Interesting. Ta. In future I will just point him here any time he wishes to debate economics, it is way, way outside my area of expertise. But I appreciate that you guys are into it and write it up well.
Short question - why not R ? Have zero experience with economic modeling, but I kind of expected that using a free language developed specifically for the purpose of statistics and modeling might help there as well.
Probably that's best Calistas. One of the unfortunate things you run into is that laymen (and I include myself in this statement) often treat macro as a religion, rather than as a science or whatever it wants to be. Part of the problem is that the people who actually practice macroeconomics often treat it as such; if you want to find a macroeconomist who says that raising taxes increases government revenue, you can do so. Overall the profession is in a fairly sorry state!
Monetary. Stimulus. To. Raise. Incomes. Not debt relief. Why this is such a perennial meme I have no idea. Rewriting umpty billion contracts just because the Fed is pussy footing around on stimulus is a terribly expensive plan liable to fuck some over significantly more than others. A few years of decent inflation would raise all boats simultaneously. Does. Not. Compute!
I really wish I could convince my mate to post here. I think he would genuinely find it educational. He isn't an idiot either, you all would have some good debates.
(skulls for the throne of khorne) This got linked to me by my realtor father this morning, and I thought it was worth a mention. It's industry specific, relatively micro, and possibly from a biased source.. but home builder confidence in the US seems to be improving rapidly:
The final employment report of the year! Good news: November: +146k. Unemployment rate down to 7.7%. That's much better than consensus of +77k and 8.0%. Bad news: downward revisions for September and October. September was revised downward from +148k to +132k, and October was revised downward from +171k to +138k. That's a net loss of 39k. That's the first downward revisions in as long as I can remember. :( Cautionary note: initial data is always murky (hence the big revisions). Furthermore, Sandy is going to throw a wrench into the works; everyone assumed it would result in lower employment and it still might. Finally, Thanksgiving fell rather early this year and I'm not sure how well the seasonal adjustment will reflect that; we may be seeing some extra hiring that will be offset by less hiring next month. Overall situation: more water treading! Gosh it'd be nice if someone in Washington was talking about employment instead of the stupid deficit. Sectoral situation: retail and healthcare were leaders (+53k and +20k respectively). Construction was the big loser at -20k. Manufacturing was flat. Government was flat, which is relatively good news given the degree to which the public sector has dragged down the economy over the past few years. edit: Do recall that when I say "Good news," that term is heavily informed by the soft bigotry of low expectations. 150k would be a good number if we didn't have 12 million unemployed workers. :(
So there was some interesting discussion on the internets this weekend regarding productivity growth and inequality. I'm really not sure what order to provide links; if you just want TL:DR read this Krugman post. The upshot is this: we all know about stagnating median wages over the past 30+ years. One explanation that's lately getting attention is that soaring productivity has rendered labor increasingly irrelevant. Call it the robot theory of inequality: robots do stuff better than people, so we don't need as many people. Consequently, the owners of the robots make tons of money, the people the robots have replaced collect unemployment. Krugman (and others who I'll maybe link to later on when it's not quite so early and I'm a bit less sleepy) imagines the consequences of the future robot economy. From a micro-level we'd expect the people the robots have replaced to go do other things, like provide healthcare and take care of senior citizens. However it's not clear that's happening; the stagnating median wage (and thus reduced share of income for everyone who's not rich) has potential long-term demand-side consequences that could end up inhibiting economic growth.
Median wages -- as opposed to income -- are a function of the distributional system we use for our income and have no bearing on income per se. A more likely strangler of innovation would be federal, state and county regulation. Perfect example? The infamous tacocopter! http://www.wired.com/gadgetlab/2012/03/qa-with-tacocopter/ Here's another great example: http://en.wikipedia.org/wiki/Teleradiology http://www.imagingeconomics.com/news/16345-teleradiology-2005-cracks-in-the-nighthawk-egg Note some of the language in that article, with direct quotes about fear of competition and "commoditization". Many of the rules that bind healthcare today were put in place essentially by the AMA in order to ensure the kind of disruptive new entrants you'd expect to find couldn't enter in a million years. Furthermore you're absolutely incorrect that displaced people haven't been going into healthcare: http://www.bls.gov/emp/ep_table_103.htm Almost all of the fastest growth professions projected for 2010-2020 are related to mental or physical health. I can't find the 2000-2010 historical data (search doesn't seem to be working on the site) but I'd suspect -- based on the increase in healthcare as a percentage of GDP by roughly 6% over that period -- a similarly enormous jump in healthcare hiring. So, why isn't innovation happening? Because the rules of the game were written to prevent any change that could possibly threaten doctor income. Unfortunately for doctors they're now under pressure from an even more powerful association -- regional medical medical monopolies-- that are doing their bit to crush physician wages and push more money into the pockets of shareholders. These giant healthcare blobs will push for the sort of disruptive improvements to care (most likely further creation of low wage jobs whose roles are functionally equivalent to physicians) that'll benefit them without enabling the creation of smaller, leaner firms or actual competition within their local monopolies. Which brings us back to the tacocopter. We know there's no problem buying health care because people already pay ridiculous prices for the stuff. Only a thundering ninny with an extreme ideological bias would push median wages as the obvious explanation when everyone and their mother knows early adopters of any tech are invariably the upper crust of society, and that the Jason McC's of the world would absolutely pay for fancy technomagical healthcare. And if wage data shows anything, it's that their buying power relative to the rest of society has INCREASED, not decreased. The sort of technomagical innovation we need in healthcare doesn't exist because of the silly rules we've been bamboozled into writing, not because it's unpossible. edit: That said, we should indeed pursue a better distributional outcome. Just through CCTs, not weird rules on what companies can and can't pay people.
