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Robert Shiller says mismatch between Eugene Fama’s findings and theories must make him feel like a priest who has discovered God does not exist.
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Robert Shiller says mismatch between Eugene Fama’s findings and theories must make him feel like a priest who has discovered God does not exist.
Here is the full text of my 48th Quartz column, “The Man in the Tank: It’s time to honor the unsung hero of Tiananmen Square," now brought home to supplysideliberal.com. It was first published on June 3, 2014. Links to all my other columns can be found here.
I was deliberate in choosing July 4 to post the full column. The honor of our nation, which moves me deeply, is that it does not send tanks to suppress free speech.
In addition to my editor, Mitra Kalita, I want to thank my father, Edward Kimball, for excellent editorial suggestions in putting together this column. The Tiananmen Square Massacre is an event well-deserving in its infamy of a two-day memorial. My post the following day also remembered.
If you want to mirror the content of this post on another site, that is possible for a limited time if you read the legal notice at this link and include both a link to the original Quartz column and the following copyright notice:
© June 3, 2014: Miles Kimball, as first published on Quartz. Used by permission according to a temporary nonexclusive license expiring June 30, 2017. All rights reserved.
It is now 25 years since the Tiananmen Square Massacre of June 3 and 4, 1989. On this anniversary of that wretched event, it is right that we honor the man in the iconic picture who at least for a while stopped a column of tanks by putting himself in harm’s way. But let us also honor the man at the controls of the lead tank, who stopped that tank dead in its tracks to avoid crushing another human being. In the final analysis, despots and tyrants cannot impose their will on a country of any size without the help of many thugs and other amoral enforcers to do their dirty work for them.
Every time one person refuses to enforce evil, evil gets weaker.
When enough people refuse to enforce a particular brand of evil, that brand of evil falls. By contrast to China, where 1989 was a year of bleak disappointment for freedom, in Europe 1989 saw civil servants in Germany, Hungary and Czechoslovakia opening loopholes that let people leave East Germany for the West. Then on Nov. 9, Gunter Schabowski, the Communist party boss in East Berlin, interpreted ambiguous instructions to announce that the gates to West Berlin were open a day earlier than higher-ups intended. Finally, the unwillingness of guards and their immediate superiors at the Berlin Wall to authorize deadly force led to the destruction of that obstacle to human freedom. At every step of the way, numerous officials in East Germany tilted their decisions bit by bit in the direction of freedom.
Those of us lucky enough to live in (relatively) smoothly functioning democracies are sometimes too ready to think the cause of freedom is won in our land. But the cause of freedom has never fully gained victory as long as there continue to be illegitimate exercises of government power, even when those actions follow the forms of democratic decision-making. No exercise of government power can be legitimate if those pushing it forward know in their hearts that it is not good for the country and the world as a whole, but is only a way to advance some private interest. When those making decisions have honest disagreements about public goods, there must be a way to decide, and at this stage of human history, democracy is, as Winston Churchill said, the least bad of the available options for many, many decisions. But when no one thinks in his or her heart of hearts that a decision is good and right, it doesn’t matter how many votes that decision can get based on narrow self-interest, it is still wrong.
What of those who want to avoid a questionable exercise of government power, but are under orders to do so? For them, a simple litmus test is that they should not execute such orders unless they believe that those orders might be in the interests of the country and the world, with all due allowance for the fact that one might be mistaken in one’s own opinions that are contrary to the views of higher-ranked leaders. But whenever an officer of the government can see no possible way that a directive could be for the good of the country and the world, I would rather risk a bit of disarray that might result from his or her not obeying that directive than the wrong such an officer of government believes is certain if he or she does obey the directive.
For those who work for private employers rather than the government, disobeying a directive to do wrong should be an easy decision, but often is not, because of the personal sacrifices involved in defying an employer. Human weakness is understandable, but for many, developing broadly valuable job skills and putting away a little savings can help reduce the temptation to do wrong. That is, if one can avoid depending on a particular job too much, then one is less likely to be tempted to save one’s own hide, financially speaking, by being a party to the furthering of evil. New doctors take an oath to do no harm. If we each vow not to do clear evil even when the powers that be urge us to help them in their corrupt and twisted designs, the world will be a better place.
In my post “Debora Spar on the Dilemma of Modern Women,” I wrote
If you think “setting priorities” is a pleasant platitude, you don’t understand what it really is. “Setting priorities” is the brutal process of deciding which things won’t get done.
