Arnold Kling  

Two Interesting Questions

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Notes for the Credentialism Fi... Misvocational Education...

1. David Warsh writes about a project in which economists were asked to come up with a long-term research agenda in economics. It appears to me that the suggestions are heavily weighted toward technocratic thinking. If anyone had asked me, I would have proposed an agenda of an audit of past exercises in technocratic policy. What were the intended results? What were the actual results? What were the unintended consequences?

2. Tyler Cowen asked the question of what one is optimistic about and what one is pessimistic about.

I am optimistic about technological change. For example, my guess is that we are very close to reaching the point where computers can grade tests with essay questions. We are close to the point where thousands of students can be taught for about the same cost as a class of one hundred students. That is a big deal. And I believe that there are equally big deals pending in some other fields.

I am pessimistic about ideological gridlock. Recently, a friend sent me a link to an anti-market screed that he had recently heard and asked me to comment. All I could say was that the speaker and I disagree, and neither of us is likely to change the other one's mind.

As an indicator of this gridlock, I give you the left's rush to the defense of the energy department loan guarantee program. See, for example James Surowiecki, as linked to (presumably approvingly) by Mark Thoma. Ten years ago, center-left economists would have been highly critical of government making loan guarantees to particular firms. They would have argued instead for general subsidies for long-term research or for carbon taxes. What would have been considered indefensible ten years ago is considered necessary to defend today. (Not by everyone. The Washington Post editorial page takes this more traditional center-left approach)

The way I look at it, advocates of centralized, technocratic management respond to every failure by demanding more power for technocrats. Those of us who are opposed are equally committed to our point of view. Most of the cries for compromise or for bipartisanship strike me as calls for my side to surrender.

I think that underneath this gridlock is a battle for status. I think that the peak years for status for technocrats were the 1940s through the 1960s. Since then, I see a trend toward technocrats experiencing (but becoming less willing to acknowledge) failures and loss of popularity.

In the 1970s, the technocrats who supported wage and price controls as a solution to inflation admitted their mistake. If such a failure were to take place today, I do not think that it would be acknowledged. The technocrats' grip on status is more tenuous today, which means that they feel that they have less margin to be generous with those of us on the other side.

I do not see a mutually acceptable solution emerging.

Here are some more notes on the economists' proposals for a research agenda.

James Heckman suggests that noncognitive traits are important for skill formation. (I think of conscientiousness, for example.) He suggests that these traits can be improved, particularly later in life, but the methods for doing so need to be discovered.

Here is the abstract of David Cutler's paper.


I propose as a central question for the social and behavioral sciences the following topic: why do people and institutions not do things that are so obviously in their self-interest, even when they want to do so? We have numerous examples of this phenomenon, from individual behavior such as seatbelt use and medication adherence, to firm outcomes such as quality improvement or cost reduction. The ability to encourage what people know to be right is central in many policy debates, including the recent health reform discussion in the United States. I indicate three lines of inquiry as promising in understanding this question: characterizing the motivation of individuals; understanding group decision-making; and undertaking interventions.

Cutler and I are in very different places on this. He thinks that with the right interventions by central planners, people will make better decisions. I take the Hayekian view that learning is largely decentralized.

David Autor and Lawrence Katz look at labor market polarization. They identify two issues. One is that the demand for high-skilled workers has risen relative to the demand for mid-skilled workers. The other is that college attainment rates have stagnated for males. Both of these trends are found in other developed countries. Thus, it is not just the U.S. education system that is unable to increase the college attainment rate of males.


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CATEGORIES: Political Economy



COMMENTS (13 to date)
Brock writes:

Is ideological gridlock a good argument for unrestricted emigation and immigration? For dividing the USA into "Southern Canada" and "Jesusland"?

Thomas DeMeo writes:

"I am pessimistic about ideological gridlock. Recently, a friend sent me a link to an anti-market screed that he had recently heard and asked me to comment. All I could say was that the speaker and I disagree, and neither of us is likely to change the other one's mind."

I would urge you to reconsider your position here. It is a reasonable assumption that you can't change the speakers mind, but by deciding you can't, you lock that in.

There really aren't many people attempting to change anyone's mind on these issues any more. You are one of the few who have the ability to make a legitimate attempt. I think both sides of these issues could gain a lot by trying to convince the other side. It will require addressing and breaking down the other side's perspective in depth, and that has value.

N. writes:

Thomas DeMeo --

I had more sympathy for your view before I was threatened with bodily harm by an Occupy Wall Streeter yesterday in response to my asking if he could explain how the stock market worked.

Time and place aside, you cannot reason someone out of a position they have not reasoned themselves into.

Furthermore, to appropriate another phrase, it is amazingly difficult to explain something to someone whose job is dependent on them not understanding it.

Matt C writes:

I think Thomas DeMeo is right, although it is certainly "do as I say and not as I do" in my case.

Somewhat related, here's a survey of the Wall Street protestors which I found rather discouraging:

http://www.forbes.com/sites/matthewherper/2011/10/07/some-say-occupy-wall-street-protesters-aimless-facts-say-otherwise/

I am anti Wall Street myself and would have expected a little better, honestly.

