Official BBO Hijacked Thread Thread

[cherdano]

This table has a clear omission - many more boys than girls waste their time playing bridge. Surely just a stepping stone to being a homicide victim or spending life behind bars, based on this data?

[y66]

Perhaps he should also publish this statistic:

 

For every male idiot who posted that chart in the BBO water cooler, at least 3 male posters did not get taken in.

[kenberg]

Perhaps he should also publish this statistic:

 

For every male idiot who posted that chart in the BBO water cooler, at least 3 male posters did not get taken in.

 

It's one more expression of my skepticism of statistics. It is not that the numbers are wrong, they probably are right, but often the numbers are not enough. Sample question: How can we get more boys to take an AP/Honors course in Art/Music? My answer: We can't. But we can provide the opportunity and then we can ask ourselves why they do not take advantage of it. Of course no one takes advantage of every opportunity, choices have to be made, but we can ask why some seem uninterested in their future at all.

 

There are aspects of adolescence today that, to me, are incomprehensible. I'll give a couple of non-academic examples that perhaps reflect on academic matters as well.

 

Adolescent males today are often in no hurry to get a driver's license. How can that be? My birthday is Jan 1 so the DMV was closed, but on Jan 2 I got my permit, in March I got my license, in April I bought a car. This was not at all an oddity.

 

I started dating when I was 14. It was very important to me that the money I spent on a date was money that I had earned myself. Again, not odd at all. A guy earned some money, called a girl, asked her out, and he did not then ask his parents for money to pay for this.

 

How does this apply to academics? By mid-adolescence I was choosing the girl I wanted to ask out, I was choosing the car I wanted to buy, I was paying for it all myself, in short, I was making my own choices. Why on earth would I be asking someone whether I should be taking Honors Art? I wouldn't. But I did have interests, and I was thinking about my future. And so were others.

 

I am thinking that the two questions "Why are boys slipping academically/' and "Why are boys uninterested in getting a driver's license?" are two sides of the same coin. I don't know the answer, but I also don't need a statistical table to recognize a problem..

 

In some cases, there is a lack of opportunity. This can be addressed. Then some will, and some won't, take advantage of the opportunity. Fixing that is much harder. Something about horses and water comes to mind. But we do need to work on providing opportunity.

[y66]

The guy who compiled an earlier version of those stats in 2011, Thomas G. Mortenson, is a senior scholar at the Pell Institute for the Study of Opportunity in Higher Education which "conducts and disseminates research and policy analysis to encourage policymakers, educators, and the public to improve educational opportunities and outcomes for low-income, first-generation, and disabled college students". From what I've read, which is not much, he appears genuinely interested in understanding problems of equal access to educational opportunity regardless of sex, race or income.

 

The guy who posted the updated chart for a subset of Mortenson's categories, Mark Perry at AEI, clearly has an ax to grind.

 

For spamming readers of this thread again, I plan to read Tyler Cowen's interview with Camille Puglia and post highlights.

[kenberg]

The guy who compiled an earlier version of those stats in 2011, Thomas G. Mortenson, is a senior scholar at the Pell Institute for the Study of Opportunity in Higher Education which "conducts and disseminates research and policy analysis to encourage policymakers, educators, and the public to improve educational opportunities and outcomes for low-income, first-generation, and disabled college students". From what I've read, which is not much, he appears genuinely interested in understanding problems of equal access to educational opportunity regardless of sex, race or income.

 

The guy who posted the updated chart for a subset of Mortenson's categories, Mark Perry at AEI, clearly has an ax to grind.

 

For spamming readers of this thread again, I plan to read Tyler Cowen's interview with Camille Puglia and post highlights.

 

I have been concerned about just what is up with the 21st century male. adolescent. I am not all that interested in a statistical comparison of boys with girls. Statistically speaking, I was probably weird but so what. I hope that a 16 year old, boy pr girl, has some idea of his/her options and preferences. Some do, of course, but it seems many don't, especially the boys. I am skeptical of statistics and I am very skeptical of ideology as being of much use, but I can listen. And maybe I am just wrong, maybe all is fine, but I don't think so.

[y66]

The New York Times posts occasional interactive geography quizzes for students.

[y66]

I have been concerned about just what is up with the 21st century male adolescent.

