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September 26, 2015

Latest Posts from Economist's View

Posted: 14 Sep 2015 01:08 AM PDT
"Mr. Corbyn's triumph isn't that surprising":
Labour's Dead Center, by Paul Krugman, Commentary, NY Times: Jeremy Corbyn, a long-time leftist dissident, has won a stunning victory in the contest for leadership of Britain's Labour Party. Political pundits say that this means doom for Labour's electoral prospects; they could be right, although I'm not the only person wondering why commentators who completely failed to predict the Corbyn phenomenon have so much confidence in their analyses...
But I won't ... get into that game. What I want to do instead is talk about one crucial piece of background to the Corbyn surge — the implosion of Labour's moderates. On economic policy, in particular, the striking thing ... was that every candidate other than Mr. Corbyn essentially supported the Conservative government's austerity policies.
Worse, they all implicitly accepted the bogus justification for those policies, in effect pleading guilty to policy crimes that Labour did not ... commit. If you want a U.S. analogy, it's as if all the leading candidates for the Democratic nomination in 2004 had gone around declaring, "We were weak on national security, and 9/11 was our fault." Would we have been surprised if Democratic primary voters had turned to a candidate who rejected that canard, whatever other views he or she held?
In the British case, the false accusations against Labour involve ... claims that the Labour governments that ruled Britain from 1997 to 2010 spent far beyond their means, creating a ... debt crisis that..., in turn, supposedly left no alternative to severe cuts in spending, especially spending that helps the poor.
These claims have ... echoed by almost all British news media ... as facts. It has been an amazing thing to watch —... every piece of this conventional narrative is ... nonsense. ... And all of Mr. Corbyn's rivals for Labour leadership bought fully into that conventional nonsense, in effect accepting the Conservative case that their party did a terrible job of managing the economy, which simply isn't true. So as I said, Mr. Corbyn's triumph isn't that surprising given the determination of moderate Labour politicians to accept false claims about past malfeasance.
This still leaves the question of why Labour's moderates have been so hapless.... Labour's political establishment seems to lack all conviction, for reasons I don't fully understand. And this means that the Corbyn upset isn't about a sudden left turn on the part of Labour supporters. It's mainly about the strange, sad moral and intellectual collapse of Labour moderates.
Posted: 14 Sep 2015 12:06 AM PDT
Posted: 13 Sep 2015 11:35 AM PDT
Paul Romer:
Botox for Development: In a talk at the World Bank that I gave last week, I repeated a riff that I've used before. Suppose your internist told you:
The x-ray shows a mass that is probably cancer, but we don't have any good randomized clinical trials showing that your surgeon's recommendation, operating to remove it, actually causes the remission that tends to follow. However, we do have an extremely clever clinical trial showing conclusively that Botox will make you look younger. So my recommendation is that you wait for some better studies before doing anything about the tumor but that I give you some Botox injections."
If it were me, I'd get a new internist.
To be sure, researchers would always prefer data from randomized treatments... Unfortunately, randomization is not free. It is available at low or moderate cost for some treatments and at a prohibitively high cost for other potentially important treatments. ...
 I work on high expected-return policies that can be implemented, with no concern about whether I will be able to publish the results from this work in the standard economics journals....
I have the good fortune of knowing that I can be a successful academic even if the journals will not publish results from the work I do. I realize that many other economists do not have this freedom. I understand that they have to respond to the incentives they face, and that the publication process biases their work in the direction of policies that are more like Botox than surgery.
But we can all work to change the existing equilibrium. It is good that economists pay careful attention to identification and causality. This inclination will be even more important as new sources of "big" non-experimental data become available. But it is not the only good thing we can do. We have to weigh the tradeoffs we face between getting precise answers about such policies as setting up women's self-help groups (the example that Lant Pritchett uses as his illustration of what I am calling Botox for economic development) versus such other policies as facilitating urbanization or migration that offer returns that are uncertain but have an expected value that is larger by many orders of magnitude.
If economists can't understand the tradeoff between risk and expected return, who can?
Posted: 13 Sep 2015 11:01 AM PDT
The pickings are a bit scant so far today. You'd think it was the weekend or something. Here's something from Erik Brynjolfsson & Andrew McAfee:
The jobs that AI can't replace,BBC News: Current advances in robots and other digital technologies are stirring up anxiety among workers and in the media. There is a great deal of fear, for example, that robots will not only destroy existing jobs, but also be better at most or all of the tasks required in the future.
Our research at the Massachusetts Institute of Technology (MIT) has shown that that's at best a half-truth. While it is true that robots are getting very good at a whole bunch of jobs and tasks, there are still many categories in which humans perform better. ...

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