Books – Page 109 – artdiamondblog.com

Reinhart Rogoff Result Robust: High Debt Lowers Growth Rate from 3.5 to 2.3 Percent

(p. A29) CAMBRIDGE, Mass. In May 2010, we published an academic paper, “Growth in a Time of Debt.” Its main finding, drawing on data from 44 countries over 200 years, was that in both rich and developing countries, high levels of government debt — specifically, gross public debt equaling 90 percent or more of the nation’s annual economic output — was associated with notably lower rates of growth.
. . .
Last week, three economists at the University of Massachusetts, Amherst, released a paper criticizing our findings. They correctly identified a spreadsheet coding error that led us to miscalculate the growth rates of highly indebted countries since World War II. But they also accused us of “serious errors” stemming from “selective exclusion” of relevant data and “unconventional weighting” of statistics — charges that we vehemently dispute.
. . .
Our 2010 paper found that, over the long term, growth is about 1 percentage point lower when debt is 90 percent or more of gross domestic product. The University of Massachusetts researchers do not overturn this fundamental finding, which several researchers have elaborated upon.
. . .
There were just 26 cases where the ratio of debt to G.D.P. exceeded 90 percent for five years or more; the average high-debt spell was 23 years. In 23 of the 26 cases, average growth was slower during the high-debt period than in periods of lower debt levels. Indeed, economies grew at an average annual rate of roughly 3.5 percent, when the ratio was under 90 percent, but at only a 2.3 percent rate, on average, at higher relative debt levels.
. . .
The fact that high-debt episodes last so long suggests that they are not, as some liberal economists contend, simply a matter of downturns in the business cycle.
In “This Time Is Different,” our 2009 history of financial crises over eight centuries, we found that when sovereign debt reached unsustainable levels, so did the cost of borrowing, if it was even possible at all. The current situation confronting Italy and Greece, whose debts date from the early 1990s, long before the 2007-8 global financial crisis, support this view.

For the full commentary, see:
CARMEN M. REINHART and KENNETH S. ROGOFF. “Debt, Growth and the Austerity Debate.” The New York Times (Fri., April 26, 2013): A29.
(Note: ellipses added.)
(Note: the online version of the commentary has the date April 25, 2013.)

The full reference to the authors’ book is:
Reinhart, Carmen M., and Kenneth Rogoff. This Time Is Different: Eight Centuries of Financial Folly. Princeton, NJ: Princeton University Press, 2009.

Longer Life Spans “Allowed More Time to Invent New Tools”

(p. 33) The primary long-term consequence of . . . slightly better nutrition was a steady increase in longevity. Anthropologist Rachel Caspari studied the dental fossils of 768 hominin individuals in Europe, Asia, and Africa, dated from 5 million years ago until the great leap. She determined that a “dramatic increase in longevity in the modern humans” began about 50,000 years ago. Increasing longevity allowed grandparenting, creating what is called the grandmother effect: In a virtuous circle, via the communication of grandparents, ever more powerful innovations carried forward were able to lengthen life spans further, which allowed more time to invent new tools, which increased population. Not only that: Increased longevity “provide[d] a selective advantage promoting further population increase,” because a higher density of humans increased the rate and influence of innovations, which contributed to increased populations. Caspari claims that the most fundamental biological factor that underlies the behavioral innovations of modernity maybe the increase in adult survivorship. It is no coincidence that increased longevity is the most measurable consequence of the acquisition of technology. It is also the most consequential.

Source:
Kelly, Kevin. What Technology Wants. New York: Viking Adult, 2010.
(Note: ellipsis added; bracketed “d” in Kelly’s original.)

The Costs of Green Jobs Policies

Source of book image: http://javelindc.com/home/wp-content/uploads/2012/11/regulating_to_disaster.jpg

I caught part of a C-SPAN presentation on the Regulating to Disaster book. It sounded plausible and intriguing—consistent with other evidence I have seen that “green” jobs have been over-hyped and under-delivered.
Perhaps more important, there are the high opportunity costs of the tax dollars devoted to the “green” jobs, in terms of the non-green jobs that would have been created by entrepreneurs if less of their income had been taxed away.
I hope to look at the book in the near future.

Book discussed:
Furchtgott-Roth, Diana. Regulating to Disaster: How Green Jobs Policies Are Damaging America’s Economy. New York: Encounter Books, 2012.

Analytical Solutions Require Unrealistic Assumptions that Make Models Useless for Policy

Source of book image: http://www.anderson.ucla.edu/faculty/edward.leamer/images/COVER%209120_jkt_Rev1.jpg

(p. 190) When I was a younger man, I and all of my cohort were apprehensive if we saw Ed Leamer in the audience when we were presenting a paper. His comments were blunt, incisive, and often negative. But what truly terrified us was that he was almost always right. . . .

