Wednesday Reads

Good Morning!

Minx is waiting for a new modem so I get to share the morning links with you! I’ve got some good reads.  Unfortunately, many of them are very discouraging.

First up is a good example of sick humor.  I’m not sure what Economist Greg Mankiw had in mind with this one.  Perhaps he was thinking of Jonathan Swift or just channeling the insensitivity of his past and present bosses Dubya and Willard.  I would like to think Harvard would suggest he take a nice, long, upaid sabbatical over this one.   Maybe he’s been spending too much time with his charming colleague Larry-the misogynist-Summers.  Here’s an explanation of the pseudo news item from Politico.

Under the header “A Fiscal Solution,” Mankiw, who served as Chairman of the Council of Economic Advisers under George W. Bush, posted an uploaded photo of an unidentified newspaper clip, a joke, that read:

“Budget Cuts: The Immigration Department will start deporting seniors (instead of illegals) in order to lower Social Security and Medicare costs. Older people are easier to catch and less likely to remember how to get home.”

It’s unclear what the source of the original clip was – but it doesn’t appear to be The Onion. Mankiw offered no comment other than “Thanks to the reader who sent this along” – but he clearly thought it was funny.

If Mankiw was just a Harvard professor, the joke wouldn’t likely resonate. But he posted it on Tuesday – the day when Paul Ryan released a budget Democrats instantly decried as a Medicare killer and two days after Romney scored a big win in Puerto Rico’s primary – which counter the flurry of criticism he’s drawn from Hispanic groups for his embrace of the controversial “self-deportation” immigration strategy.

Sorta puts a new twist on the concept of grannie starving, doesn’t it?

Jonathan Chait has a new feature up at New York Magazine on “How Obama Tried to Sell Out Liberalism in 2011” that’s worth a look.  Makes me feel a little nervous about the upcoming budget fights. I’ve jumped to the bottom line.

…faced with unrelenting criticism for his decision to not fully endorse Bowles-Simpson, when the next bipartisan plan came out, this time Obama chose to praise it to the skies. And the criticism is that he killed a bipartisan deal by doing so!

The obvious reality is that there never has been any way to get House Republicans to agree to a balanced deficit deal. Even the capitulation Obama offered — $800 billion in semi-imaginary revenue, all raised from the non-rich — was too much for them to agree to. Locking in that low level of revenue would have required huge cuts in spending, making a decent liberal vision of government impossible. The Post is making the case that there was a potential deal, and Obama blew it by failing to properly handle the easily-spooked Republican caucus. What the story actually shows is that Obama’s disastrous weakness in the summer of 2011 went further toward undermining liberalism than anybody previously knew.

David Corn has a new book out titled Show Down which is being dissected by the pundit class.  It’s an update on the workings of the Obama administration along the lines of Suskind’s Confidence Men.  This is some musings on an excerpt from WP’s Greg Sargent at The Plum Line. It shows how two of Obama’s advisers–Sperling and Plouffee–knew Obama’s economic rhetoric was straight out of Reaganland and not particularly based in genuine economics

In “Showdown,” an insider account of Obama’s response to the 2010 midterm losses, author David Corn reports on a number of behind-the-scenes discussions that led to the Dems’ emphasis on deficit reduction. Here’s what drove Obama strategist David Plouffe’s thinking (page 132):

Plouffe was concerned that voter unease about the deficit could become unease about the president. The budget issue was easy to understand; you shouldn’t spend more money than you have. Yes, there was the argument that the government should borrow money responsibly when necessary (especially when interest rates were low) for the appropriate activities, just like a family borrowing sensibly to purchase a home, to pay for college, or to handle an emergency. But voters needed to know — or feel — that the president could manage the nation’s finances. The budget was a test of government competence — that is, Obama’s competence.

This is a reference to the “government must tighten its belt” analogy. Obama repeatedly has invoked this language, arguing that government, like families, needs to live within its means. As Paul Krugman has explained at length, this analogy is flawed on many levels. And judging by the above passage, Plouffe knew this. He knew the policy justification for the pivot was thin. But Obama’s team clearly didn’t feel they could win this argument with voters.

Romney won Illinois yesterday.  This Saturday is the Louisiana primary.  I’ve already been treated to some of the nastiest ads I’ve ever seen.  Romney ads are on all the time.  It makes me wonder what we’re going to see this fall.  As usual, pundits are talking about what the results may or may not mean.

Everything in the sense that Romney beat Santorum again in a large Midwestern state where a majority of voters don’t think of themselves as evangelicals and prize electability and experience as the most important traits for a Republican candidate to possess. Everything in the sense that Romney’s victory — coupled with some organizational flubs by Santorum — means that the former Massachusetts governor will extend his already near-determinative delegate lead.

