Almost Classical

Teaching within a top-ranked business school associated with nine Nobel laureates in economics, I am honored to meet some of the brightest young minds in the world. These students excel at math, as one might expect, and many also pursue second degrees or minors in additional STEM (science, technology, engineering, and math) fields. At our institution, economics is paired with statistics by default, as we emphasize quantitative economics over the philosophical approaches to the field. Although I admire these students, I'm also saddened that so many chase financial industry careers over working in other STEM fields or in the public sector. These great minds set forth to turn money into more money, when they might use their skills to apply the lessons of economics and statistics to greater social good. As Washington Post reporter Jim Tankersley writes, it isn't that finance is a "good" or "bad" pursuit for an individual — but in the last two decades finan...

For once, a post that agrees with Paul Krugman. He makes an argument I have advanced on this blog and I agree with his general premise that now is the ideal time for some infrastructure spending. See:  Ideology and Investment - NYTimes.com There’s an obvious policy response to this situation: public investment. We have huge infrastructure needs, especially in water and transportation, and the federal government can borrow incredibly cheaply — in fact, interest rates on inflation-protected bonds have been negative much of the time (they’re currently just 0.4 percent). So borrowing to build roads, repair sewers and more seems like a no-brainer. . I've posted an identical call for (sane and limited) infrastructure spending. We have billions of dollars in deferred maintenance that must be done. Now is the ideal time, with low bond rates and an anemic economy. I'm not calling for or supporting reckless spendthrift approaches to investment. I don't like waste (high speed r...

Yesterday, I reminded my undergraduate economics students that modern economics, with its quantitative bias, is not about what is "fair" in life. While we can use economics to identify what isn't "fair" and how to better allocate resources, at its core economics is the study of efficiently allocating scarce resources. Math is not moral; it is an amoral aspect of economics that should be informed by philosophical inquiries. For example, quantitative economics can answer when a person is "unproductive" and "inefficient" within the system. But, economics does not answer if it is moral to reallocate resources from the unproductive to either the currently or potentially productive members of a community. Raw numbers tell us the money spent on extending the last year or two of life might be best spent on educating the young. But is that the right way to approach problems? Economic models do not tell us if stock market gains driven by low inter...

Where's the inflation? Where's the run-up in bond rates? Despite high debt, unsustainable long-term social spending, unfunded pension liabilities, and numerous other fiscal challenges, the U.S. bond market is strong and interest rates remain low. Companies are facing increasing energy costs, unstable global situations, falling unemployment, rising minimum wages in larger cities, and a regulatory landscape that has shifted. The Tea Party and the Occupy movements aren't exactly in the mood to reform corporate taxes, and the politicians reliant on both extremes aren't going to collaborate to improve the business climate in any meaningful way. (Yes, there are areas of agreement among most economists, across the political and theoretical spectrum, that good policy isn't good politics.) If business costs and risks are rising, prices should be rising. With all levels of government fiscally unsound (and ungovernable), bond vigilantes should be circling. In theory,...

The "one percent" of income earners, and even the one-tenth of top one percent, might be the only segment in the United States that has caught up to pre-recession income and growth levels. Though I never support wealth redistribution, clearly the opportunity curve is… broken. If the middle and upper-middle class cannot advance, it's unlikely the economy can move forward for all citizens. Even in the richest 3%, there's a growing wealth gap Robert Frank | @robtfrank Friday, 5 Sep 2014 | 3:13 PM ET CNBC.com America's millionaire population hasn't grown significantly in 10 years, according to new government data, suggesting that not everyone at the top is benefiting from the recovery. The latest Surveys of Consumer Finance from the Federal Reserve paints the familiar picture of widening income inequality in America. The wealthiest 3 percent of households control 54.4 percent of the nation's wealth, up from 51.8 percent in 2009. But the gains are hi...

I'm really tired of the canard that money suddenly has an outsized influence in politics. Plenty of studies show that money follows likely winners, but doesn't determine the winners of elections. More importantly, this September 7, 2014 column by Senators Tom Udall of New Mexico and Bernie Sanders of Vermont ignores the most basic of all questions… http://www.politico.com/magazine/story/2014/09/the-threat-to-american-democracy-110683.html In 2010, the Supreme Court issued a disastrous 5-4 opinion striking down major parts of a 2002 campaign-finance reform law in Citizens United v. Federal Election Commission. This case and subsequent rulings, including McCutcheon v. FEC, have led to the explosion of outside money in elections through so-called super PACs. In the 2012 election, we quickly saw the results — 32 major super PAC donors combined to give more money than the millions of ordinary Americans who donated less than $200 each to Barack Obama or Mitt Romney. More than 60 pe...

