nature of humanity.

In much the same way, Hofstadtler's Godel, Escher, Bach used stories about the Tortoise and Achilles to illustrate many of the same ideas for his textbook, and Stephenson uses pulp thriller fiction (using many of the same characters like Leibniz and Turing) to explore the same ideas.

The comic book format doesn't allow Doxiadis and Papadimitriou's Logicomix to explore the topic as deeply, but it may make it much more successful in reaching a larger audience.

In various ways, I have been reading about these ideas for a very long time, in theoretical computer science summer courses in middle school where we learned about the foundations of arithmatic and Cantor diagonolization, reading Marvin Gardner's Aha and Gotcha around the same time, thinking about the limits of utopia reading Huxley's Brave New World in high school, learning set theory freshman year, to learning about the limits of rational choice theory (e.g. reading Scott's Seeing Like a State) in grad school.

Unlike Stephenson's novels which pressuposes a lot of this background, Logicomix tries to address the ideas to someone who perhaps never liked math, and I think ultimately succeeds. For me personally it lacked some of the depth of say Asterios Polyp which used comics to explore the nature of art and humanity. But that may just be because I haven't really thought as much about art before, and thus I am probably the wrong audience for Logicomix.

Mind Bending Art

2010-02-06T12:20:00.000-08:00

Been thinking about art again recently. At R-'s hospital holiday party, the S.O. of one of her colleagues, was an art history grad student. Neat, cause I haven't talked art history in a while. I confirmed my personal observation that most art these days has become whimsical and accessible, whereas before, art was high minded and constructed high barriers of entry requiring lots of prior art knowledge to understand it, today to take some examples from the last Venice Bienniale I went to, artists put a video camera on a dog so you can experience what a dog feels like, or another one built a simulated subway station inside a museum, complete with hot air and vibrating floors though no subway; or recently at MOMA, a Chinese artist who put the entire contents of his mother's house in one room, so that you can literally see her life laid out on the floor. The art historian confirmed that one of the main themes of art history seminars these days is what to make of the new populism.

I think it is a good development, though I also like the idea of connoisseurship, that some things are worth the effort. Like I had recent discussions about wine, which does take a lot of effort to make worthwhile, but I thought it was worth it. Similarly, for opera, I think after seeing maybe 10 operas now, and no especially enjoying most of them, the genre is starting to make sense to me. Though I've had a hard time convincing others that the investment is worthwhile.

The recent Murakami exhibit at the Brookyln museum merged both high and low well while commenting on itself (which I suppose is so typical of modern art it is almost trite these days). Most of the art itself was fanciful, playing with anime characters, easily accessible. Though the underlying theme is a critique of commercialism, with the novelty of including a louis vuitton store selling murakami merchansise within the exhibit instead of after. A subtle shift that speaks much, building on Andy Warhol who built upon Marcel Duchamp.

Last weekend, I wound up seeing both the Tim Burton show at MOMA and Tino Seghal at Guggenheim. The Burton show I feel takes it a step too far... showing sketches and clips from his movies. It certainly generated a lot of money for MOMA (so good for them) the place was packed full, tickets sold out early, and there was barely room to move. I'm all for populism but this may have been a step too far. I'm not sure it really should be considered "Art" with the capital A and double quotes, except in the grandest most meta- sense, that the MOMA was making a statement about commercialism by wholeheartedly adopting it without irony or commentary. Still, I left dissatisfied.

Fortunately, the next day, the Guggenheim made me feel much better. It still had up an excellent piece by Anish Kapoor, which puts all previous square black canvases to shame. An exhibit years ago at MOMA did make me appreciative of monochrome paintings, by showing many different white square canvases in one exhibit (ranging from one made of fresh milk, one ripped down the middle, evoking a vagina, one made of white nails, etc. But this took the genre to a new level. It was the first "painting" where I really understood the idea of gazing into infinity, and really felt not really despair, but perhaps an echo of it.