And nothing in the sense that even Romney’s staunchest allies don’t expect him to pick up enough momentum to win the Louisiana’s caucuses set for Saturday, meaning that the “Romney can’t win the South” and “Romney can’t win conservatives over” storylines will linger as the calendar turns from March to April.

“Nothing impossible in Louisiana but Santorum [is] not likely to be closed out soon,” acknowledged Charlie Black, a longtime Republican campaign hand who is supporting Romney.

Watching politics unfold is anything but dull in the good ol US of A.  So, what’s on your reading and blogging list today?


Mankiw’s Introductory Econ Class stages a Walk Out

This has to be one of the most intriguing situations that I’ve heard about for some time.  Any one that teaches knows that student evaluations really count for people that aren’t tenured and don’t have some kind of research status that makes them immune to student complaints.  Administrators pay attention to them a lot more than they probably should.  I’ve had raises parsed out based on the 4th decimal place of department averages. I always used to wonder about the one question where freshmen students get to judge whether or not you know your subject area. I mean, how would they be in a place to know that if they’ve never had any exposure to a technical, complex topic before?  There are sometimes very useful things you can learn from students.  I’m wondering what the real lesson should be from a walk out associated with a political movement.

I’ve occasionally had students complain to me about other professors either personally or on my evals.   It puts you in an awkward position.   I’ve never seen it raise to this level in all the years I’ve been teaching in a variety of colleges and universities.  The roots of the walk out were in the Occupy Movement.  The contents of the letter explain the motivation directed at Harvard Professor Greg Mankiw published in the Harvard Political Review.

Greg Mankiw has his own blog as well as having published his own textbooks for introductory economics.  I’ve never used them but I’ve looked at them during textbook searches.  It’s fairly standard treatment of the subject. Mankiw was Chair of the Council of Economic Advisers under Dubya Bush.  He’s been an adviser to Mitt Romney. He also has a lot of clout if you look at his cites and pubs at IDEAS/RePEc rankings.  The funny thing is that he’s actually considered a “New Keynesian” economist.  Here’s a quote from an article he wrote in the NYT in 2008.  I quote this to show you he’s not really that atypical of a macroeconomist.  He shows up in fairly mainstream, traditional Republican circles.

“If you were going to turn to only one economist to understand the problems facing the economy, there is little doubt that the economist would be John Maynard Keynes. Although Keynes died more than a half-century ago, his diagnosis of recessions and depressions remains the foundation of modern macroeconomics. His insights go a long way toward explaining the challenges we now confront.”

The students  complain that Mankiw has an inherent bias.  There should be no surprise you frequently hear that from students who come in wanting their own biases reinforced.  I personally try to challenge my students from all sides of the political system just to try to get them to think critically rather than on automatic.  I have no personal experience of Mankiw’s classes so I have no idea if their complaints are legitimate or not.

As Harvard undergraduates, we enrolled in Economics 10 hoping to gain a broad and introductory foundation of economic theory that would assist us in our various intellectual pursuits and diverse disciplines, which range from Economics, to Government, to Environmental Sciences and Public Policy, and beyond. Instead, we found a course that espouses a specific—and limited—view of economics that we believe perpetuates problematic and inefficient systems of economic inequality in our society today.

A legitimate academic study of economics must include a critical discussion of both the benefits and flaws of different economic simplifying models. As your class does not include primary sources and rarely features articles from academic journals, we have very little access to alternative approaches to economics. There is no justification for presenting Adam Smith’s economic theories as more fundamental or basic than, for example, Keynesian theory.

Care in presenting an unbiased perspective on economics is particularly important for an introductory course of 700 students that nominally provides a sound foundation for further study in economics. Many Harvard students do not have the ability to opt out of Economics 10. This class is required for Economics and Environmental Science and Public Policy concentrators, while Social Studies concentrators must take an introductory economics course—and the only other eligible class, Professor Steven Margolin’s class Critical Perspectives on Economics, is only offered every other year (and not this year).  Many other students simply desire an analytic understanding of economics as part of a quality liberal arts education. Furthermore, Economics 10 makes it difficult for subsequent economics courses to teach effectively as it offers only one heavily skewed perspective rather than a solid grounding on which other courses can expand. Students should not be expected to avoid this class—or the whole discipline of economics—as a method of expressing discontent.

