Stop Making Sense

August 31, 2011
Posted by Jay Livingston

Stephen Moore, in a Wall Street Journal editorial, says that he is “surprised how many students tell me economics is their least favorite subject.”  I’m surprised too, surprised that all these students are talking to Moore.  As far as I know, he has never held a teaching job.  Presumably, they are the students he meets in the WSJ editorial room or at Arthur Laffer’s firm, not exactly a random sample.  Whatever. The reason these many students dislike Econ, says Moore, is this:
Too often economic theories defy common sense.
It’s not just students.  In the title of the article and the closing line, Moore expands the anti-economics population:
Why Americans Hate Economics
For us sociologists, that’s strange, because we’re told that the trouble with sociology is that “it’s just common sense.” 

So students – and (let me be Moorishly grandiose here) Americans  – dislike economics because it defies common sense, and they dislike sociology because it confirms common sense.   Go figure.

What Moore means by “economics” – the kind that students and Americans hate – is Keynes.
the “invisible hand” of the free enterprise system, first explained in 1776 by Adam Smith, got tossed aside for the new “macroeconomics,” a witchcraft that began to flourish in the 1930s during the rise of Keynes.
Others have criticized Moore’s economics (see here and here for example).  It’s the common sense part that interests me.  For example, Moore ridicules an Obama spokesman’s defense of unemployment insurance  – that it pumps money into the economy, and people use the money to buy stuff they otherwise couldn’t.

But Moore says, “That's a perfect Keynesian answer, and also perfectly nonsensical.” 

I’m not sure why.  To me, it sounds like common sense.  To meet the increased demand, the suppliers buy more materials and hire more workers.  It’s all good for the economy. Wasn’t it George Bush who, when the economy got tough, encouraged people to go shopping?

I would think that for many people, it’s that invisible hand that defies common sense – and not just because it requires  belief in something that is invisible.  The basic idea of classical economics is this: if you set a bunch of greedy suppliers free to pursue their own selfish interests, you’ll wind up with greatest good for greatest number – lots of stuff at low prices.  It’s Gordon Gecko’s dictum “Greed is good,” and it may be true.  But it is not common sense.   

Free market economists (like Robin Hanson) also tell us that getting rid of immigration restrictions will similarly lead to good things.
We economists tend to expect open immigration to increase overall wealth and value (and liberty), and to reduce inequality. . . . Open those borders!
Again, It may be true, but it is not common sense.

Here is Moore again:
“All economic problems are about removing impediments to supply, not demand,” Arthur Laffer reminds us.
Since Moore quotes this favorably (he works for Laffer’s firm), he must believe that it’s common sense.  But when I think about, say, the economic problems in the housing market, my common sense tells me that the source of the problem is that people aren’t buying houses.  It does not tell me that the problem is builders being impeded from supplying more houses.* 

It all makes me wonder if common sense is a useful idea.  In these economics examples, common sense is not held in common.  What’s common sense to the Keynesians is not common sense to the supply siders. 

In either case, if economics were common sense, professors wouldn’t have to spend semesters teaching it.** Teaching common sense – that’s sociology.

* I myself am trying to sell a condo in Pittsburgh.  I encountered no real impediments in supplying this condo to the market.  My problem is that I haven’t encountered any buyers.

** I would guess that when you add up the student semester hours, classical free-market economics courses far outnumber Keynesian courses.  So I don’t know why Moore seems to think that what’s turning students off is the Keynesian domination of the field

The Morning After

August 28, 2011
Posted by Jay Livingston

When Norman Mailer ran for mayor of New York in 1969, he proposed “Sweet Sunday.”  On one Sunday each month, powered vehicles would be banned from the city.  No cars, no buses, nothing. 

Today, we’re getting a sense of what that would be like.  The hurricane has pretty much passed through the city, but subways and buses are still out of service (they were shut down at noon Saturday).  A few cabs cruise the streets, but almost no cars.  Broadway in the 60s and 70s is usually full of cars, even on Sunday.  Not today.

Here is West 72nd looking west from Broadway towards the Park (the famous Gray’s Papaya is at the right). 

As a result, the scale of city life has been reduced.  People are out, and they walking in their own neighborhoods.  The restaurants and shops that are open are the small independents.  The large chains – McDonalds, Starbucks, and the like – are closed. 