The main exhibit was a piece by Tino Seghal, which I won't describe since it would ruin it for you. If you don't care, you can read about it at the nytimes. Self-referentially, it is called, Is this Progress, and I think it is. It echoes my favorite piece of all time, a MFA thesis at the Stanford gallery, a giant wooden ball maybe 15 feet tall, with an inviting hole just big enough to crawl into, that was unmarked, but might as well have had a sign "climb me" a la Alice in Wonderland. Crawling in brought you into a strange world of twisty wooden passages and ladders, dimly lit by lamps, and the key element is that you felt like you were transgressing. Nothing said you were allowed to climb inside, and normally this kind of behavior would break all norms and rules of museum etiquette, and it was precisely this subversiveness that brought me back to being a kid again that made it so amazing. The point of art is communicate something (and as Kirk Varnedoe said, a great artist invents a new language), and this piece did communicate something that no other medium could. I wondered how many people actually got to experience that, and how many people just walked by. The timing was perfect for me, I was in the gallery alone, and was prompted just enough by the ticket taker to look at the piece carefully, without being told it was actually the point. At the Guggenheim, we saw many people missing out too. Still, I suppose lots of people walk past the Mona Lisa without getting it (me included). A risk all art takes for the sake of Progress.

Avatar: Micro-reviewlet (warning spoilers)

2010-02-02T14:59:00.000-08:00

Not only was the plot ridiculously cliched (e.g. Pocohantas and Dances w/ Wolves), it was obnoxious. David Brooks captures the condescension of the movie perfectly. What I would add is that it annoyingly perpetuates Rousseau's myth of the noble savage. That civilization (things like literacy, and representative rule, and division of labor) are all corrupting, and instead we were better off running around naked, bowing before unelected rulers. Another reviewer made Brooks' point a bit crassly. The movie is telling us is that the alien’s need Americans (not the dumb militaristic kind, but the real Americans, the scientists and the Sully types) which represents American can-do spirit who comes in, f***s (the reviewer's word not mine) their princess, learns their battle tactics better than they do in just a few months, mounts that flying thing that none of the natives have been smart enough to do in generations, and united all the tribes as their new dictator.

Still the visuals were breathtaking, and after I started ignoring the plot, was blown away by his achievements in technology, and it had robot suits that fought with giant knives.

Maybe irrationality's a good thing

2010-01-28T14:49:00.000-08:00

Even before I was an economist I was a big fan of rationality. My friend from Singapore spoke with pride about how another economist friend of hers noted "it's like they've given my people (economists) a country, and they did good! I didn't hear an irrational comment all week," something I noted myself when I was there 8 years ago (wow time flies).

But now, my reaction was, well maybe a little irrationality is good.

To explain, let me just cite Wachowski (2003)

"The first matrix I designed was quite naturally perfect. It was a work of art. Flawless. Sublime. A triumph only equaled by its monumental failure. "

"As I was saying, she stumbled upon a solution whereby nearly ninety-nine percent of the test subjects accepted the program provided they were given a choice - even if they were only aware of it at a near-unconscious level. While this solution worked, it was fundamentally flawed, creating the otherwise contradictory systemic anomaly, that, if left unchecked, might threaten the system itself. Ergo, those who refused the program, while a minority, would constitute an escalating probability of disaster."

"Your life is the sum of a remainder of an unbalanced equation inherent to the programming of the matrix. You are the eventuality of an anomaly, which despite my sincerest efforts I have been unable to eliminate from what is otherwise a harmony of mathematical precision. While it remains a burden assiduously avoided, it is not unexpected, and thus not beyond a measure of control. Which has led you, inexorably, here. "

Or consider Huxley's Brave New World for a more literary citation.

Rationality is all fine and good and probably great for 99 percent of the people. But maybe you need irrationality for beauty, or for innovation, for disruptive change, for paradigm shifts, for freedom (whatever that means; I took a class on defining freedom and still don't know what it means), and all that. For magic too.

(And I bet you thought watching that movie was a waste of your time...)

Thoughts on Copenhagen II: On Negotiations amidst the Circus

2010-01-22T10:07:00.000-08:00

Back in Copenhagen, I attended a briefing for US NGOs. Two things that struck me.

