Posts Tagged ‘economics’

The Only Thing We Have to Say Is… Bias Itself

October 21, 2008

The ever-entertaining WSJ op-ed page notes Fed Chair Ben Bernanke’s support for a stimulus program not too dissimilar from what the Democrats have proposed.

The conclusion: “Perhaps Mr. Bernanke’s blunderbuss political intrusion will win him more Democrat friends, and maybe even Mr. Obama’s goodwill. To the rest of the world, he has harmed the Fed and made himself less credible.”

There is no intellectual justification for anything the WSJ supports.  So when someone argues against their views, all they can do is scream “bias!”


June 27, 2008

Tyler Cowen (via):

Another possibility is that Republicans don’t get much electoral credit for pro-poor initiatives (just as many voters simply won’t believe that “Democrats can be tough”).  The more competitive political messaging becomes, the more this constraint binds and so the policies of upward redistribution are more likely to be enacted by Republicans in the resulting political equilibrium.

For gosh sakes, Tyler, the stuff they teach you in Econ 101 is a series of useful simplifications, not absolute truth.

First off, perceptions about parties and candidates are not a perfectly competitive market— note that John McCain is billing himself as having stood up to the president in defense of the environment.

Plus, people and parties do not have perfect information, much less rational preferences.  Witness Mitt Romney’s insistence that preventing nuclear proliferation is a “liberal” concern.

The GOP, forever pandering to its jingoistic, enemy-craving base, is a deeply irrational party.  “Political equilibria” have nothing to do with it.

Empirical Incrementalism Trainspotting

February 26, 2008

Obama has surrounded himself with advisers who are experts in their fields. The common thread among his advisers is that they are committed to policy grounded on empirical, up-to-date research.

Despite Obama’s reputation for grandiose rhetoric and utopian hope-mongering, the Obamanauts aren’t radicals–far from it. They’re pragmatists–people who, when an existing paradigm clashes with reality, opt to tweak that paradigm rather than replace it wholesale. As Thaler puts it, “Physics with friction is not as beautiful. But you need it to get rockets off the ground.” It might as well be the motto for Obama’s entire policy shop.

The campaign’s focus on behavioral economics is particularly encouraging. As an undergrad, I was astonished that the Economics department was housed in the same building as the Marketing professors. Didn’t they ever talk to each other? Since that time, behavioral economics— the study of economics as it relates to how humans actually behave rather than lines on a graph— has become ground zero for econ in the past decade-plus.

The explanation of their foreign policy is also pretty encouraging, and it helps explain Obama’s much more intelligent approach to Iraq than most of the Democratic establishment:

[T]he Obama hands tend to feel less hemmed in by establishment opinion. As one Obama adviser puts it, ‘Democrats want to be just a little bit different from Republicans, but not so different that they get attacked for being weak.’ Like [former Indiana Senator Lee] Hamilton, the Obamanauts generally reject this calculus–not because they favor some radical alternative, but because clinging to received foreign policy wisdom can preclude highly practical courses of action.

The article discusses Obama’s receptivity to eliminating nuclear weapons— a goal that Eisenhower embraced, and that we are bound by treaty to pursue.

So, Obama is a candidate with an appealing, optimistic attitude, and a set of well-grounded progressive policies untethered to the DC establishment (though I think Paul Krugman has the better of the argument on health care). I’m starting to get pretty enthusiastic about this guy, who had been my third choice at best.