Alan Patton, the author, was very interested in a similar topic in the 1930s and 40s when he was the head of a reform school for boys in South Africa. He wondered what distinguished boys who were always getting into trouble from boys who got into trouble and then got out. A big part of it, he decided, was that boys who did not have long running conversations with parental figures were more likely to get in trouble. That sounds obvious but then how do you help boys who aren't getting what they need. In his school, he established a system that rewarded trustworthy behavior that had some success. In Too Late The Phalarope, he tells the story of a family in which the father and son aren't able to talk about stuff that's going on in the son's life which, if they had, might have changed everything.

 

I attended a conference at Brookings last year where a professor from Harvard claimed that teenagers who learn how to have adult conversations in high school tend to do better in college relative to their peers. That seems obvious too but how do you help kids learn this when their parents never figured this out?

[kenberg]

Alan Patton, the author, was very interested in a similar topic in the 1930s and 40s when he was the head of a reform school for boys in South Africa. He wondered what distinguished boys who were always getting into trouble from boys who got into trouble and then got out. A big part of it, he decided, was that boys who did not have long running conversations with parental figures were more likely to get in trouble. That sounds obvious but then how do you help boys who aren't getting what they need. In his school, he established a system that rewarded trustworthy behavior that had some success. In Too Late The Phalarope, he tells the story of a family in which the father and son aren't able to talk about stuff that's going on in the son's life which, if they had, might have changed everything.

 

I attended a conference at Brookings last year where a professor from Harvard claimed that teenagers who learn how to have adult conversations in high school tend to do better in college relative to their peers. That seems obvious too but how do you help kids learn this when their parents never figured this out?

 

When I think of my own youth the answer to "how do you help" is both simple and complex; Have something useful to say. I listened to adults, but I chose which adults.

[y66]

You've talked about tutoring kids. Chief Justice Roberts mentioned in his annual report that Merrick Garland has been doing this for some time and that some of his court colleagues have joined in. I've never thought about tutoring. It's a lot of responsibility. I'll ask my daughter-in-law who teaches 4th grade what it takes to be a successful tutor.

[kenberg]

You've talked about tutoring kids. Chief Justice Roberts mentioned in his annual report that Merrick Garland has been doing this for some time and that some of his court colleagues have joined in. I've never thought about tutoring. It's a lot of responsibility. I'll ask my daughter-in-law who teaches 4th grade what it takes to be a successful tutor.

 

I've tutored. including tutoring my father when i was 14. It can be a good thing, Mostly I now help grandkids when asked, and I am not much asked.

 

My thinking was along a different line, perhaps illustrated by a recent story in WaPo

 

https://www.washingtonpost.com/business/2020/01/10/january-2020-jobs-report/

 

The idea is that the number of jobs has been increasing, but not so much in jobs traditionally held by males. What's a guy to do? Complain? Blame women? Vote for Trump? Or maybe give some thought to options? This last, give some thought to options, is the path most likely to lead to success.

 

When I was young I liked working on cars, I liked mathematics, I chose mathematics. Probably, for me, a good choice. That's the sort of thing I am trying to get at. There seems to be a lot of lost boys out there. I am not so sure that this has to be.

[y66]

From the Financial Times:

 

Forensic experts hired by Jeff Bezos have concluded with “medium to high confidence” that a WhatsApp account used by Saudi Crown Prince Mohammed bin Salman was directly involved in a 2018 hack of the Amazon founder’s phone.

 

A report on the hack, which has been seen by the Financial Times, says Mr Bezos’s phone started surreptitiously sharing vast amounts of data immediately after receiving an apparently innocuous, but encrypted, video file from the prince’s WhatsApp account in May 2018.

 

The file was sent via WhatsApp weeks after the pair exchanged numbers at a dinner in Los Angeles during a trip to the US by the crown prince. But the relationship soured after the gruesome murder of Jamal Khashoggi, a veteran Saudi journalist who used a regular column in the Bezos-owned Washington Post to criticise Prince Mohammed’s autocratic leadership.

