Western Values, According to Stephen Miller and Donald Trump

Toward the end of the period when I attended the Mormon Church (late 1999 and early 2000), I was still occasionally teaching Sunday School classes and more frequently teaching "Priesthood Meeting Elder's Quorum" classes. Despite views that varied significantly from Mormon orthodoxy at that point, I had no trouble teaching lessons in good faith. Assigned to teach from the text of a top Mormon leader's sermon, I would simply cross out the parts I disagreed with and teach the lesson based on what remained. And there was always something important that remained. I suppose some people might think that what was remaining was trite, but I never did. The basics that people with diverging views agree on are often the deepest and meatiest truths of all. 

My reaction to Donald Trumps speech in Poland on July 6, 2017 is similar. My disagreements with Donald Trump are profound—particularly on immigration: see for example

But I agree that what Donald Trump called "The West," deserves to be protected and defended, once one insists that anyone who accepts the values and principles of "The West" thereby becomes part of "The West," regardless of their national origin. (See my evocation of the principle of openness to newcomers in "'Keep the Riffraff Out!'")  

And what are those values? Donald Trump's chief speechwriter Stephen Miller wrote a beautiful passage that were delivered in the Remarks by President Trump to the People of Poland | July 6, 2017:

We write symphonies.  We pursue innovation.  We celebrate our ancient heroes, embrace our timeless traditions and customs, and always seek to explore and discover brand-new frontiers.

We reward brilliance.  We strive for excellence, and cherish inspiring works of art that honor God.  We treasure the rule of law and protect the right to free speech and free expression.

We empower women as pillars of our society and of our success.  We put faith and family, not government and bureaucracy, at the center of our lives.  And we debate everything.  We challenge everything.  We seek to know everything so that we can better know ourselves.

And above all, we value the dignity of every human life, protect the rights of every person, and share the hope of every soul to live in freedom.  That is who we are.  Those are the priceless ties that bind us together as nations, as allies, and as a civilization.

Where "God" is mentioned, I need to interpret the passage according to my own view of God. (See "Teleotheism and the Purpose of Life.") And those with Western values are much more divided about the role of government than this passage recognizes. But otherwise I agree. And I hope you do, too, whatever your view of the man who wrote those words and the man who spoke them. 

 

See also John O'Sullivan's thoughtful National Review article "Trump Defends the West in Warsaw"

Japan Shows How to Do Interest Rate Targets for Long-Term Bonds Instead of Quantity Targets

When the Fed began making large purchases of long-term Treasury bonds and mortgage-backed bonds—"QE"—I wondered why the Fed didn't announce an interest rate target for these bonds instead of a quantity target. An interest rate target for long-term bonds is the same thing as a price target, since there is a mechanical one-to-one relationship between prices and reported interest rates for bonds: by the present-value formula, higher prices are lower interest rates and lower prices are higher interest rates. One advantage of a interest rate target rather than quantity target for long-term bonds is that it would have given a better sense of the modest magnitude of stimulus provided by QE. 

In his July 6, 2017 Wall Street Journal article, Mike Bird points out in his title another possible benefit of a price target for long-term bonds rather than a quantity target: "Japan Shows Europe How to Dial Back Stimulus Without Spooking Investors." The Bank of Japan calls these price/interest rate targets for long-term bonds "yield curve control." Mike's argument is to point to the 2013 US "Taper Tantrum" and to the European Central Bank's current communications difficulties:

“Draghi is discovering that narratives contrary to the one you want to get across can take hold in the market,” said Grant Lewis, head of research at Daiwa Capital Markets Europe. ...

Germany’s 10-year bund yields rose by 0.2 of a percentage point in five days, the largest jump since 2015’s “bund tantrum” when investors dumped bonds as they also anticipated less stimulus. ...

The BOJ can keep its markets stable by setting a clear limit on what it will tolerate, analysts say. In early February, when 10-year yields rose as high as 0.15%, the central bank offered to buy an unlimited volume of bonds at a yield of 0.11%, pushing yields back down.

“It’s clearly been easier for (BOJ chief Haruhiko) Kuroda. He’s stood up and said yields will be held at these levels. Try and beat me, I’ve got infinite resources,” Mr. Lewis added. “That’s actually allowed them to start purchasing less.”

One important consideration for an interest rate target for long-term bonds is that, along with the target for safe short-term rates that all major central banks continue to set, this would have effectively set a target for the spread between long-term bonds and the safe short rate. Unlike the short-term safe rate, which can be set in a very wide range (that in fact should be wider than current custom: see my paper "Next Generation Monetary Policy"), there are likely to be real limits on what the spread between short-term and long-term rates can be set at before the central bank ended up with zero or all of a category of long-term bonds. (It would be interesting if a central bank ever chose to do a big short on long-term government bonds.) Thus, an interest-rate target for long-term bonds needs to be kept in a range that implies a reasonable spread between safe short-term rates and long-term interest rates of a given category. But even if a central bank explicitly said it would revise its interest rate target if it ended up with zero or above 90% of a category of bonds, that target would still be quite powerful in its effects on markets. 