It could just be because it's early and I woke up at five AM, but right now your post reads mostly like a total non sequitur. Krugman et. al. are talking about what seems to be changing returns on labor vs. capital and what the implications thereof will be. Regulation stifling innovation does in fact suck but there's no evidence that it's a huge problem on a macro level; and very little evidence that suggests it's responsible for the problem outlined up in sentence two of this post. Also, with regards to tacocopters: regulation didn't stop the tacocopter. The fact that it's currently impossible for a quadrotor to deliver burritos stopped it. The range and lifting capacity of those thing is piss-poor. Incidentally, there's some historical precedent for what I'm talking about above. Iirc sixteenth/seventeenth century England displayed an economy with those sorts of characteristics; there was a massive permanently unemployed lower class that caused all sorts of trouble and grief.
Matt Yglesias's take: the decline in labor's share of income is an artifact of successful price (which is to say, wage) stabilization policies: Here is the chart:
My bet is Yglesias - it's probably not a coincidence the change in income distribution and capital/labor distribution matches up so well with the Great Disinflation + rightward economic turn in government. If only you had a single data series to back this pet theory! Or a plausible model, even.
You realize I posted the Ygelsias theory a while back in this thread right? Except back then it was my theory pulled from a few studies, and I argued the fuck out of it? Feel free to roll on back through them pages until you find it again. It's back when I was talking about pareto optimality and the distribution of wages at the aggregate level. My 'pet theory' as you've decided to call it is related to long run aggregate supply constraints and the distributional effects thereof, and I'll defend it in a post I'm still working on. Whatever your confusion on the subject, it's not nearly so simple to defend as the macro aggregate demand stuff (which, despite its simplicity, still took me months and months of arguing with enormous posts to defend). Everything about it is based on local regulatory environments and institutions and, yes, even my favorite bugbear of culture. It can't be generalized from because IT IS NOT GENERALIZABLE. So I'm working up a defense of something that takes a lot longer to defend and can't be summed up in a single data series or set of data series. And you wanna give me ish? I WILL BITE YOU HOMBRE.
Oh, we agree on that then. It's the "regulation caused the inequality" I don't get at all. Disinflation by contrast has a perfectly plausible set of data and a simple model.
Yeah I don't see a natural transmission mechanism from "Regulation lowers AS (which it does)" to "Lowered AS necessarily results in greater inequality."
I set up a regional monopoly and extract rents from consumers. I pay those rents out as dividends + capital gains to shareholders and as income to managers. If the shareholders and managers are on average richer than the customer, distributional effect. Which way benefits me (the presumed CEO) the most determines the distribution of dividends vs income.
Plausible theory; I'd be interested to see regression analysis showing that we've seen this happening over the past thirty or forty years.
I can see a concentration story, but concentration is not interchangable with licensing and regulation. Regulation famously decreased quite a bit over the period in some areas - trucking and airlines are unrecognizable today compared to 1970. If it's an association thing, sometimes regulation leads to more concentration, sometimes it doesn't. A reduction in regulation led to far more concentration in finance.
I hate R with the passion of a thousand suns. I don't understand why free has to mean this interface makes Windows 3.1 look good.
To each their own. I have to use linux commandline quite a bit in my work, R is not that much more difficult. And the plotting functions can be very cool indeed. Edit: By the way - interface ? R is a language. Choose your own IDE. Use SPSS if you want, it contains R as well. To get access to all the nice functions only available therein.
Maybe that was my problem as the IDE I was using was horrible. I spent less time modeling and more time fighting it.
Good point, and stumped me for a while as well. But the R community came up with rseek, which uses an R-specific Google subset.