Supposedly, about 70 of the 700 students walked out.  I really haven’t read anything about the walk out from other blogging economists. I think it’s because every one pretty much feels a certain amount of empathy for a colleague.   Also, there is such a thing as academic freedom.  I do, however, find it strange that the complaints say that Mankiw spends too much time on Adam Smith as compared to J.M Keynes given his research agenda and his writings.  I’d like to offer up this WSJ Book Review of a Keynes Biography to illustrate why I’m a bit confused.

But mathematics is, fundamentally, the language of logic. Modern research into Keynes’s theories—I have conducted such research myself—tries to put his ideas into mathematical form precisely to figure out whether they logically cohere. It turns out that the task is not easy.

Keynesian theory is based in part on the premise that wages and prices do not adjust to levels that ensure full employment. But if recessions and depressions are as costly as they seem to be, why don’t firms have sufficient incentive to adjust wages and prices quickly, to restore equilibrium? This is a classic question of macroeconomics that, despite much hard work, is yet to be fully resolved.

Which brings us to a third group of macroeconomists: those who fall into neither the pro- nor the anti-Keynes camp. I count myself among the ambivalent. We credit both sides with making legitimate points, yet we watch with incredulity as the combatants take their enthusiasm or detestation too far. Keynes was a creative thinker and keen observer of economic events, but he left us with more hard questions than compelling answers.

So, my guess about the situation and the lack of comments of blogging economists on this is along the lines of students will be students.  Mankiw is clearly no Austrian economist which is one school of thought that every one walked out on years ago but is experiencing a resurgence because of Koch Brothers’ investment.  I think he’s gotten tagged because of the folks he’s advised.  Again, these are guys are old school Republicans and not part of the Tea Party insurgence.  Dubya actually did implement some fairly traditional Keynesian stimulus in his response to the 9/11 macro shock.  The political discourse has gotten so harsh and has been so narrowly covered by the press that it must be harder for younger people not to think that every Republican and their advisers is off the Richter scale of reason.  I guess that’s my way of  saying that calling Mankiw an out of the mainstream economist makes about as much sense as calling Obama a Kenyan-born socialist.  The claims oversimplify Mankiw, Adam Smith, and J.M Keynes. But, we are talking freshmen and not doctoral candidates.  I think this reflects the anger in the current national discourse a lot more than it reflects anything else.  I’m just wondering if any of Mankiw’s peers on either side of the neoKeynesian battle lines will speak up.

In a way, this reminds me of  the article I read about 5 days ago on Thomas Sargent in the NYT.  Sargent was lauded as  a ‘non-Keynesian”  in a WSJ article covering his win of the Nobel prize in economics this year.

In telephone conversations last week, Professor Sargent said he felt insulted by people who call him “non-Keynesian” or “right wing,” terms that, he said, are based on a misunderstanding of his thinking. And he rejected attempts to categorize his views in simple slogans.

He doesn’t wear his political opinions on his sleeve. “They really don’t matter in my research,” he said. But because others have applied labels to him, he decided it was worth setting the record straight. He’s a Democrat, he said, “a fiscally conservative, socially liberal Democrat,” adding, “I think that budget constraints are really central.”

It’s important to consider the “incentive effects” of government policies, he continued. “There are trade-offs in efficiency and equality, and they lead to choices that aren’t easy,” he said.

This sort’ve lends itself to the traditional economist jokes where the punchline always has something to do with “on the one hand, on the other hand”.   I kind’ve liked the opening paragraph on that article and so I’m going to borrow it as I start the close to this blog piece.

EXPRESSING your own views is challenging enough.  Describing someone else’s opinions without talking to them first opens the door to serious trouble

I once did an experiment in a few class rooms just to see if any of them could guess my party affiliation.  I got your basic 50-50 split between those who thought I was a  Republican and Democrat.  I will usually step up and answer a direct question on policy with my opinion if I’m asked for it. Usually, I will play the role of devil’s advocate just to get student’s to question their thought process more.  I did express constant surprise this summer that a huge number of politicians seemed to feel that it was okay to default on US debt. That’s basically because I was teaching a graduate finance course and the basic risk free rate for every model is generally presumed to be one US Treasury rate or another.  I asterisked my explanations for the first time ever with an explanation that this might be the first year ever where we have to find another empirical example for a risk free rate if the debt ceiling extension doesn’t pass.  I did get called out as having a ‘bias’ for this in one eval.  Given the way that many Republicans considered US default a reasonable policy, I suppose I had to have at least one person show up that considered my asterisked explanations to be a bias.  So, let’s just say on some level, I can relate to Greg Mankiw even though if you put the two of us in one room there would undoubtedly be a lot of things we don’t see eye-to-eye on.

So, what do you think?  Just politics?  Just students being students?