[y66]

Fun read: https://www.nytimes.com/2020/01/21/dining/iliana-regan-milkweed-inn.html

 

Ms. Regan grew up with three older sisters on a 10-acre farm near Merrillville, Ind. Her bedroom had plywood floors, and the basement always flooded. The barn was crammed with used restaurant equipment, coffee cans filled with old parts and an abandoned light-blue Chevy, where she used to sit and fantasize she was on a date with a pretty girl. An outsider observing her young life, she wrote, might have bet she’d grow up to be an alcoholic transgender trucker carny.

 

Her mother liked to read Gourmet magazine and make her own pasta. Her father, a steelworker who never met a vegetable he didn’t want to grow, saw early on that she had a knack for finding the last ripe dewberry on a bush.

 

In an arresting passage in her book, she describes the day he taught her to hunt for chanterelles. She was about 5, and so focused on the task that she lost track of him. A drunk uncle who she recalls was always telling her what a pretty little girl she was, picked her up from behind and carried her into a dilapidated cabin. A family friend was inside, saving her, perhaps, from something terrible. He took her back to her father. As they headed to the car with their bags of mushrooms, a tornado spun through the sand and swept the family to the ground. When they finally made it home, her father placed her on a stool next to the stove and taught her how to carefully cook the chanterelles with red wine and butter.

 

“This was the day I slighted fate and became a chef,” she wrote.

[kenberg]

Fun read: https://www.nytimes....lkweed-inn.html

 

 

That is one great article including some really fun photos, everything from the walleyes being fire cooked to the berry picking.

 

And here is one of the many quotes I liked:

 

"I think some people were unprepared for a Michelin-starred chef to be the daughter of a steelworker union rep who grew up with sisters who were drunk and fighting all the time," Mr. Seibold said.

Yes, I can imagine it might be unexpected!

The whole thing is just a pleasure to read.

[y66]

98.6 degrees Fahrenheit isn't normal anymore. From Jo Craven McGinty at WSJ:

 

Nearly 150 years ago, a German physician analyzed a million temperatures from 25,000 patients and concluded that normal human-body temperature is 98.6 degrees Fahrenheit.

 

That standard has been published in numerous medical texts and helped generations of parents judge the gravity of a child’s illness.

 

But at least two dozen modern studies have concluded the number is too high.

 

The findings have prompted speculation that the pioneering analysis published in 1869 by Carl Reinhold August Wunderlich was flawed.

 

Or was it?

 

In a new study, researchers from Stanford University argue that Wunderlich’s number was correct at the time but is no longer accurate because the human body has changed.

 

Today, they say, the average normal human-body temperature is closer to 97.5 degrees Fahrenheit.

[y66]

Quote of the day:

 

The time of the traditional car manufacturers is over. -- CEO Herbert Diess in prepared remarks at an internal Volkswagen meeting this month.

From Wise Up, Stock Analysts. Tesla Is the Real Deal. by Matthew A. Winklerby at Bloomberg:

 

The greatest shakeup in automobile history reordered the stock market this month when a minnow grew larger than a whale.

 

Tesla Inc., the 17-year-old Palo Alto maker of battery-powered, zero-emission vehicles, is now the second-largest automaker measured by market capitalization, overtaking No. 2 Volkswagen with a value of $101 billion. It wasn’t long ago that no industry analyst would have predicted that the 82-year-old Wolfsburg, Germany-based seller of 30 times as many vehicles last year would become an also-ran to Tesla. Most of them remain unconvinced that Tesla is worth its price of $558 a share and less than 32% recommend buying the stock, according to data compiled by Bloomberg.

 

But Tesla customers and investors are making the case that the reliance on the internal combustion engine by Volkswagen — and by the 39 other major automakers committed to a commercial fossil fuel machine invented in the 19th century — is a dubious strategy. Tesla is worth $131 billion less than No. 1 Toyota Motor Corp., but its sales growth has been more than nine times the industry average during the past decade and 832 times Toyota's 25% appreciation since Tesla became a public company in June 2010 with an initial valuation of $2 billion. It opened its largest service center in Germany last year and agreed in December to build its first European car factory, in the state of Brandenburg.

Who is more insane, Elon or car manufacturers and government policy makers who continue to rely on fossil fuel strategies? It's not looking like Elon at the moment. Hope he can pull this off.