One is I am ambivalent about NGO invovlement. One notable thing was at the meeting, you had Fred Krupp, president of the one of the largest environmental groups (who quite reasonably should be there), but he was sitting next to a couple kids painted and dressed as green aliens carrying placards. On the whole, it was a surprisingly young group.

The other was again, how similar the US government position is in the current administration as it was under the previous. That the US will not concede sovereignity in terms of taxes it must pay. That the US cannot commit to greater cuts than Congress will allow. That the US cannot commit to spending, in such contexts.

And again, on the sovereignity issue, which is not unique to the US (but a big part of why negotiations broke down with China and India), that the idea of a binding carbon price/limit may be futile because it requires a higher extra-governmental power. The WTO did achieve this (somewhat) but that took half a century, and in general, free trade is win-win (countries generally benefit from lower trade barriers, even though they may suffer from political trouble from noisy constituents, overall countries are typically better off). Whereas in climate change, it is by and large a pure public good to constrain carbon, so an even harder sell without a world government. This suggests again that the technology push is key making green technology cheaper than dirty. (This was the position of the Bush administration--I don't mean to be so defensive on that, really--and also what Bjorn Lomborg has been pushing, hopefully that doesn't automatically discredit the idea) I think economists by and large agree that technology is key, though many would then say that a carbon price would be the key the incentivizing new technology, though I think most economists agree that we have little evidence to that effect, only faith.

Thoughts on Copenhagen I: Legitimate Policy or Optimal Policy?

2010-01-14T12:23:00.000-08:00

It is kind of fascinating. How different policy is actually made, compared to political econonmy models. I am reminded a bit of the march and olsen garbage can model, but instead of policy by flight and by oversight, this is policy by pseudo-consensus, generated by people sitting in a room, making comments, randomly interacting, and in the end, people agreeing not because they are happy with the outcome, but out of fatigue, or out of agreement that sufficient process has been conducted.

It has been noted that while economists focus on outcomes, lawyers care about process. Economists have written a bit about preferences over actions (legitimacy) vs preferences over otucomes, but the latter still largely defines the field.

Policy folk like typologies. I worry a bit that much is decided by policy folk who understand politics and process well but have often only a cursory understanding of the scientific and economic details. They like colorful bar charts, and 2 x 2 typologies.

Not so different than whitehouse. A consensus process. Difference is there is no executive, essentially a dictator, of last resort, who may be convinced to make the optimal decision.

This leads to interesting implications for what good policy should look like. Economists would like a global carbon tax (or cap and trade) since that is likely optimal, but given that consensus is required this may no longer work. Even amongst the countries that agreed to Kyoto, half of them failed to comply and many of the ones who did, did so because they had an economic collapse.

This gives further credence to the Bush administration's technologically focused environmental policy.

xkcd fixed point problem

2010-01-13T08:23:00.000-08:00

Self-Description:
I'm a big fan of xkcd. Something that bothers me about these graphs though. If the lines (including the lines used to form the letters) were Euclidean lines (in that they have no width and hence no area), then there should be no ink at all. If you think about the pie chart in the first panel, and say it is x% full, where x%=x/C (where W is the area of the wedge and C is the area of the pie), then if I is the area of the whole image then since C < I, you get W/I < W/C, hence contradiction. So what you need to balance this equation, is that the lines must have area, in fact we can calculate how much. Let L be the area of the lines, then W/C = (W+L)/I which we can solve for W to get

IW = CW + CL
W = CL / (I-C)

The bar chart complicated this a bit, but we assume that away for now.

My first real tweet: Does being #vegan and #prochoice make you a hypocrite?

2010-01-07T08:56:00.000-08:00

Usually stuff I want to post requires more than 140 characters, but "Does being #vegan and #prochoice make you a hypocrite?" was idea that I was contemplating after a recent NY Times on why killing plants is as unethical as killing animals, that I didn't have anything else to add.

I don't really twitter much, since few of my friends use it, but created the account long ago mostly just to stake out a username in case I had some need in the future. Had to settle on ho_ben since every other permutation of my name that I could think of was taken.

how smart was issac newton?

2009-12-29T21:14:00.000-08:00

Marginal Revolution asks what is the probability the person with the most chess aptitude in the world today actually knows how to play chess. The question is how much wasted potential there is out there because people with high aptitude never get the resources to take advantage of that aptitude.