Thomas DeMeo writes:

N- I understand that what I am asking for is difficult. Many of the protesters have no coherent idea of what they are protesting for, and some are real jerks.

I will say that solely based on your description, it sounds like you were trying to show the protester up, not engage them. It doesn't justify them threatening you, but it wasn't a good start, either.

N. writes:

Thomas -

I am all ears. Give me a better approach or opening line. I wasn't trying to be smug or snide, but yes, clearly, I wouldn't have asked the question if I thought he had an answer, and he knew that. The problem is... that goes for anything I could think to ask them. I didn't go down there to taunt these folks or counter-protest. I would love to know at which point we share common ground.

Having spent a great deal of time around self-described Marxists and tried to engage them, as you say, I have found that the sticking point is ultimately that I believe economic exchange is not zero-sum and they do. I believe that management and labor can plausibly reach a voluntary agreement where neither exploits the other, and they continue to insist that there must always be one party oppressing and one party oppressed.

If you can suggest any angle of attack, I would certainly be obliged.

Thomas DeMeo writes:

N- Engaging a protester on the street is tough. My original point was directed at Mr. Kling, who has wider options to engage in the debate. He might be able to choose or not choose to discuss such issues in a number of more civil forums.

Still, anyone can talk about this stuff one on one. The important thing is to listen, get past the stupid stuff and get to the core of what should really be discussed. Many of these people really only have an emotional reaction that life for most people has gotten much harder very quickly, and that the top 1% seems to be doing better than ever. They are right about that much.

Like always, figuring out something is wrong is much easier than figuring out what to do about it. What they are wrong about is what public policies are smart and reasonable and might help. For example, a protester might want companies to stop laying people off out of social conscience. An economically literate person could explain why such an idea could actually be hurtful to society in the long term.

David C writes:

This paragraph hit home for me:
"Solyndra was a wager that went wrong, but failure is integral to the business of investing in new companies; many venture capitalists will tell you that, of the companies they fund, they expect a third, if not more, to fail. By those standards, the government is actually doing pretty well so far: under the stimulus program, the D.O.E. has handed out nearly twenty billion dollars in loan guarantees to renewable-energy companies, and only Solyndra has defaulted, accounting for a small fraction of the money guaranteed." - James Surowiecki

I'm not following the issue very closely as $500 million is a small amount of money for the federal government, but it's the best thing I've read so far analyzing whether or not the Department of Energy was making good investment decisions. The Washington Post article doesn't have anything close to as good. I don't consider it ideological gridlock when the far left has a better argument than the center.

Lori writes:

To Warsh's concern; I propose an open source approach to microeconomics, with bulk data points by the millions on guff, perhaps in the form of a "price instance database." Just a few data fields—place (latitude and longitude), time (julian date), price (in whatsoever currency) and description (for many consumer goodies, a UPC or EAN bar code), but many, many, many of them, perhaps harvested by volunteers with a love for the subject (or by mechanical Turks, just to rub our faces in how hopeless the cause of full employment has become). Call it an "economic observatory," hopefully with "interferometer" capability, and maybe some SETI@Home type stuff when it comes to crunching the numbers.

"Many venture capitalists will tell you that, of the companies they fund, they expect a third, if not more, to fail. By those standards, the government is actually doing pretty well so far."

Unfortunately, unlike a venture capital firm, the government's soft budget constraint makes it less likely to bear the brunt of the cost of this mistake in the way a private firm would. The externality of this failure falls on taxpayers, not the "firm" (the USG).

If it's just like the typical VC environment as Surowiecki implies, then there's no reason it can't take on such a project. Plus it wouldn't upset a good chunk of the citizenry.

Dan King writes:

I think Mr. Kling is right about education. The marginal cost of education is descending to zero - and the sooner the better. I'm hoping that within 5 years or so college math departments will be extinct - all of that should be taught on-line.

The key hangup is data entry. There needs to be an easy way for students to hand-write equations, and after the computer sets those to ASCII text, then send those to where ever. Now the data entry for math formulas is so clumsy and user-unfriendly as to make on-line math education too complicated.

Unblinkered writes:

The importance of building your coherent and well developed argument is not about convincing the other guy, but about providing coherent and well developed arguments for the multitude of observers and interested people following the argument.

Your a blogger and an intellectual after all, and so is the "other guy" with a readership, and an extended network of second and third order receivers of your arguments radiating outwards from you, who are inclined to your positions but are without the intellectual stamina or skill to develop these arguments on their own.

To the approacher of protesters, it is best to find your intellectual equivalent on the other side and engage him/her to your own mutual benefit. My children know when they being had by the system "which is my wife and I, within their life's context" and our ability to outargue them does not change their sense of that essential truth, it just confirms their worst suspicions about how it works, which we are trying to discourage.

Steve Sailer writes:

"I think that the peak years for status for technocrats were the 1940s through the 1960s."

Inventing the atomic bomb did wonders for the prestige of technocrats.

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