[Zelandakh]

Tesla customers and investors are making the case that the reliance on the internal combustion engine by Volkswagen — and by the 39 other major automakers

This is pure advocacy dressed up as market research, a subject I find personally repulsive. VW has invested heavily in electric cars recently, as has pretty much every other car manufacturer. Can you name any of the 39 companies being fingered here that are not working in a similar direction?

[Cyberyeti]

98.6 degrees Fahrenheit isn't normal anymore. From Jo Craven McGinty at WSJ:

 

It was always 98.4 (36.9 C) in the UK

[y66]

This is pure advocacy dressed up as market research, a subject I find personally repulsive. VW has invested heavily in electric cars recently, as has pretty much every other car manufacturer. Can you name any of the 39 companies being fingered here that are not working in a similar direction?

As a longtime fan of German engineering, I applaud VW CEO Herbert Diess for his advocacy and his recognition that the future belongs to companies that have the courage to reject fossil fuel based strategies. Ditto for Mr. Winklerby and Bloomberg for their contrarian view of Tesla's prospects which, no doubt, will continue to mirror the wild swings of their mercurial co-founder.

[y66]

Excellent interview with Fintan O'Toole by Andrew Anthony at The Guardian: https://www.theguardian.com/books/2018/dec/29/fintan-otoole-the-books-interview-brexit-english-nationalism

[y66]

From Milton Friedman’s World Is Dead and Gone by Peter Orzag at Bloomberg:

 

The annual conclave of the rich and powerful this month in Davos, Switzerland, put the longstanding debate about the social responsibility of corporations front and center by proclaiming its official theme as “stakeholders for a cohesive and sustainable world.”

 

By using the word “stakeholders,” the World Economic Forum confirmed that it’s taken sides in a debate rekindled last year by the Business Roundtable, a lobbying group representing chief executives of major U.S. corporations. The Roundtable had issued a statement highlighting a “fundamental commitment to all of our stakeholders,” including shareholders, clients, employees, suppliers and communities, thereby situating itself in opposition to the view of corporate responsibility made popular half a century ago by the economist Milton Friedman. Friedman had famously stated in a 1970 New York Times magazine essay that business executives who diverted corporate assets toward social goals were betraying their obligations to shareholders.

 

Yet the debate between Roundtable supporters and Friedman supporters, a main topic of panels and unofficial conversation at Davos last week, missed five key points:

 

1. When Friedman was writing, the consequences of his view were more modest than they later became. In the 1960s and 1970s the regulatory state was often more interventionist than it is today — especially in industries such as transportation and telecommunications — and social norms were different. Before the deregulation wave of the 1970s and 1980s, arguing that a business executive should focus only on maximizing shareholder value thus may or may not have been wrong theoretically, but the practical impact was less significant. Whether business leaders pursued a narrow or broad definition of their responsibilities didn’t matter as much because government regulation constrained the consequences.
   
2. In no small part because of Friedman’s influence, an extreme definition of capitalism has become dominant. By this definition, only perfectly competitive markets with minimally interventionist governments and business executives who maximized shareholder value should be considered capitalist. It’s a strange argument. I doubt that anyone would have said during the 1940s, 1950s or 1960s that the U.S. wasn’t capitalist, but somehow the qualification standards seem to have changed. I heard one person argue at Davos that regulating or even taxing carbon would be “anti-capitalist.” That’s nonsense. Virtually the entire range of policy options for more or less government action on climate change would not, if enacted, affect whether an economy remains capitalist.
   
3. As Friedman’s worldview as taught in introductory economics classes became more dominant, policymakers emphasized the effect of incentives and individual skills. Economists focused on assessing how much more productive an individual could be if she faced a lower marginal tax rate or had more education. Studying, instead, how much more productive an individual could be if she worked at Company A instead of Company B, or lived in City X instead of City Y, went out of fashion. And yet the evidence over the past few decades shows the importance of the place-based perspective, with growing differences in productivity and wages for otherwise similar individuals working at different firms, growing differences in returns on capital across firms, and growing differences in upward mobility for people living in different cities.
   