This is actually something I could use some help with. Recently, I read the Harvard Business Review article “Find the Coaching in Criticism” by Sheila Heen and Douglas Stone. Like many Harvard Business Review articles, it is of high quality (and unfortunately, that high quality doesn’t come for free–it is supported in part by the revenue generated through the Harvard Business Review's paywall.) They write:
Feedback is less likely to set off your emotional triggers if you request it and direct it. … Find opportunities to get bite-size pieces of coaching from a variety of people throughout the year. Don’t invite criticism with a big, unfocused question like “Do you have any feedback for me?” Make the process more manageable by asking a colleague, a boss, or a direct report, “What’s one thing you see me doing (or failing to do) that holds me back?” That person may name the first behavior that comes to mind or the most important one on his or her list. Either way, you’ll get concrete information and can tease out more specifics at your own pace.
I feel that I already get plenty of advice on things I should be doing more of–both for my academic career and for my career as an economic journalist (which is how I categorize my efforts on this blog). What I could use more of is advice on what I should be doing less of–things that I am putting time and effort into that don’t have an adequate payoff. To clarify, I need to say that I have three goals:
Both my academic career and my career as an economic journalist contribute to both goals, but in different degrees. My academic career is still at least an order of magnitude more important in providing income than my career as an economic journalist. (Any change in that fundamental fact would be a change that would look dramatic to outside observers as well as me.) But I feel my career as an economic blogger/journalist is at least as important as my academic career in making the world a better place. So I definitely want to keep up with both my academic career and my career as an economic journalist. But what I do within each of those categories, and the exact balance between them, is something I could use advice on.
Notice that in both academia and in blogging/journalism, a certain amount of self-promotion and institutional promotion is optimal. If I manage to write something worth reading, it is worth putting forth a certain amount of effort to get 5000 people to read it instead of 500. And some aspects of promotion of a blog are cumulative over time. I see the goal of having at least one post a day in that category. Even during a stretch where no one post is a big hit, it means something to readers to know there will be something every day.
All of that is just meant to direct you away from some possibly tempting, but I think, misguided pieces of advice like “Quit watching TV” (What? Reduce my leisure time further and lose my chance to enjoy the premier art form of our time?) or “Quit doing your blog” or “Abandon your academic career and become an economic journalist full-time.” By contrast, three pieces of feedback I have received, which may or may not be the right advice, but are definitely the kind of thing I am looking for, are “Twitter beyond basic announcements of posts and maybe one more tweet a day isn’t worth the time it takes if the goal is blog promotion,” “You don’t need to copy over the whole text of a post to Facebook, the link alone is plenty,” or “Reading and commenting on 200 blog posts from your students in the course of a semester is above and beyond the call of duty.”
In addition to getting your advice for myself, I wanted to recommend that those of you who feel you are overextended and overly busy also consider asking those around you
What should I be putting less time and effort into? What do think I am doing that isn’t worth the time and effort I put in?
To get useful responses, you might need to spell out your objectives clearly as I tried to do above for myself.
Cast your minds back, to a time when everyone supposedly loved each other. By MichaelH
Econlolcats on my blog are a sign of good things to come. Sometime this morning, I expect to have my latest column appear on Quartz. This one is on “Odious Wealth.”
The link above is to the Japanese version. “The Costs and Benefits of Repealing the Zero Lower Bound … and Then Lowering the Long-Run Inflation Target” in English can be found here.
I am delighted to be able to host another guest religion post by Noah Smith.
Don’t miss Noah’s other religion posts on supplysideliberal.com:
The point of this one is that it would great if more people in the world were Jewish. Let’s give people a chance to become Jewish by letting them now how easy it is to join Reform Judaism. (Note that you don’t have to be Jewish yourself to give people this useful bit of information.)
To me, Reform Judaism in particular is an important religion because it is one of the rare religions that fully welcomes non-supernaturalists.
Scott Aaronson has a wonderful blog about math and computer science, called “Shtetl-Optimized”. I’m not sure why it’s called that, since the name has nothing to do with the blog (which you should check out if you are a hardcore nerd). But anyway, this post is about the name, not the blog, since the phrase “shtetl-optimized” got me thinking about Judaism.
I was raised Jewish, but gently set it aside when I grew up and lost my taste for life rules for which I couldn’t see a point (e.g. “Don’t mix milk and meat!”). But I still think there is a lot to be valued in Judaism - as there is in most major religions - and I am mildly frustrated by the failure of these good things to diffuse out into the wider world. You see, the Jewish religion is still shtetl-optimized.
A shtetl was a Jewish ghetto in Central or Eastern Europe, similar to the town featured in the musical Fiddler on the Roof. Modern Judaism developed much of its current mix of ideas and culture in those little ghetto towns. These are precisely the elements that I think much of the world would embrace: 1) a love of knowledge, education, and friendly argument, and 2) a concept of personal morality based on healthy living and positive personal relationships.