Leamer has produced a highly original little book, with big insights and lessons for us all. He explores the tension between economics that is mathematically sophisticated and complex but often vacuous, versus economics that may be vague but which is useful and carries a message. It is frankly a remarkable work, full of insights and persuasive arguments that need to be read, debated, and taken seriously.
. . .
(p. 191) But this is no rant of an old guy. Leamer gets very specific about his notions of usefulness versus rigor. A good drum to bang on is Samuelson, an important “mathematizer.” I would strongly encourage all young trade economists and perhaps all graduate students who have been subjected to a traditional international trade course at any level, to read the section on factor-price equalization. This is beautifully done and even exciting and funny at times. As told by Leamer, the young Samuelson excoriates Ohlin for largely dismissing the possibility of factor-price equalization and then presents his (Samuelson’s) “proof” of factor-price equalization. The latter, of course, is a theorem that is mathematically correct given the assumptions, but Ohlin is talking about its usefulness in understanding the world and constructing policy. The factor-price-equalization theorem is indeed a prime example of something that is valid but not useful.
. . .
Yet at the same time, I have thought long and hard about exactly what message should be given to graduate students and assistant professors without much success. The journal publishing business puts a huge premium on rigor over usefulness and few referees or editors are inclined to take the chance inherent in accepting papers that are a bit loose in their analytical or econometric structures, no matter how exciting they might be. If you accept that, then the profession as a whole has to rethink our view of what is an important scientific contribution: I cannot simply tell graduate students to think more broadly and worry less about elegance. Some will of course deny that there is any tension, but I side with Leamer. Over and over again, I hear, read, and/or referee papers (p. 192) where, in order to get an analytical solution to a model, the author has to assume away almost every interesting feature of the problem to the point that the remaining model is uninteresting and uninformative. But that at least qualifies the paper for possible publication in Econometrica, RESTud, or JET.

For the full review, see:
Markusen, James R. “Book Review of Ed Leamer’s the Craft of Economics.” Journal of Economic Literature 51, no. 1 (2013): 190-92.
(Note: ellipses added; italics in original.)

The book under review is:
Leamer, Edward E. The Craft of Economics, Ohlin Lectures. Cambridge, MA: The MIT Press, 2012.

Hunter-Gatherers Complained of Hunger and Food Monotony

(p. 30) Based on numerous historical encounters with aboriginal tribes, we know [hunter-gatherers] often, if not regularly, complained about being hungry. Famed anthropologist Colin Turnbull noted that although the Mbuti frequently sang to the goodness of the forest, they often complained of hunger. Often the com-(p. 31)plaints of hunter-gathers were about the monotony of a carbohydrate staple, such as mongongo nuts, for every meal; when they spoke of shortages, or even hunger, they meant a shortage of meat, and a hunger for fat, and a distaste for periods of hunger. Their small amount of technology gave them sufficiency for most of the time, but not abundance.

Source:
Kelly, Kevin. What Technology Wants. New York: Viking Adult, 2010.
(Note: “hunter-gathers” substituted for “they” by AMD.)

Chagnon Enraged Cultural Anthropologists By Showing Tribal Violence

Source of book image: http://media.npr.org/assets/bakertaylor/covers/n/noble-savages/9780684855103_custom-4deac679a847f1d6e7d64424b01d0be54b54e3a7-s6-c10.jpg

(p. C) In the 1960s, cultural anthropologists led by Marvin Harris argued that conflict among prestate people was mostly over access to scarce protein. Dr. Chagnon disputed this, arguing that Yanomamo Indians’ chief motive for raiding and fighting–which they did a great deal–seemed to be to abduct, recover or avenge the abduction of women. He even claimed that Indian men who had killed people (“unokais”) had more wives and more children than men who had not killed, thus gaining a Darwinian advantage.

Such claims could not have been more calculated to enrage the presiding high priests of cultural anthropology, slaughtering as it did at least three sacred cows of the discipline: that uncontacted tribal people were peaceful, that Darwinism had nothing to say about human behavior and culture, and that material resources were the cause of conflict.
. . .
Meanwhile the science has been going Dr. Chagnon’s way. Recent studies have confirmed that mortality from violence is very common in small-scale societies today and in the past. Almost one-third of such people die in raids and fights, and the death rate is twice as high among men as among women. This is a far higher death rate than experienced even in countries worst hit by World War II. Thomas Hobbes’s “war of each against all” looks more accurate for humanity in a state of nature than Jean-Jacques Rousseau’s “noble savage,” though anthropologists today prefer to see a continuum between these extremes.