4. The evolving view of government’s proper role and the emphasis on individual-based policy instead of place-based policy coincided with fundamental changes in the global economy, especially a substantial expansion in the effective global labor supply, and the evolution of the computer era. Over roughly the same period, the U.S. experienced a disproportionate rise in political polarization, as a new analysis from the National Bureau of Economic Research shows. The authors of that article argue that diverging views among elites (which is plausibly about the role of government, though the authors don’t make that argument) may be the cause of the rapid rise in broader polarization relative to other countries. At the very least, it’s interesting that the country that has most forcefully adopted the Friedman-inflected approach to policy has polarized the most.
   
5. Some people who want businesses to adopt a broad view of corporate responsibility argue that companies have to fill a gap left by the diminishing effectiveness of government. (They might not realize that Friedman addressed that issue in his 1970 essay.) Like the old saw about the child who murders her parents and then complains about being an orphan, however, the dominant paradigm of the past several decades has plausibly produced a dramatic rise in inequality and polarization, and that polarization in turn has made the government unable to function effectively. In other words, we have basically done this to ourselves.
   

So what is the best pathway forward? There is no easy fix, but I like many recent ideas about making public investments and regulatory adjustments to encourage creation of business ecosystems like technology hubs, as has been done in Palo Alto, California; Austin, Texas; and Boston. That would require more government action than is likely in the near term. But as Friedman’s success in altering the dialog demonstrates, a first step is to be clear about what we should be doing, even before we’re capable of doing it. And an approach to policymaking focused more on where we work and live seems vastly more promising than what we’ve tried over the past few decades.

The first bullet point is the key to understanding the context of the Friedman Doctrine. No doubt Friedman would have appreciated the line about the child who murders her parents in the last bullet point and would also agree that the regulatory adjustments we need require more government action than is likely in the near term.

 

In “Capitalism and Freedom” (1962) he says “there is one and only one social responsibility of business — to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.” The "so long as" part of that statement is the part everybody forgets and that now seems incredibly naive.

[y66]

From How to Leave Your Lover with Lemons by Chantel Tattoli:

 

In a forum online, I’d seen an exchange come up from Shakespeare’s play Love’s Labour’s Lost where one character suggests a lemon had been gifted to another character instead of precious nutmeg. Could the meaning we attach to lemons have roots, like so much else, in the bard? I asked Barrett. “Again, gaps are suspicious,” he told me. “Shakespeare has been studied for hundreds of years—why would it take so long to happen? Almost all of the expressions we know from Shakespeare show continuous use. It’s very rare for Shakespeare to contribute something freshly into the language.”

 

Barrett eventually sleuthed out a song titled “A Lemon in the Garden of Love,” by the Broadway composer Richard Carle. (“A million peaches round me / Yet I would like to know / Why I picked a lemon in the garden of love / Where they say only peaches grow.”) He believed this to be the popularizer, the word historians use for the source that renders a phrase recognizable to the general public.“The song’s mentioned a lot in 1906, 1907,” Barrett said, “and that’s when we see this term [handed a lemon] really take off.”

[y66]

Quote of the day via Tim Higgins at WSJ:

 

Following another disappointing quarter earlier this month, Ford CEO Jim Hackett tried to assure skeptics that he was preparing the auto giant for the future. “Tesla’s now worth over 5x the market cap of Ford,” an analyst pressed him. “What’s the message the market’s sending Ford?”

[y66]

From a review at The Economist of "10% Less Democracy: Why You Should Trust Elites A Little More and the Masses A Little Less" by Garett Jones

 

Garett jones, an economics professor at George Mason University in Virginia, knew he was on to a good thing when he got a call from the campus police. A student journalist had written a report on a lecture that he had given suggesting that rich countries would be better off if they were less, rather than more, democratic. The hostile reaction, which spread beyond the university, included a call threatening enough to trouble the university’s private security force. Mr Jones concluded that he had an idea powerful and contentious enough to make into a book. The result is “10% Less Democracy”.

 

This is a fertile time for critiques of democracy. In light of the use of state apparatus by elected leaders to undermine an opponent in America, murder people in the Philippines, render a religious minority stateless in India, threaten judicial independence in Poland, and rob the public purse in South Africa, the system which has long provided the rich world with a satisfying mix of moral superiority and stable government is looking a bit ropy. A report last month from the Centre for the Future of Democracy at Cambridge University found that support for democracy had declined sharply in most of the world since the 1990s, including in America and western and southern Europe. The world’s biggest autocracy, meanwhile, is bringing prosperity to its own population and extending its influence round the world.