Of course, these things have naturally diffused into modern culture to some extent, through American academia and Hollywood (two institutions in which Jews have a large presence). But I think people in many countries would enjoy being able to have a religion that emphasized these things on a daily basis, and provided the kind of cultural community that religions are good at providing. In other words, I think a lot of people in a lot of countries would enjoy being Jewish.
Unfortunately, they don’t get the chance. Most people don’t realize that it is very easy to convert to Reform Judaism (the less strict flavor, which doesn’t make you wear a funny hat). They don’t realize that because Jews consciously avoid making them aware of this fact. Jews, you see, have a cultural taboo against proselytizing. When I suggested to my (more religiously inclined) cousins that Jews should accept more converts, they were horrified.
Making people aware of the ease of conversion is actually not the same as “proselytizing”. “Proselytizing” means trying to convince people to convert. But my bet is that in the Old Country of Europe, the Christians who surrounded Jews failed to see that fine distinction. My guess is that if there was any rumor that the local Christians were converting to Judaism, then some Jewish people’s houses were going to get burned.
So my guess is that Jews learned their insularity on the shtetl. The cultural taboo against informing people in China, or Brazil, or Indonesia that they can be Jews if they want is an anachronism. If Judaism is to survive, much less bring the benefit of its unique perspective to those who would enjoy it, it’s going to have to learn to inform the goyish (non-Jewish) world that they, too, can be Red Sea Pedestrians.
(Of course, there are a few Jews who are insular for a quite different reason - they want to preserve the purity of the Ashkenazic race - an ethnic group that is mostly Jewish. I myself belong to that group, but to me, preserving the purity of the Ashkenazic race sounds about as desirable a goal as giving myself a vasectomy with a Dremel.)
Anyway, the upshot is this: Jews, time to get off the shtetl! There are lots of people in China and Brazil and Indonesia who would love to join your religion. Why not let them know they can?
I agree with Brad here. In Keynes vs. Stiglitz, I’ll go with Keynes.
Paul Finkelman argues persuasively in the New York Times op-ed linked above that Thomas Jefferson’s racism and his proslavery attitudes should not be whitewashed. In this area, he was far worse than many of the other founding fathers. Here is a key passage of Paul’s essay:
…the third president was a creepy, brutal hypocrite.
Contrary to Mr. Wiencek’s depiction, Jefferson was always deeply committed to slavery, and even more deeply hostile to the welfare of blacks, slave or free. His proslavery views were shaped not only by money and status but also by his deeply racist views, which he tried to justify through pseudoscience.
It is quite possible that the Civil War itself can be laid at Thomas Jefferson’s feet. Paul Finkelman writes:
Jefferson also dodged opportunities to undermine slavery or promote racial equality. As a state legislator he blocked consideration of a law that might have eventually ended slavery in the state.
As president he acquired the Louisiana Territory but did nothing to stop the spread of slavery into that vast “empire of liberty.”
If slavery had withered away in Virginia and there had been no slave states in the Louisiana territory, there is a good chance the proslavery forces would have lost political power early enough that things would not have escalated into the Civil War. Or even if there were a Civil War, if Viriginia had become a free state, perhaps Robert E. Lee’s loyalty to Virginia would have led him to lead Union troops into battle, and so to a much quicker end to the war.
Thanks to John L. Davidson for flagging this essay.
For my take on the biggest collective moral issue of our time, see “The Hunger Games is Hardly Our Future: It’s Already Here.”
For a bit of alternate history speculation about more recent events, see my post “Sliding Doors: Hillary vs. Barack.”
I have two posts on the more positive side of Thomas Jefferson: “Thomas Jefferson and Religious Freedom” and “The Importance of the Next Generation: Thomas Jefferson Grokked It.”
Image from The Innovator’s Prescription, location 294
Things start hard and then get easier. This can be true even for health care. Here are the examples that Clay Christensen, Jerome Grossman and Jason Hwang give in The Innovator’s Prescription:
The problems facing the health-care industry actually aren’t unique. The products and services offered in nearly every industry, at their outset, are so complicated and expensive that only people with a lot of money can afford them, and only people with a lot of expertise can provide or use them. Only the wealthy had access to telephones, photography, air travel, and automobiles in the first decades of those industries. Only the rich could own diversified portfolios of stocks and bonds, and paid handsome fees to professionals who had the expertise to buy and sell those securities. Quality higher education was limited to the wealthy who could pay for it and the elite professors who could provide it. And more recently, mainframe computers were so expensive and complicated that only the largest corporations and universities could own them, and only highly trained experts could operate them. (We will come back to this last example, below.)
It’s the same with health care. Today, it’s very expensive to receive care from highly trained professionals. Without the largesse of well-heeled employers and governments that are willing to pay for much of it, most health care would be inaccessible to most of us.