Eligible citizens in the United States don't vote. A majority of 18 to 25-year-old voters have little faith in government and no desire to serve in public office. Personally, I don't blame them. I was engaged until about 2006. My disengagement is as much a statement as my direct participation was. Too often, though, partisans can't understand that not being engaged is a rhetorical choice. What if a person truly believes that both major parties are horrible for the United States and the world? The notion of voting for the "lesser of two evils" still requires voting for evil. A pacifist I know explained it this way: She cannot, for any reason, vote for any president or party that is likely to take any military action. This is a deep religious conviction. How would she express this conviction? Voting for a minor party doesn't change the outcome, and no major media outlets cover those candidates. I deeply object to policies of the two major parties. I ...

No matter what states try, election participation is falling. This doesn't correspond to voter ID laws, narrow voting windows, or anything else. States with vote-by-mail (Oregon) and at-will absentee voting (California) also have abysmal voting rates. If voter turnout is key, why is it so low? - Pittsburgh Post-Gazette : Taken together, just 15 percent of the voting-age population cast ballots -- or 18.2 million people out of 122.8 million eligible. Turnout was 17 percentage points lower than the most recent high-water mark of 32 percent in 1966. Democrats were down 14.5 points from their 1970 high, or 20.9 percent of eligible citizens, and Republicans were down 5 points from their 1966 high of 13 percent. Why? Because most of us know… our votes don't really count. States and districts are increasingly polarized. States are not gerrymandered, so we can't blame redistricting for partisanship in the United States Senate. When did California last have a Republican senator? ...

Readers know that I find Richard Florida 's insistence that cities are in almost all ways "better" than suburbs and rural regions simplistic at best. His analyses depend on his (and similar scholars') definitions of what is "best" for humans and what variables don't matter as much. What we weight as important in such analyses reflects biases. Florida seldom acknowledges that cities mask social problems (income inequality, mental stress, concentration of power) and drive away some hypersensitive, great minds. Cities are inhospitable to those who need reflective space. Imagine my pleasant surprise when The Atlantic  ran a story reflecting the experiences and observations of my wife and me. The smartest people we know leave cities for more relaxed lives in the country (or exurbs). Where Do the Smartest People Move? - CityLab : The most interesting finding here (below, far right) is that once income was taken into account, people who moved from the city...

This is an older article in The Atlantic , but it goes to something I discuss in my courses when we explore demographic research. Looking at "red state-blue state" dichotomies ignores that the real divide is Rural vs. Urban  and that this has little to do with how many scholars and reporters have argued about "liberal vs. conservative" and other political issues with maps. Red State, Blue City: How the Urban-Rural Divide Is Splitting America - The Atlantic The new political divide is a stark division between cities and what remains of the countryside. Not just some cities and some rural areas, either -- virtually every major city (100,000-plus population) in the United States of America has a different outlook from the less populous areas that are closest to it. The difference is no longer about where people live, it's about how people live: in spread-out, open, low-density privacy -- or amid rough-and-tumble, in-your-face population density and diverse comm...

My wife and I are fortunate, and we are hard working. Which of these traits should be first? I cannot answer with certainty. We moved to our current home in 2011 for what seemed like a perfect job. It wasn't. Yet, I was "lucky" because we ended up in a region with several great universities, a wonderful performing arts community, and many other benefits. These institutions, however, require that you be prepared to take advantage of their existence. I worked hard for my doctorate, and my wife worked hard for her master's degree. We prepared ourselves for opportunities, when they might appear. Only a few years ago, we had nothing. We lost everything and I received the earned income tax credit (EITC), which I still believe was odd, since I didn't request it. I read a study that claimed in simulations, with everyone starting equal, the successful outside the simulation end up successful in the game. The theory is, that some people just rise to the top, even...