 

But as Mr Jones discovered, criticising democracy in the West is still a bit like launching a broadside against the pope in 15th-century Europe—or against a modern-day authoritarian president. You can suggest that all is not going to plan, but you will get a friendlier reception if you pin the blame on dodgy advisers or foreign interference, rather than on the concept itself.

 

David Runciman’s recent “How Democracy Ends” attributed democracy’s woes to decadence. The system was healthier, he argued, when change or conflict—the expansion of the franchise in the first half of the 20th century, the second world war—had given it a shot in the arm. Pankaj Mishra, in “Age of Anger”, maintained that the problem lies in the growing gap between a political system that promises equality and an economic one that leads to inequality.

 

By contrast, Mr Jones plants responsibility squarely on the shoulders of the voters. As an economist, he approaches democracy as a production system whose output is governance, and examines how it can be tweaked to improve the product. The core of “10% Less Democracy” is thus research on whether more or less democracy produces better or worse outcomes for countries and citizens.

 

Early and less often

 

As the title suggests, Mr Jones’s critique operates within a narrow band. He concedes that massacres and famines are less likely to happen in democracies than in autocracies, and that there is a clear correlation between democracy and prosperity. But he takes issue with Daron Acemoglu’s claim, in the title of a paper published last year, that “Democracy Does Cause Growth”. The paper found that when undemocratic countries became democratic, they grew faster, raising gdp per head by an average of 20% in the long run.

 

But democracy, Mr Jones points out, is not like virginity: countries can be a bit more or a bit less democratic. No modern country, not even Switzerland, is as insanely democratic as ancient Athens, where citizens voted to recall their military leaders from Sparta. All democracies limit popular participation in collective decision-making, be it by handing over responsibility to elected representatives to make big decisions, or by appointing judges and other public servants. Mr Jones believes that, because people do not always vote for what is good for them, those countries that have made it to the top quartile of the democracy scale should set slightly tighter limits.

 

A study by Alberto Alesina and Lawrence Summers in 1993, for instance, showed that inflation was lower in countries with independent central banks. There was no cost in terms of growth or employment; it was a free lunch. The trick was simply to hand over responsibility for the money supply to an official who had no interest in using it to boost growth in the run-up to elections. (In the best—or only—joke about central bankers, a student visits his former professor, who has become one. The phone rings. “No…no…no…no…yes…no…no,” says the central banker. Hanging up, he explains that the caller was the finance minister. “What did you answer ‘yes’ to?” wonders the student. “He asked if I could hear him.”)

 

Likewise, regulators’ backbones are stiffened by independence. A study in Europe showed that the less dependent on politicians they are, the more likely they are to stand up to government-owned utilities. Free trade, too, benefits when farther from democracy. The closer politicians are to an election year, the less likely they are to vote for measures to liberalise trade.

 

In America, which has historically been devoted to democracy, all sorts of officials are elected. State-by-state variations allow comparison of their performance with the appointed type. It turns out that elected judges make worse judgments and elected city treasurers cost their taxpayers more (though not many are as improvident as the man who consulted a psychic to help him manage the voters’ money—and eventually bankrupted Orange County).

 

A price worth paying

 

Mr Jones musters plenty of convincing evidence that fewer elections and more distance between voters and decisions make for better governance. But he stretches the argument for limiting democracy far beyond that observation. He is attracted by the idea of “epistocracy”, or rule by clever people; he advocates giving an official role in decision-making to bondholders, who already constrain governments’ freedom by raising the costs of lending to badly managed countries.

 

These arguments expose the flaw at the centre of this interesting and enjoyable book. Mr Jones looks at democracy as an economic system. But for most people, democracy’s moral component is also essential. It is an expression of the belief that everybody is equal in the sight of God or the presence of the ballot box, and that a country’s people should have power over their government. Less democracy may mean more sensible outcomes, but it also means less legitimacy.

 

Recent events illustrate that point. Hong Kong is in many ways a splendidly governed place, with reliable social order and a thriving economy—and very limited democracy. The result of last year’s election, in which voters supported pro-democracy protesters, was a clear message to the territory’s Chinese overlords that its people wanted more of a say, even at the cost of less stability.