I often think about this type of analysis when trying to figure out how smart Issac Newton was. Sure he had the most success of math as anyone of his day (by a bit, Leibniz discovered much of the same shortly after him), but he was only the best out of the very small set of people born who had access to the resources to become good at math. Let's say 100,000 at the most, or the top 0.001 percentile. Being in the 0.001 percentile these days means there are tens of thousands of people better than you at math in the world, and thus is probably not good enough to get you into a good graduate program in math these days.

The Ethics of Killing Brussels Sprouts: And the Ethics of Climate Change

2009-12-23T20:47:00.000-08:00

In Krugman's obituary for Paul Samuelson, he mentioned that one of his contributions is he clarified the idea of welfare for economists, and the common good. Economists have a very well defined notion of social welfare, that is entirely human centric, but at least it is clear and well defined.

I do concede that animals and plants must fit in there somewhere, but since I have yet to come across a good definition, I tend not to use use it.

This interesting nytimes article questions whether killing brussels sprouts is any better than killing a pig for food?

This is particularly relevant when it comes to the issue of climate change, since if we just consider the impact of humans, climate change has arguably negligible impact 0 +/- 2% of GDP say the best estimates (of course extreme events are possible). But the impact on plants and animals is tricky. Many animals will die, though plants on the whole stand to benefit. And was it wrong for say the mammals to kill the dinosaurs (as some theories suggest)?

My Kindle DX Thoughts

2009-12-19T07:08:00.000-08:00

Many have asked in various forums for thoughts on the Kindle. Here they are in one place. I mostly got the Kindle DX for work (to read Pdf's). For that, it is passably ok. I have been able to cut down on the stacks of printouts I normally carry around. It is nice for a student to e-mail me a document, and then I can just forward his e-mail to my kindle, and be able to access it just like that. It is annoying there is no folder system (though I wrote a perl script that fakes it reasonably well). Another feature that is useful for commutes is that it can read stuff aloud, which is useful to catch up on random papers, during my long commutes. But the main annoyance is that it is quite slow. Too slow to page quickly through and the keyboard is a bit too fiddly and search too slow. It comes up when trying to find a particular table in a paper, or for paging through the couple magazines I subscribe to that offer pdf versions.

I await new versions with hopefully better contrast, faster load times, touch screen (like the Sony version), and even color, and better keyboard.

It is still pretty great for its main purpose, which is reading novels. For the Kindle formatting books, the contrast is not a problem, the screen is definitely easier to read that a computer screen, and it is so nice to be able to impulse buy books, like iphone apps, and have them right away. Amazon claims that of books that have kindle versions, 40% of its sales are electronic, which I can believe. Formatting is still a bit off, and annoying you can't page through easily, but generally fine for just reading.

Oh, and battery life is awesome. It goes for weeks between charges.

Bottom line, I wouldn't get it yet, I'd wait for a newer version given its hefty price tag. But I have no regrets given it came out of my research budget.

Star Power in Copenhagen and Lots of Lines

2009-12-15T04:41:00.001-08:00

Waited in line today 90 minutes in 0 degree C weather to get in for the UN COP\15 Climate Change Conference (people who hadn't registered yet apparently had to wait 5+ hours in the cold yesterday). Leaving tomorrow, which is good because I imagine the logistics will only get more hectic tomorrow. They apparently registered nearly 40,000 people for a confernce center that only holds 15,000.

In some ways, it is a shame I'm leaving, since the star power is starting to heat up today. Up until now, it was all very policy wonkish. (More substantive thoughts in my next post.) But today, after waiting in line to get in, I waited in more lines to see Arnold Schwarzeneger and now I'm seated in a CNN debate with Bjorn Lomborg, Kofi Annan, Thomas Friedman and Darryl Hannah (let's play the Sesame Street game: one of these things is not like the other, three of these things are Kinda the same).

I arrived too late for the Al Gore tickets, but might be able to see part of the opening ceremony for some of the more high powered guests (minsters only now though) the heads of state mostly arrive tomorrow or Thursday.