Putin, at 85 percent approval (or higher, depending on source), is the most popular leader in Europe among his voters. Though we know he controls the media and crushes opposition, he really doesn't care what the West does or doesn't do. He's even used the sanctions as proof that the West is out to destroy Russia. It wouldn't matter who sat in the Oval Office. Putin's Russia is, as he says, "Trying to right a horrible wrong." Pride and honor are at stake, not international norms. And, in the end, Russian oil and gas are needed by many nations in the region -- at least for now -- and that gives Russia leverage. The sad reality... there is not much Pres. Obama or anyone can do to change Putin's worldview. Sanctions, harsh words, none of those things will matter to Moscow. And China will be more than happy to support Putin's Russia. When we try to understand the world through "American" or "Western" eyes, we miss that other ec...

The rich are not "smarter" as the following headline suggests — but they do attend elite universities and major in the more demanding academic fields. When this article appeared in May, I was winding down my first year at an elite institution, in its business school. If many of my students are destined for wealth, is it because they are smarter, more gifted, harder working, born to the right families? What is it that takes someone from the middle-class (or nothing) to extreme wealth? The rich are different—they're smarter, study says http://m.cnbc.com/us_news/101679720 —By CNBC's Robert Frank. CNBC.com | May 16, 2014 | 11:12 AM EDT Economist Paul Krugman recently wrote that the multibillion-dollar salaries of top hedge fund managers proved that education plays little role in the growing wealth gap. The rich get rich, he said, because of the "runaway financial system" and investors making money from money. "Modern inequality isn't about gra...

This is why I haven't been blogging a lot this summer. I've been working on several new plays…  A NEW DEATH A World Premiere By C.S. Wyatt Directed By Kaitlin Kerr Assistant Directed By Sarah McPartland Presented by Throughline Theatre Company   July 18 - July 26 The Grey Box Theatre 3595 Butler St, Pittsburgh, Pennsylvania 15201 TICKETS: http://www.throughlinetheatre.org/tickets-and-pricing/   Featuring: Andy Coleman  Chelsea Faber Hazel Carr Leroy Eric Leslie  Tonya Lynn  Sarah McPartland Jared King Rombold  John Henry Steelman

Richard Florida and his team are at it again, pointing to correlations and assuming causations.  High-School Dropouts and College Grads Are Moving to Very Different Places Cities like Washington and San Francisco are gaining the highly skilled but losing their less-educated workforce. While I suppose I could live anywhere, my career somewhat demands that I be near either cities or at least college towns. It isn't that I love or even like cities — I don't — but I like being employed. I don't like the noise, light, or other pollution of cities. Employment: it beats the alternative. Don't imagine cities are "attractive" to every migrating household. No, they simply are where we must go, and we must demand higher and higher salaries to afford those very cities, pushing the inequality gap wider and wider.  Want to live near the great university where I work? Expect to spend $700K or more on a little, old, problems-included, house. Invest another $100K...

We will always have articles accusing "libertarianism" of being everything from "fascist" (huh?) to "right-wring" to "juvenile." Those advocating for classical liberalism will be linked to racists, plutocrats, crony capitalists, and other perversions of limited government and negative rights. (I still hate the "negative" rights label, inherently a rhetorical device that insults various philosophical and political schools of thought.) When I read "Somalia is a libertarian paradise," I know the comment poster is either ignorant or intentionally lying. The basics of classical liberalism include: Rule of law, with an egalitarian legal system; Enforced contracts, protecting parties in transactions; Property rights beginning with the individual's ownership of self; Limited, effective, and reliable government. Now, for the sad reality that libertarians in the United States need to address: there are horrible people who...

Over on Politico, the divisions we know exist are examined yet again, this time in a new Pew poll. Pew poll: Polarization highest in recent history Two decades ago, “a lot of Democrats and Republicans said they didn’t really like what the other party was doing, but they didn’t downright worry about them and see them as a threat in the way that we’re seeing from a lot of people today,” said Michael Dimock, Pew’s vice president for research. On Facebook, my political friends are increasingly intolerant of other views. It is best to be neutral and ignore the political, or you risk having to choose sides when neither "side" is of much interest. The hatred, the name calling, the complete intolerance for "them" and a conviction that "they" are destroying this country is… destroying this country. As a classical liberal, I'm the definition of a radical moderate. Leave me alone, and I'll support your right to be left alone. Let me be a heath-consciou...