 

For its part, the European Union is a model of co-operation and rational decision-making. Yet it has just lost one of its larger members, in part because British voters felt no connection with its governance structures. Technocrats may make sensible decisions, but democracy without legitimacy is a ship without a sail.

[kenberg]

From a review at The Economist of "10% Less Democracy: Why You Should Trust Elites A Little More and the Masses A Little Less" by Garett Jones

 

 

 

Another book that I had not before heard of and that no doubt I would find interesting. An example I have mentioned before: I was a high school student in St. Paul in the mid 1950s The schools needed more money and, as required, they put it up for a vote. It was defeated. So they announced that because of a shortage of funds they would need to cut back on high school athletics . Then they put it up for another vote. It passed. A pretty clear statement of what the public thinks is important in educational funding.

 

But Churchill still had it right: Democracy is the worst form of government except for all those other forms that have been tried.

 

Clever as that observation is, democracy does lead to serious problems. Fundamentally, people have to care. If they do not care, we are beyond saving.

[y66]

From Remembering Paul Volcker by Don Kohn (Feb 12, 2020):

 

... Of course, his best-known and most lasting accomplishment as Chairman was conquering inflation. I was too junior a staff member to be there at the famous October 6, 1979, meeting of the Federal Open Market Committee when it shifted from setting an interest rate to setting a money supply target, but I was involved in the aftermath. He was determined to reduce inflation, but no one knew how high rates would need to go to accomplish that. The incremental monetary policy process of voting on each rate decision probably wasn’t going to get to the right place and wasn’t credible in markets—especially after he only narrowly won board approval for a discount rate increase in mid-September. There was enough evidence linking money supply to inflation over long periods to make a shift to a quantity-based target credible and likely to succeed over time. The shift to money and reserve targets provided a rationale for very large rate increases that was easier to implement in the Committee and easier to explain in public—it was the demand for money that was raising rates, not a deliberate decision by the Fed.

 

Nonetheless those were tough times—economically and politically. Interest rates of 20 percent and unemployment rates of 10 percent; rings of tractors around the board building; offices filled with 2x4s mailed in by builders; consumer demonstrations outside the building; talk of his impeachment in the Congress. In response to the consumer protests, he agreed to send board members and senior staff to meet with consumer groups around the country. It was a very unpleasant experience, marked by hostility, harassment, and demands for personal financial information. Paul recognized the sacrifice he had asked us to make and had a ceremony in his office awarding us purple hearts for wounds suffered in service to the central bank. I confess to a small degree of satisfaction when at the end of the round of meetings, the group came into the board room at the Fed and behaved in a way that earned the Chairman his own purple heart.

 

“[T]he decisions on when to shift away from particular strategies require an even broader perspective, a greater subtlety of thinking and analysis, and confidence in one’s own judgment and ability to convince others than the decisions to undertake those strategies in the first place. Paul Volcker had the required attributes in great abundance.”

 

I think we can draw a couple of lessons for public policy from his handling of the fight against inflation. First, once an important public policy goal and a course of action to achieve it are identified, stick to it, recognizing that the short-run costs will be far outweighed by longer-term gains. And, the Volcker disinflation set the stage for two and a half decades of almost uninterrupted growth. But second, once that calculus of short-run costs and longer-run gains flips, back off. That’s what happened in the fall of 1982 when inflation had receded considerably and was still on the way down, and the high interest rates of previous years were threatening debt sustainability in Latin America and therefore the viability of several major US banks. His book is entitled “Keeping at It” and that’s a great description of his lifelong pursuit of key public policy goals. But sometimes, within that overall arc, the decisions on when to shift away from particular strategies require an even broader perspective, a greater subtlety of thinking and analysis, and confidence in one’s own judgment and ability to convince others than the decisions to undertake those strategies in the first place. Paul Volcker had the required attributes in great abundance.

 

When the news of his passing came out, I was in London and Brookings asked for a statement to give reporters. Here’s what I said: For me, he was mentor, role model and friend. He rejected some of the technology of modern central banking—the explicit inflation target, the transparency, the ease with new-ish financial instruments. But he had the essential elements of courage, integrity, devotion to public service and a laser like focus on price and financial stability that made him a great central banker. We were fortunate to have him among us.