 

The Scientific Approach to Monetary Rules

Nick Timiraos reported in the July 7, 2017 Wall Street Journal article shown above:

The Federal Reserve defended having the flexibility to set interest rates without new scrutiny from Capitol Hill in its semiannual report to Congress on Friday, warning of potential hazards if it were required to adopt a rule to guide monetary policy.

I think there is another approach that the Fed could take to a stress on monetary policy rules by Congress. Here is what I wrote in my new paper "Next Generation Monetary Policy," in the Journal of Macroeconomics:

Because optimal monetary policy is still a work in progress, legislation that tied monetary policy to a specific rule would be a bad idea. But legislation requiring a central bank to choose some rule and to explain actions that deviate from that rule could be useful. To be precise, being required to choose a rule and explain deviations from it would be very helpful if the central bank did not hesitate to depart from the rule. In such an approach, the emphasis is on the central bank explaining its actions. The point is not to directly constrain policy, but to force the central bank to approach monetary policy scientifically by noticing when it is departing from the rule it set itself and why.

I earnestly hope that any of you interested in monetary policy will read "Next Generation Monetary Policy." It distills all of my thoughts about monetary policy aside from my thoughts about negative interest rate policy (for which you should read the papers linked in my bibliographic post "How and Why to Eliminate the Zero Lower Bound: A Reader’s Guide"), relating them where appropriate to the potential for negative interest rate policy. To whet your appetite, here is the abstract:

Abstract: This paper argues there is still a great deal of room for improvement in monetary policy. Sticking to interest rate rules, potential improvements include (1) eliminating any effective lower bound on interest rates, (2) tripling the coefficients in the Taylor rule, (3) reducing the penalty for changing directions, (4) reducing interest rate smoothing, (5) more attention to the output gap relative to the inflation gap, (6) more attention to durables prices, (7) mechanically adjusting for risk premia, (8) strengthening macroprudential measures to reduce the financial stability burden on interest rate policy, (9) providing more of a nominal anchor.  

Freedom Under Law Means All Are Subject to the Same Laws

What does it mean to be free? If it means to have no legal restraints at all, then only one person at the apex of society can be free. If, instead, "freedom under law" is possible, it means to have the maximum amount of freedom that anyone in society has. That is, one can think of "freedom under law" as like a "most-favored-nation" clause:  "freedom under law" is facing only the restrictions on one's behavior that everyone faces.

Interestingly, this definition "freedom under law" works for both "freedom under natural law" and "freedom under civil law." Here is John Locke's explanation of freedom under law in section 22 of his 2d Treatise on Government: “On Civil Government” (in Chapter IV "Of Slavery"):

THE natural liberty of man is to be free from any superior power on earth, and not to be under the will or legislative authority of man, but to have only the law of nature for his rule. The liberty of man, in society, is to be under no other legislative power, but that established, by consent, in the commonwealth; nor under the dominion of any will, or restraint of any law, but what that legislative shall enact, according to the trust put in it. Freedom then is not what Sir Robert Filmer tells us, Observations, A. 55. “a liberty for every one to do what he lists, to live as he pleases, and not to be tied by any laws:” but freedom of men under government is, to have a standing rule to live by, common to every one of that society, and made by the legislative power erected in it; a liberty to follow my own will in all things, where the rule prescribes not; and not to be subject to the inconstant, uncertain, unknown, arbitrary will of another man: as freedom of nature is, to be under no other restraint but the law of nature.

For freedom under civil law, the key clause is Robert Filmer's: "to have a standing rule to live by, common to every one of that society ...". This idea of everyone being subjected to the same laws was taken seriously in late 19th century, early 20th century US constitutional law as the prohibition against "class legislation." A prohibition against "class legislation" has the potential to put a barrier in the way of special interests lobbying for laws that will inhibit competitors.

Among US Supreme Court decisions, Lochner v. New York is one of the most famous, and one of the most criticized. Going into why would take this post too far afield, but I want to quote the discussion of "class legislation" in David Bernstein's book "Rehabilitating Lochner." The principle against class legislation came up in that litigation because the limitation on bakers' hours at the heart of the case was in important measure an attempt to benefit other bakers by disadvantaging newly immigrant bakers. Here is David:

The liberty of contract doctrine arose from two ideas prominent in late-nineteenth-century jurisprudence. First, courts stated that so-called "class legislation"-legislation that arbitrarily singled out a particular class for unfavorable treatment or regulation-was unconstitutional. Courts used both the Due Process and the Equal Protection clauses as textual hooks for reviewing class legislation claims. Indeed, the opinions were often unclear as to whether the operative constitutional provision was due process, equal protection, both, or neither. Second, courts used the Due Process Clause to enforce natural rights against the states. Judicially enforceable natural rights were not defined by reference to abstract philosophic constructs. Rather, they were the rights that history had shown were crucial to the development of Anglo-American liberty.