Copenhagen: First Impressions

2009-12-12T04:56:00.000-08:00

Just arrived on red-eye flight, straight to the COP15 conference. Impressed by Copenhagen's airport. Very nice, clean scandinvaian (ie Ikea-style) aesthetic. R- says "i always just think all the nordic countries are like one big ikea...organized, natural looking." Also impressed by how well organized they are for the conference. Special passport lines, lots of conference information booths, special free shuttle buses, nice graphic design of posters, free public transportation passes, free wifi at the conference center, lots of power plugs, impresively good and cheap conference food, even a specially designed iphone app to disseminate news, videos and meeting schedules, lots of stunts makes it a little silly -- WWF drawing cartoons and doing a skit with a giant baloon earth; people carrying around skis, a group in matching red suits. Lots of lines. Long security lines, but lots and lots of scanners unlike at airport.

Shameless Self-promotion: me on NPR

2009-12-07T07:07:00.000-08:00

I don't sound as awful as I feared, but I was still too nervous to get through the thing without getting stuck on words. If they had only taped the conversation I had with the other guest (David Biello) while we were waiting in the green room. I was fine there.

The Takeaway: Why It's Not Easy Being Green

The Takeaway is unfortunately one of the new format public radio shows that tapes things live, and doesn't edit out stutters and umm's, as is typical for NPR (technically also, the show is a PRI show, not an NPR show but close enough). The only consolation was that the hosts got stuck over a couple words too while I was there.

Inequality has NOT increased

2009-11-29T15:52:00.000-08:00

Professions can have blind spots, and I think one thing that not only have pundits been mistaken on, but economists as a whole may also have been, has been rising inequality. It has become a oft repeated stylized fact that inequality (which has declined for centuries) has been increasing in the United States since the 1970's.

I never believed it. Mostly due to my own prejudices for optimism. Prejudice can be good when it forces you to seek out more information.

A lot of the inequality can be explained by increases in immigration which opened up in the 1970's; inequality amongst American born Americans has declined (Easterbrook). Also, the inequality picture looks a lot better when looking at outcomes like health, where inequality continues to decline, rather than just income (Lomborg).

Yet despite this, most economists still believe that inequality is on the rise, and the profession has mostly come to take this for granted. Two new studies have revisited this (Gordon and Winship):

They emphasize that the measured inequality has really only occurred in the top 1% (bankers and CEOs and movie stars, the superstar winner take all effect that economists like Frank and Rosen have emphasized) of the population, but does not reflect shifts amongst the population as a whole.

Anyway, this could still be a reflection of my own biases for sunny-optimism and that the world is always getting better.

The best thing I've heard on npr in recent memory...

2009-11-24T08:38:00.000-08:00

This story reaffirmed why I still trust NPR.

It echoes the most important thing I learned from psychology classes (see the 1.14.03 entry here)

reCaptcha - a genius idea

2009-11-16T10:07:00.000-08:00

In general, those words you have to type in to prove you are human before leaving a comment on a blog or e-mailing a nytimes story tend to be annoying because it often takes me several times to get it right. That is why I appreciate the genius of the reCaptcha used now at the NY Times, since they use words from actual scanned documents, that are generally pretty easy for humans to read, but are demonstrably hard for computers since they have failed the standard computer OCR (optical character recognition) programs. The added genius is that not only are these relatively easy to read, they also help collect data for the designers of OCR programs, to make OCR programs better in the future, so you're actually doing useful work by deciphering those letters.

Nifty.

E-mail Storms

2009-11-01T14:55:00.001-08:00

A friend of mine was recently complaining about someone who e-mailed a large distribution list and the two people who hit reply-all.

Reminded me of the early days of e-mail back in the 1990's when such things could last for days and span hundreds of e-mail, when there were mysterious lists that had hundreds of people, and someone would hit reply-all, and and then someone else would hit reply all to tell people not to hit reply-all, and then people would hit reply all to that to lament about the irony, and then lots of people would start hitting reply all out of annoyance to tell people to shut up, and then people would hit reply all to just be part of this weird social phenomenon.

Ah, good times. I haven't seen that in a long time. Always interesting how society interacts with a new technology.

