Thursday, August 18, 2011

David Henderson, Idiot

David Henderson tells us:
"Then, in my late teens, I started to learn economics. I started to understand that the vast majority of income in a relatively free society is earned. It's true that a small number of wealthy people did get their money by fraud or dishonesty. More common, especially in societies with lots of government controls, were people who got wealthy by using political pull. But I started to see that the typical high-income person in a relatively free society gets his or her income the old-fashioned way--by earning it." -- David Henderson
I suppose it is good that some economists are willing to expose themselves, or their teachers, as incompetent. Economists refusing to teach theories that collapsed half a century ago, except as history, would be better. Even if markets were perfectly competitive, marginal productivity would not be a theory of income distribution. In neoclassical economics, properly understood, no sense can be attached to the claim that the rich earn their income. But, of course, markets are not perfectly competitive in the United States. The ever increasing income and wealth being seized by the top quintile, or 10%, or 1%, or 0.1%, etc. is the result of the exercise of political power.

Noah Smith, who probably thinks of himself as a liberal opposing "libertarians" (that is, propertarians), is not much better. In his discussion, he fails to mention any empirical facts about the increasing and astonishing unequal distribution of income in the United States. He fails to discuss whether or not gross inequalities in the distribution of income and wealth is consistent with the smooth expanded reproduction of a capitalist economy. And he fails to discuss whether having an income distribution in the United States that has not been matched since the 1920s might have something to do with current recessionary conditions. Instead, he writes about feelings. As far as feelings go, the vast majority of Americans should be angrier. "Let fury have the hour, anger can be power/D'you know that you can use it?"

Wednesday, August 17, 2011

Scholarly Fantasies

Maybe many that read old books might find interest the rediscovery of works whose existence was previously unknown or thought to be gone forever. Some examples:
  • The Gospel According to Thomas and other gnostic manuscripts: Two Egyptian farmers discovered the Nag Hammadi library in 1945. This story is fairly incredible. While these Egyptian brothers pursued a feud with one of their neighbors, they left them in the keeping of their mother. She, in turn, I guess, started a fire with them every morning, until a coptic priest recognized their importance. And then they were smuggled out of Egypt.
  • Thomas Malory's Le Morte d'Arthur: While cataloging the Winchester College library, in 1934, Sir Walter Fraser Oakshott discovered a manuscript of this book. This manuscript suggests that Malory conceived his work as a collection of tales. Caxton, the printer, edited it into an unified tragedy.
  • Third edition of François Quesnay's Tableau Économique: Marguerite Kuczynski, in the late 1960s, asked the heirs of Pierre Samuel Du Pont de Nemours if they had any printed works by Quesnay in their possession. And the Eleutherian Mills Historical Library told her "Yes".
  • David Ricardo's unknown correspondence and manuscripts: Piero Sraffa's discovered, in 1934, a bundle in F. E. Cairnes castle at Raheny. Raheny is near Dublin, and F. E. Cairnes, son of a 19th-century economist, had recently died. The bundle contained 57 letters from Ricardo to James Mill and various manuscripts written by Ricardo
  • Ludwig Von Mises' papers from his apartment in Vienna: Unbeknownst to Mises, the Nazis preserved these after Mises fled. The Soviets captured them from Germany at the end of WW II, catalogued them, and preserved them in the KGB archives. Richard Ebeling brought them back from Russia in 1996 after their discovery by western scholars after the collapse of the Soviet Union.

Tuesday, August 09, 2011

Video Strategy Games As A Testbed For Decision Theory

Daniel MacDonald occasionally mentions video games. It turns out some researchers use strategy video games for exploring decision theory models. (Partially observable Markov decision processes and partially observable stochastic games are examples of such models for decision theory.) Frans A. Oliehoek and others at the Intelligent Systems Lab, at the University of Amsterdam, have developed the Multi-Agent Decision Process (MADP) Toolbox, "an open source C++ library for decision-theoretic planning under uncertainty in multiagent systems."

Some researchers, I guess in this lab, have integrated MADP into StarCraft, a real-time strategy game. StarCraft has a science fiction setting, and MADP routines are used to calculate policies for one of the three races in the game.

I consider Edward Castronova one the most interesting researchers exploring the intersection of computer games and economics.

Don't tell Brad DeLong (who at one time found he had to choose between playing Civilization or doing economics) about this post.

Sunday, August 07, 2011

Quiggin Fortunate In His Enemies; Williamson Still A Fool

  • An attack by Michael Stutchbury in The Australian. (Even the title is a lie - social democrats are not on the "far left".)
  • John Quiggin responds.
  • Stephen Williamson reviews Zombie Economics. We learn "DSGE has no implications, and therefore can't be wrong. Indeed DSGE encompasses essentially all of modern macroeconomics."
  • John Quiggin tries to correct Williamson.
  • Noah Smith also tries.
  • Paul Krugman links to Smith and gently chides Williamson.
  • Stephen Williamson comically explains this is not pulling rank: "Zombie Economics reads like fringe economics (Austrians, Post-Keynesians, etc.). In fringe economics, the game is dismissing things you know little about, and offering little that is actually constructive."
  • Stephen Williamson provides an even worse elaboration, as if Krugman's point were that his synthetic Nobel makes him right.

Wednesday, August 03, 2011

Hahn On Regression In Macroeconomics

One can find many amusing quotes from such as Frank Hahn and Robert Solow on trends in macroeconomics after Robert Lucas. I get this one second-hand:
"One should now ask how the present mess came into being. For macroeconomics today is in a state which astronomy would be if Ptolemaic theory once again came to dominate the field. There can be few instances in other disciplines of such a determined turning back of the clock. A great deal of what is written today as well as the policy recommendations which have been made would be thoroughly at home in the twenties. So something needs explaining and I hope that some good intellectual historian will attempt to do so soon." -- Frank Hahn (1985) (as quoted in Philip Mirowski's More Heat Than Light, p. 411).
Do I need to note some economists today would still find Hahn's opinion apposite?