But it’s the non-commercial areas, the parks, that seem to be attracting the most people. 

Above is the pier at 70th Street.  Of course, in New York, each zip code is its own UN. 

Not all were locals.  The World Police & Fire Games are in town, and apparently the Hong Kong and Swedish teams are staying in West Side hotels.

The hurricane was exciting, and it did some serious damage, especially outside the city.  But the West Side was spared.  Somewhere, Norman Mailer is smiling (and maybe sharing a drink with Jane Jacobs.)

Calm Before the Storm

August 27, 2011
Posted by Jay Livingston

With eight hours to go before things get really rough, New York seems to be taking the approaching hurricane in good humor. 

The Town Shop, which has been selling women’s undergarments since the 1880s, remained undaunted.

(Click on an image for a larger view.)

Even the headline writers at the tabloids seemed to be working in tandem.

Fairway never closes – on Christmas and New Years, through heavy snows – but it closed its doors at 10 a.m.  With the subways and buses shutting down at noon, their many, many employees would have no way of getting home.

But the West Side Market stayed open, and people were lined up waiting to get in.

Trader Joe’s closed.

So did most of the national chains – all of the many Starbucks, Staples, etc. But many of the independent cafés and restaurants are open, So is the tiny Westsider Book shop across the street from Barnes&Noble, which is closed. 

And if you want to get your shoes repaired during a hurricane, no problem.

The Social Journalist

August 22, 2011
Posted by Jay Livingston

Henry Tischler, sociologist and a friend of mine, took this picture at the Aspen Ideas Festival  last month – a gathering of hundreds of heavy hitters, many you haven’t heard of , many you have.  (No, Henry was not on the program.)

David Brooks (on the right) having breakfast with Alan Greenspan.

When Henry showed me the photo, I thought of what I.F. Stone once said.
Once the secretary of state invites you to lunch and asks your opinion, you’re sunk.

I.F. Stone was the classic outsider journalist.  He had no inside sources.  Nobody, Democrat or Republican, was leaking ideas or information to him.  Instead, he relied on official government information – documents, Congressional testimony – and on press reports to find out what was really going on. 

Stone didn’t have to worry about offending people.  He didn’t have to worry about being played by important people in government.   He didn’t have to worry that his relationships with the people he wrote about were influencing what he wrote and what he thought.*

David Brooks is a journalist who talks regularly to politicians and FED chairmen.  He sees them at dinner parties and at breakfasts in the Rockies.  Does that affect how tough he is on them in print?  Here’s the opening of a Brooks column of a week ago.
Very few people have the luxury of being freely obnoxious. Most people have to watch what they say for fear of offending their bosses and colleagues. Others resist saying anything that might make them unpopular. 
But, in every society, there are a few rare souls who rise above subservience, insecurity and concern. Each morning they take their own abrasive urges out for parade. 

The rest of the column is about Donald Trump.  But Jonathan Chait at The New Republic  thinks that this opening is really how Brooks feels about his colleague Paul Krugman.  Regardless of who is in that obnoxious “very few people” category (Trump, Krugman, whoever), it seems clear that Brooks counts himself among “most people” –  the ones who have to fear offending both their colleagues and those with more power, the ones who can’t afford to be unpopular.  (Brooks was at Aspen to talk about his book The Social Animal.)

Does Brooks’s sociability affect how he writes about newsmakers?  Guess who wrote the following: 
Alan Greenspan continues his efforts to cement his reputation as the worst ex-Fed chairman in history. 

(Hint: it’s not Donald Trump.  Answer here.)

In fact, the only Brooks mention of Greenspan I could find in a quick Google search was a column suggesting that Greenspan might have had some “misperception,” but hey, as Brooks explains, we all make perceptual errors.  You can’t blame a guy for being human.

I haven’t read The Social Animal, but I would expect that Brooks discusses how our perceptions and judgments can be influenced by our social ties to others.  Or maybe not.

 * Stone’s independence was a virtue born of necessity.  He was a radical, a socialist.  In the fifties, amid the anti-communism phobia, nobody in Washington would be seen with him.   He could never question them directly.  The Sunday morning shows like “Meet the Press” no longer put him on their panels.