Books that my Kids will definitely be reading: Gardner's AHA and Gotcha!

2009-10-23T22:47:00.000-07:00

Well they'll definitely be getting a copy. Who knows if they will actually read them. But these were two of my favorite books as a kid. I was reminded by a recent nytimes blog post about their author Martin Gardner. They really got me excited about math (using comic strips) but using serious math, applying number theory and topological fixed point theorems and things that gave me a second Aha when I learned about them again in grad school.

One I pondered for a long time and still occasionally do was the Pop-Quiz paradox. I recall seeing a resolution in college, and recall trying to apply the epistemic game theory I learned in grad school to the problem. The neat thing is that these ideas have stayed with me throughout and my appreciation has only gotten deeper with time.

I also first encountered the Monty Hall Problem there.

Another that stays with me (which in grad school I learned is an application of a fixed point theorem) is to think about somebody hiking up a mountain. She starts a 9am and arrives at 5pm. She camps out on top, and then starts walking down the same path at 9am, and arrives at the bottom at 5pm. The interesting question: Is there a time when she is at exactly the same point on the mountain at exactly the same time of day.

The answer it is revealed is yes. And you can see this by envisioning a video of the mountain as she walks up and a video of the mountain as she walk down. And then projecting the video simulatenously onto the same screen. At some point she will have to intersect herself.

The same idea can be applied to show that if you take a piece of paper that lying flat, completely fills the bottom of a box. Then you can pick it up and crumple it up however you want. There will always be some point of the paper that is exactly above where it was before when it was lying flat. Alternatively, you also know that at any given time, there is some point on the earth that is the exact same temperature as the point directly opposite it on the other side of the planet.

I remember learning about multiple infinities, and the difference between countable and uncountable.

And the best thing was they were all done in cartoon form. I loved the stick figures and the blatant asymmetric shapes. Ah great memories.

America owes less money than you think

2009-10-18T21:14:00.000-07:00

It is impressive, how much more economic literacy the country has developed in the past 12 months. Just enough to be dangerous. I've often lamented that a little bit of economic knowledge (say from Econ 1) gives people a dangerously distorted view of the world. The recent education people have gotten from newspaper editorials and headlines is perhaps even more distorted. Though I have been impressed with coverage, it still worries me because it gives people a false confidence in their own economic literacy. Many times, I'm sitting in a restaurant, overhearing snippets of conversation at tables next to mine where everyone's talking about the economy with great conviction while at the same time it is quite clear that no one knows what they are talking about.

I was recently waiting at a bus stop recently, and when it came up that I'm an economist, the guy having just seen a movie about the debt starts ranting about how the US debt is unsustainable. And we are headed for doom.

Really?

So the national public debt has gone up a lot in the past few months, to around $11 trillion. Is that a lot? Sounds like a lot. On a per capita basis, that's about $110,000 per household.

So 11 trillion is a lot, maybe 80% of GDP. Is that a lot?

Let's put this another way. If your annual income is $100,000, and you take out a mortgage to buy a house that costs $80,000. That seems quite reasonable doesn't it?

There's a bit of a slight of hand there, because GDP is how much money the country as a whole makes, and public debt is just how much the federal government owes. So let's try this another way:

If the US makes about $13 trillion a year, how much does the US as a whole (including government and private companies and individuals) owe to other countries? Note (over half of the federal debt is borrowed from Americans, so when we pay back our creditors, we are giving money to our children). The answer is about $13 trillion. The thing is, the US is also owed $8 trillion by other countries. So on net, the US debt is only about 35% of GDP.

Back to our analogy, that's like someone with an annual income of $100,000 having a mortgage of $100,000 but also holding $65,000 in stocks and other assets. Doesn't sound so untenable.

You might also note that the real problem is not the current debt (as the OMB chief likes to point out) but the size of the obligations to Social Security and Medicare. Which some estimate are in the tens of trillions, most of which is medicare and medicaid. So if you look at the numbers, the deficits in Social Security can be wiped out just by raising the retirement age by a couple years, or by indexing payments to inflation, rather than to wages, meaning that retirees in the future will get as much money as retirees of today, which doesn't sound so bad. Both are still politically difficult, but quite reasonable. Medicare and medicaid costs are the far bigger looming obligation, but those obligations assume that unchecked health expenditures, and given that the US spends more or less twice as much as every other developed country on health care, it is quite plausible that health expenditures can be brought down significantly in the future.