At some point, however, these industries were transformed, making their products and services so much more affordable and accessible that a much larger population of people could purchase them, and people with less training could competently provide them and use them. We have termed this agent of transformation disruptive innovation. It consists of three elements (shown in Figure I.1). Technological enabler. Typically, sophisticated technology whose purpose is to simplify, it routinizes the solution to problems that previously required unstructured processes of intuitive experimentation to resolve. Business model innovation. Can profitably deliver these simplified solutions to customers in ways that make them affordable and conveniently accessible. Value network. A commercial infrastructure whose constituent companies have consistently disruptive, mutually reinforcing economic models.
Using some terminology Clay Christensen uses in all of his books, the key problem with health care is that so much of it is set up on the “solution shop” business model. The “solution shop” business model is familiar to academics in research universities because the kind of research done in academic is almost always done in a solution-shop way, by specialized crafting of ways to get a scientific job done. The only way to make health care significantly cheaper is to routinize and “deskill” or at least “downskill” much of it so that the job for at least the easy cases can be done in a way that is more in the spirit of mass-production: as a “value-added process.”
“Most people out there have a plan A. Successful people have a plan A, B, C, and D–that’s the key to life.”
– Mark Stevens, businessman and business writer, as quoted in Clutch, by Paul Sullivan.
The link above is to the Japanese version. “On the Great Recession” in English can be found here.
The link above is to the Japanese version. “America’s Big Monetary Policy Mistake: How Negative Interest Rates Could Have Stopped the Great Recession in Its Tracks” in English can be found here.
The link above is to the Japanese version. “How Subordinating Paper Money to Electronic Money Can End Recessions and End Inflation in English can be found here.
Link to Wikipedia article on Henry George
Charles Lane compares Thomas Piketty to Henry George in hi May 15, 2014 Washington Post op-ed,
Thomas Piketty identifies an important ill of capitalism but not its cure.
Charles gives a succinct evaluation of both Thomas’s and Henry’s proposals:
Alas, Piketty’s global wealth tax and George’s single tax suffer from the same defect, and it’s not political impracticality — after all, George nearly got himself elected mayor of New York City in 1886.
It’s the inherent difficulty of separating the productive, untaxed component of the return on land or capital from the unproductive, taxed part. …
As a result, it’s hard to devise a tax on wealth that raises a significant amount of revenue but doesn’t discourage at least some socially beneficial saving or entrepreneurship. The potential for adverse unintended consequences — economic and political — is greater than Piketty seems to realize.
Quite distinct from this concern about incentives, Charles goes on to a positive note about having power in the hands of private individuals:
Great private fortunes can indeed entitle their owners to an undue share of society’s current income and political power. At times, however, private wealth can serve as a font of charity or, indeed, a bulwark against government overreach.
These are indeed the key issues to think about in relation to wealth taxation.
I have always liked Henry George’s proposal, and pointed out how a carbon tax can be seen as akin to Henry George’s single tax in my post “‘Henry George and the Carbon Tax’: A Quick Response to Noah Smith.” And I like Noah’s application of Henry George’s idea to San Francisco. But Thomas Piketty himself points to the difficulty of getting enough revenue from taxing the value of unimproved land alone:
In particular, it seems impossible to compare in any precise way the value of pure land long ago with its value today. The principal issue today is urban land: farmland is worth less than 10 percent of national income in both France and Britain. But it is no easier to measure the value of pure urban land today, independent not only of buildings and construction but also of infrastructure and other improvements needed to make the land attractive, than to measure the value of pure farmland in the eighteenth century. According to my estimates, the annual flow of investment over the past few decades can account for almost all the value of wealth, including wealth in real estate, in 2010. …
… the fact that total capital, especially in real estate, in the rich countries can be explained fairly well in terms of the accumulation of flows of saving and investment obviously does not preclude the existence of large local capital gains linked to the concentration of population in particular areas, such as major capitals. It would not make much sense to explain the increase in the value of buildings on the Champs-Elysées or, for that matter, anywhere in Paris exclusively in terms of investment flows. Our estimates suggest, however, that these large capital gains on real estate in certain areas were largely compensated by capital losses in other areas, which became less attractive, such as smaller cities or decaying neighborhoods. (Capital in the Twenty-First Century, p. 197.)
Thomas Piketty’s example of the unearned rise in the value of one’s urban land may seem like an opening for non-distortionary taxation, but in fact from the standpoint of efficiency these positive externalities suggest subsidizing all activities that create these positive externalities for land values, of which just as many are private activities as are activities of the government. (And many activities of the government do not raise land values.) Also, I worry that urban governments often make land prices for certain favored plots go up while reducing the total value of land (and social welfare) by putting tight restrictions on building. This is a concern that Matthew Yglesias raises in his book The Rent Is Too Damn High: What To Do About It, And Why It Matters More Than You Think.