For the full commentary, see:
MATT RIDLEY. “MIND & MATTER; Farewell to the Myth of the Noble Savage.” The Wall Street Journal (Sat., January 26, 2013): C4.
(Note: the online version of the review has the date January 25, 2013.)
(Note: ellipsis added.)

The Chagnon book that Ridley is discussing:
Chagnon, Napoleon. Noble Savages: My Life among Two Dangerous Tribes — the Yanomamo and the Anthropologists. New York: Simon & Schuster, 2013.

Hunter-Gatherers Lived “in the Ultimate Disposable Culture”

(p. 30) In a very curious way, foragers live in the ultimate disposable culture. The best tools, artifacts, and technology are all disposable. Even elaborate handcrafted shelters are considered temporary. When a clan or family travels, they might erect a home (a bamboo hut or snow igloo, for example) for only a night and then abandon it the next morning. Larger multifamily lodges might be abandoned after a few years rather than maintained. The same goes for food patches, which are abandoned after harvesting.

Source:
Kelly, Kevin. What Technology Wants. New York: Viking Adult, 2010.

Academia Rejected Maslow’s Humanistic Psychology

Source of book image: http://www.harpercollins.com/harperimages/isbn/large/9/9780061834769.jpg

(p. 23) Abraham Maslow, humanistic psychology’s founding father, rejected the atomistic approaches of psychoanalysis and behaviorism that dominated the first half of the 20th century. He strove to develop a psychology that provided “a fuller, though still scientific, treatment of the individual” and understood the potential for growth as innate. His ideas got their most welcome reception from industrial management, to which Maslow retreated when academia failed to roll out the red carpet. But Grogan eloquently insists that humanistic psychology subtly revolutionized Americans’ conception of the self and the role of therapy, and asserts that current trends in the field, like positive psychology, owe the theory a debt they have been reluctant to pay.

For the full review, see:
MEGAN BUSKEY. “Nonfiction Chronicle.” The New York Times Book Review (Sun., March 31, 2013): 23.
(Note: the online version of the review has the date March 29, 2013.)

The book under review:
Grogan, Jessica. Encountering America: Humanistic Psychology, Sixties Culture, and the Shaping of the Modern Self. New York: Harper Perennial, 2012.

At Least By 100,000 Years Ago, Humans Looked Just Like Us

(p. 22) The exact time . . . protohumans became fully modern humans is of course debated. Some say 200,000 years ago, but the undisputed latest date is 100,000 years ago. By 100,000 years ago, humans had crossed the threshold where they were outwardly indistinguishable from us. We would not notice anything amiss if one of them were to stroll alongside us on the beach. However, their tools and most of their behavior were indistinguishable from those of their relatives the Neanderthals in Europe and Erectus in Asia.

Source:
Kelly, Kevin. What Technology Wants. New York: Viking Adult, 2010.
(Note: ellipsis added.)

Marx’s Contradictions Due to His Being a Reactive Journalist Instead of a Philosopher

Source of book image: http://s-usih.org/wp-content/uploads/2013/04/marx.jpg

(p. 14) Plenty of scholars sweated through the 20th century trying to reconcile inconsistencies across the great sweep of Marx’s writing, seeking to shape a coherent Marxism out of Marx. Sperber’s approach is more pragmatic. He accepts that Marx was not a body of ideas, but a human being responding to events. In this context, it’s telling that Marx’s prime vocation was not as an academic but as a campaigning journalist: Sperber suggests Marx’s two stints at the helm of a radical paper in Cologne represented his greatest periods of professional fulfillment. Accordingly, much of what the scholars have tried to brand as Marxist philosophy was instead contemporary commentary, reactive and therefore full of contradiction.

For the full review, see:
JONATHAN FREEDLAND. “A Man of His Time.” The New York Times Book Review (Sun., March 31, 2013): 14.
(Note: the online version of the review has the date March 29, 2013.)

The book under review:
Sperber, Jonathan. Karl Marx: A Nineteenth-Century Life. New York: Liveright Publishing Corp., 2013.

In Later Middle Ages Machines Replaced Slaves and Coolies

(p. 7) By the European Middle Ages, craftiness manifested itself most significantly in a new use of energy. An efficient horse collar had disseminated throughout society, drastically increasing farm acreage, while water mills and windmills were improved, increasing the flow of lumber and flour and improving drainage. And all this plentitude came without slavery. As Lynn White, historian of technology, wrote, “The chief glory (p. 8) of the later Middle Ages was not its cathedrals or its epics or its scholasticism: it was the building for the first time in history of a complex civilization which rested not on the backs of sweating slaves or coolies but primarily on non-human power.” Machines were becoming our coolies.

Source:
Kelly, Kevin. What Technology Wants. New York: Viking Adult, 2010.