Of course the problem with metaphors is they are always imperfect (for example, if the US really needed to, it could just print more money to pay off its creditors). But many smart people are quite worried about the current levels. But put in perspective they are not as big as people seem to believe.

Ways of Seeing (Art)

2009-10-10T15:48:00.000-07:00

I guess one main reason I post these publicly instead of keeping them as a private journal is that usually comments from all of you make me think about things in a new way. Recently, comments to a snobbish nytimes article I posted about art made me think about how we visit museums, and the ways of seeing (as an old art history book of mine called it).

The article laments the practice of people who jog through the Louvres, to snap their photo next to the Mona Lisa, without spending more than a few seconds in front of each work.

Nowadays, when i go to a museum, i try to go to the special exhibits, mostly because they are transient, but also because they often tell more of a story, in terms of how they were curated. (Hanging out with art historians, you realize someone puts a ton of thought on these things) I'm also actually sympathetic with the jogging (though R- didn't like the fact I made her do that for her first visit to the louvres). I guess I got that from my art history prof who did that for my first visit. Even though over the course of the 6 week course, we spent pretty much every other day in some Paris museum, we still only saw a tiny fraction, and the prof thought it would be a travesty if we didn't at least see the mona lisa, the venus de milo and the nike. You can see many reproductions, but I've learned that reproductions are always a poor substitute in terms of image fidelity, size, impact, context in terms of other paintings, but also geography, and the other people watching.

Just like watching a movie alone is different than watching it in a theater. I'm also at the end of the day, less judgmental than the article. It is true that for a lot of people, they are there because they feel it is good for them, or because it is a status symbol. saying "hey, i saw the mona lisa last weekend" is similar to driving up in a hybrid car, or giving someone a diamond ring. but maybe that's ok. Americans are more likely to go to a museum than go watch sports, and somewhere along the way, that probably leads to something good.

I need help rewriting Op-Ed on "We talk too much about the science of climate change!"

2009-10-04T20:04:00.001-07:00

I was asked to write an op-ed on social science and climate change. Here's a very preliminary draft. I have lots of changes in mind, but before then, you guys are good at keeping me honest:

There was too much science driving the public debate on climate change. Coming from a former economist for the Bush administration, that kind of sentiment probably immediately raise your alarms, echoing images of a closed minded administration engaged in a War on Science. That kind of sentiment reminds you of everything that you thought was wrong with the Bush administration, and the kind of thinking that the Obama administration was supposed to fix. Yet, I maintain that any administration would be well served to not let science dominate policy decisions.

Let me be clear, I have nothing against science. My parents are scientists. Some of my best friends are scientists. Let me be even more clear, there is a scientific consensus that the earth is warning, and at least part of the warming is due to human activity. We should acknowledge that there are reasonable dissenters on this finding, and that nothing in science can be guaranteed with 100% certainty especially as paradigms shift, but I as a non-scientist think it more than reasonable to go with the consensus scientific opinion and acknowledge mankind’s role in climate change.

However, what we should do about climate change is a very different question, and one which quite possibly, scientists are not the ones with the best expertise. An old adage avers that “When you’re a hammer, everything looks like a nail.” Scientists see climate change as a scientific problem to be solved with a scientific solution. However, good public policy requires many inputs, among them, scientific and engineering understanding, but crucially we also need to understand social science as well.

For far too long, expert opinion within the public debate on climate change was dominated by scientists, and that created a large blind spot when it came to thinking about public policy.

To be fair, the scientists were the ones who identified the problem and have been thinking about the problem for the longest, and up until recently, they have been the ones doing most of the research. For reporters looking for stories on global warming, science was a natural place to turn.

