Posted in Uncategorized, tagged economics, ideology, markets on March 9, 2015 |
Builders of the American republic in the decades either side of 1800 grasped and employed new philosophical and ideological tools for its construction. The revolutionary idea of inherent political equality – “all men are created equal” with “inalienable rights” – however limited its reality then seems looking back from now, was the Next Big Thing of the day. Also critical were economic analyses originating with Adam Smith and his British colleagues. “Free market” arguments asserted that self-interested actors uncontrolled by authorities combine to create the greatest good for the greatest number.
John Lauritz Larson, in a recent presidential address to the Society for Historians of the Early American Republic, notes a couple of important similarities between the political theories and the economic theories of America’s revolutionary era. Both sets of ideas demanded that the king’s government get off people’s backs, especially by stopping its interference in commerce. And both sets of ideas asserted, based 18th-century “scientific” analysis, that state rule distorted the God- or Providence- or Nature-given order of things. Men, advocates argued, were naturally equal and self-governing; similarly, markets were naturally productive and self-governing.
Larson goes on to make the point that there was nothing natural about the ascendency of the naturalistic argument for the laissez-faire philosophy. But we live with its seeming naturalness to this day.
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Posted in Uncategorized, tagged economics, government, polarization on October 8, 2013 |
Back about a decade or two, as polarization widened among America’s politicians and political activists, most analysts concluded from the initial flurry of research that the general public seemed exempt. Officeholders and activists were taking more extreme positions on hot-button issues like immigration and welfare, but Americans in general seemed to be largely in the middle and not that exercised. (That’s what I reported in this 2010 post.)
Well, there are new developments. For one, Americans started to express greater loyalty to their own party and greater hostility to the other party (see this 2012 post). And increasingly they seem to recast their social views, even their religious identifications, to line up with their political positions (see this 2013 post and this one).
A just-published study (pdf) by sociologists Clem Brooks and Jeff Manza adds to the evidence that polarization in the general public is increasing. It also has an interesting message about whether and how reality – in this case, the economic crash in late 2008 – affects Americans’ views on government policy. If the Great Depression brought support for the New Deal, should not the Great Recession bring support for a Newer Deal?
Below, I summarize Brooks and Manza’s findings about changes up through 2010 in Americans’ support for government action. And then I look at the changes after 2010, a look that complicates the story.
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Posted in Uncategorized, tagged class, economics, mobility on September 18, 2013 |
One of the key dimensions of “American Exceptionalism” is the idea that America is the land of opportunity more than any other. We would like to believe that American children who are raised in the meanest conditions are likelier to move up in the world than are children elsewhere. Yet, as of today, the U.S. does not provide more upward mobility than other nations do; if anything, young Americans’ economic fortunes are more tied to those of their parents than is true in other western nations. So, where did this image of exceptional mobility come from?
Two economists, Jason Long and Joseph Ferrie, published a study this summer in the American Economic Review that creatively brings together some 19th-century data to argue that there was a time when the U.S. was exceptionally open – or, at least, more open than Britain was. Two pairs of sociologists wrote critical comments on the study (here and here). Yet, even with the controversy, there is a lesson to be learned.
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Posted in Uncategorized, tagged economics, science, statistics on September 4, 2013 |
Some folks – perhaps only stats nerds like yours truly – noticed this item in the press last week: “Second-Quarter G.D.P. Revised Sharply Higher … Government statisticians gave the American economy a lift Thursday when they sharply revised their calculation of the nation’s second-quarter growth to an annual rate of 2.5 percent, up from an initial estimate of 1.7 percent.”
What is striking about this huge revision – the new estimate means that the economy was growing almost 50% faster than initially estimated – is not so much the statistical work itself, but how the media, the financial markets, and public read them. The economic numbers are only approximations. Indeed, this 0.8 point revision is less than the average revision made on quarterly growth rates over the last almost 30 years. The problem is not with the statisticians working to estimate these numbers; they are top-notch. The problem is the non-statisticians who fail to appreciate how noisy the data are and who make strong claims and key decisions based on small variations that experienced researchers treat with appropriate distance.
(As a footnote to this post, I ask why two scholars recently dismissed economics as a science on the grounds that economists don’t predict the future – an odd argument.)
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Posted in Uncategorized, tagged economics, inequality, taxes on October 22, 2012 |
A recent story in The New York Times, back in its business section, had important news about inequality: “Income Inequality May Take Toll on Growth.” A couple of economists at the IMF reported research (here) showing that, across many countries, periods of greater income inequality tend to be followed by slow-downs in economic growth.
This is, actually, old news. About twenty years ago the research literature already showed that inequality probably damped the economy (see pp. 126ff here). But this remains important to repeat – not just because reporting the baleful effects of inequality now has the imprimatur of the IMF, but also because so many people still resist the news; they insist instead on believing the opposite, that inequality stimulates the economy, to the benefit of everyone. And, of course, this insistence has political implications right now.
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