Quite frankly, R can be a lot tougher than GUI-based stat software, at least for a while. I myself have to look up stuff most of the time when using it, since I do not exactly use it daily. But as a reward it is really extremely flexible, and has built-in support to ease sharing of methods (basically R can import code from papers directly, if marked with a tag). And it scales like a charm. Edit: if you are curious regarding the graph abilities, the R Graph Gallery is a good starting point. And shares source code in addition to nice pictures of what is possible.
http://commons.apache.org/math/ I mean I figure if I'm ever doing something so complex that the Commons option isn't cutting it, I can probably just show what I'm doing to someone and go from there.
You say this like the answer is obviously "licensing and regulation", but those are a tiny set of the menu. The late 19th century and early 20th century was dominated by enormous firms, and they didn't remotely get that way through regulation by the tiny state and local governments. They used the standard playbook - buying up competitors, buying up verticals like the railroads and squeezing out competitors, exploiting increasing returns, operating in winner-take-all markets, etc. Standard oil's corporate biography is a good overview. Bought politicians in those days defended their clients like usually do today - fighting tooth and nail against taxation and regulation attempts. Public choice theory-derived strategies like regulatory capture are not historically the dominant way firms exhibit market power. I am not an economist, etc., but near as I can tell this is the case. Listening to online debates gives you a really unrepresentative picture.
Jason McCullough the answer is "by preventing new entrants". Any mechanism necessary to reach that goal fits the bill. You can look it up, it's definitional. I kinda thought you'd know that being as I'm only bitching about it all the time.
I got the impression you were all about licensing and regulation - of which I see not much evidence that's in a historical upswing or anything. But yeah, locking out competitors, is the root defense behind all the strategies.
I'm focusing on it right now because it's what I'm interested in right now. Given my body of work it ought to be obvious it's not all I'm interested in. Just because it happens to sound a lot like favorite Republican bullshit talking points -- where it's often code for 'stack the deck in favor of economic incumbents' -- doesn't mean it's always bs. Plus I feel like I'm closing in on an actual workable model that's mildly generalizable and then I can start dicking with it! Or could except my boss is handing me a customer database and I'm gonna be working on tools for that instead. So right now what I'm working on is being all excitable and figuring out the differences between networked and embedded derby.
Regulation is just a tool; it can be used split up and otherwise clamp down upon monopolies as well as encourage new entrants. Just because it is also used for the opposite purpose doesn't indicate that that is the only way it can be used. I'd argue that most completely unregulated markets in a 'pure' sense tend toward monopoly in the longer term due to economies of scale and the other numerous advantages that having a lot of money swilling about grants a large company. I suspect its probably only the more 'social' factors that that provide a weak counterbalance to a lot of our current giant firms growing any larger. Social factors which include cautious management, fear of monopoly/anti-trust regulation as well as potential consumer backlash over a general fear of giant omni-corps. However, some large companies like GE, Amazon & Apple with excellent customer relations are beginning to resemble that sort of mega corporation with ownership over the whole supply chain, diversified interests and a fearlessness about moving into new markets or gobbling up smaller firms.
Dan Lawrence I don't disagree that there's a happy medium between none and all. I'm personally more interested in the weaponization of government aspect than the 'how many sprinkles make for a perfect topping' aspect. http://brokenforum.com/index.php?threads/hsbc-settles-for-2b.4369/#post-372709
Sure, but I think that the 'weaponisation of government' as you put it is a problem with its roots in the incentives the political system gives to its participants, principally the elected representatives. Regulation is just one of the tools these corrupted actors then use to manipulate the state of the markets to the wishes of their masters. I guess it depends if you want to proscribe a course of corrective action or just diagnose the symptoms of the disease. I'm fairly certain we don't really disagree but I thought it was worth highlighting as the discussion seemed to be turning toward that blind alley.
I have a significantly less negative viewpoint of the process. I'm of the opinion that in many cases these are supposed to be small giveaways or even improvements that aren't well comprehended and end up having negative impacts. A famous example is hair dresser licensing. A century back you needed a brief apprenticeship to demonstrate the ability to cut hair professionally. These days it's a racket involving thousands of hours of expensive education and training in thoroughly irrelevant material. Did someone set out to create that? Did anyone along the way go "this will entrench my economic advantages?" Or was it just a collection of people over the years who wanted to make hairdressing slightly more professional because they were worried about bad hairdressers screwing customers over, and ended up -- despite good intentions -- making things worse for everyone? That's the traditional example for the kind of low level stuff I'm poking at right now. It's obviously got some kind of economic impact, but how much and how generalizable can it possibly be? Dunno, so I'm trying to find out.