Those who doubted the scientific consensus are pilloried as closed minded slack-jawed yokels, yet the same people that defend science often openly flaunt economic consensus. They advocate policies that fail every conceivable cost benefit analysis test, and claim that regulating carbon will increase economic growth. I know economists may not have the best reputation these days for predicting the macro-economy, but I still think the economic evidence is quite strong that added taxes and regulation while worthy, will likely dampen economic growth.

If you read the economic findings within the same Nobel Prize winning Intergovernmental Panel on Climate Change that people cite for describing the scientific consensus on climate change, you find the prediction that the economic consequences of implementing climate action to be on the order of trillions of dollars over the next 25 years. Implementing policies to stop climate change has consequences that include increasing poverty by the millions, increasing deaths from conditions associated with the cold such as flu or hypothermia, and decreasing potential growing seasons in large parts of the world like Canada and Russia.

The film An Inconvenient Truth frustrates me because after spending two hours deriding junk science, it ends using the junk economic argument that stopping global warming can be painless and is worth any cost.

But, I do believe that the economic analysis is clear that the potential consequences of doing nothing easily justify these costs. Trillions of dollars sounds big, but accounts for only a percent or two of world output over 25 years.

Some would say that informing people of the truth about the costs of climate policy is ill advised because it will only confuse them. While I share the goals of those who advocate for strong action to address climate change, I still think the public is better served when they are better informed. Especially because a better public understanding can make those climate policies are better designed.

Economists for example are fairly certain about certain principles that should drive climate policy.
Policy should begin modest, and increase with time. Policies should use market based instruments such as taxes or cap and trade which are far more effective that heavy handed regulation. Market based policies help ensure that only actions whose benefits outweigh their costs are taken.

In an article in the NY Times about eminent physicist Freeman Dyson who advocates many of these ideas, his ideas are treated with derision and contempt when most of his ideas are in line with economic mainstream.

I should be clear that my frustration comes mostly from the public debate, and not from the experts in the field who are mostly well informed on these issues. Scientists themselves are normally well aware of all of these other issues, though whether they find these other issues interesting enough to care about is another story.

At a meeting hosted by the Cornell Center for a Sustainable Future, we were discussing why the electric power grid needs to be upgraded to handle renewable power. While the engineers were focused on the science of upgrading the grid, in terms of determining the optimal location of new power lines, and the science of power transmission, I was reminded of a study by a group of economists at Resources for the Future, who found that it wasn’t money, or technology, or government regulation that was the main impediment to upgrading our power grid, but instead, it is primarily NIMBY. The social phenomenon where locals protest any new construction in their backyard, which often means just obtaining the rights to build a single power line can take decades.

And that I have used the past tense, because in recent months as the debate has taken more center stage in congress, more nuanced debate has emerged, and economic concerns have been mooted for debate.

But public perception is slow to shift. Some concrete examples where bad economics has played a role in the public debate include a favorite politician buzzword: Green Jobs. This term frustrates economists who see it as a dishonest slight of hand. Government policy can create jobs, but in general, the net effect long term effect of government policies and regulations is effectively zero: any green jobs created comes at the expense of jobs lost elsewhere in the economy.

Another peeve of mine is the proposal by a Columbia University biologist who has proposed converting Manhattan skyscrapers into giant greenhouses. I appreciate the sentiment of wanting to reduce transportation costs, but given that land in Iowa costs about a thousand dollar an acre, and office space in Manhattan costs hundreds of millions, it is hard to imagine how growing food in Manhattan skyscrapers vs. Iowa could possibly yield hundreds of millions of dollars in environmental benefits.

Note, that we are all hammers, and while I began my discussion criticizing scientific narrow mindedness, I should be cognizant my own economic-tinged narrow minded. I just urge more humility and open-mindedness in public discourse.

Economists often dream up policies without considering the politics, without accounting for the political difficulties in securing international cooperation and navigating well established international treaties, or with balancing the checks inherent in the democratic political process.

Economists have also largely ignored the power of social movements, of social pressure and moral obligation, to effect change. By incorporating insights from sociology and psychology, behavioral economists like myself, working with some colleagues at CALS, have been working on trying to understand how social pressures, and feelings of guilt, altruism, self-expression, or pride can be marshaled toward the environment.