CLASS LEGISLATION ANALYSIS AND THE DUE PROCESS CLAUSE

Opposition to class legislation had deep roots in pre-Civil War American thought. After the Civil War and through the end of the Gilded Age, leading jurists believed that the ban on class legislation was the crux of the Fourteenth Amendment, including both the Equal Protection and Due Process clauses. Justice Stephen Field wrote in 1883 that the Fourteenth Amendment was "designed to prevent all discriminating legislation for the benefit of some to the disparagement of others." Each American, Field continued, had the right to "pursue his [or her] happiness unrestrained, except by just, equal, and impartial laws." Justice Joseph Bradley, writing for the Court the same year, declared that "what is called class legislation" is "obnoxious to the prohibitions of the Fourteenth Amendment." In Dent v. West Virginia, the Court even declared that no equal protection or due process claim could succeed absent an arbitrary classification.--' Influential dictum from Leeper v. Texas suggested that the Fourteenth Amendment's due process guarantee is secured "by laws operating on all alike."

The Supreme Court, however, interpreted the prohibition on class legislation quite narrowly. In 1884 it unanimously rejected a challenge to a San Francisco ordinance that prohibited night work only in laundries.-' Justice Field explained that the law seemed like a reasonable fire prevention measure, and that it applied equally to all laundries. The following year, a Chinese plaintiff challenged the same laundry ordinance, alleging that its purpose was to force Chinese-owned laundries out of business. Field, writing again for a unanimous Court, announced that-consistent with centuries of Anglo-American judicial tradition and prior Supreme Court cases-the Court would not "inquire into the motives of the legislators in passing [legislation], except as they may be disclosed on the face of the acts, or inferable from their operation. ..."' The Court's refusal to consider legislative motive severely limited its ability to police class legislation. 

To my mind, the unwillingness to inquire into the motives of the legislators was a mistake. Looking for the motive to help one group even at the expense of another seems one of the easiest common-sense ways to figure out if something is class legislation. Nowadays, we recognize laws that are designed with the motive of disadvantaging African Americans as unconstitutional. This is that same principle applied to many classes of people. And even if the prohibition against class legislation were limited to a prohibition on legislation that would disadvantage the poorest of the poor, in line with John Rawls's recommendations in A Theory of Justice, it would be an extremely valuable principle. (For more thoughts on that score, see "Inequality Is About the Poor, Not About the Rich.")

Though defining "equality before the law" in particular cases is difficult, it seems to me that one way or another in all countries that believe in freedom and the rule of law, these ideas have a proper role in constitutional law:

  • "to have a standing rule to live by, common to every one of that society"
  • "the right to 'pursue his [or her] happiness unrestrained, except by just, equal, and impartial laws'"
  • "laws operating on all alike"

 

For links to John Locke posts on the previous 3 chapters of the 2d Treatise, see "John Locke's State of Nature and State of War."

Jason Fung: Dietary Fat is Innocent of the Charges Leveled Against It

See also "Sugar as a Slow Poison"

I highly recommend Jason Fung's book "The Obesity Code." Jason Fung lays out what I consider the most credible theory for what causes obesity—and implicitly what has led to the continuing dramatic rise in obesity across the developed world over the last century. In order to understand the overall argument, which I will discuss in a future post, it is important to know certain facts that the nutritional establishment is loath to communicate because they run counter to the message they have been giving for so long. Among these, one of the key facts is that there is no evidence that dietary fat is bad for health. In saying this, I leave aside the trans-fats, which with good reason are close to being banned. The use of dangerous trans-fats was encouraged by the suspicion cast on more time-tested dietary fats. 

The lack of evidence that dietary fat is bad for health is an important and credible null result because so much effort was expended looking for proof that dietary fat is bad, by researchers who believed that it is. Here are three passages that give the core of Jason Fung's account of that research, from Chapter 18, "Fat Phobia":  


In the 1950s, it was imagined that cholesterol circulated and deposited on the arteries much like sludge in a pipe (hence the popular image of dietary fat clogging up the arteries). It was believed that eating saturated fats caused high cholesterol levels, and high cholesterol levels caused heart attacks. This series of conjectures became known as the diet-heart hypothesis. Diets high in saturated fats caused high blood cholesterol levels, which caused heart disease.

The liver manufactures the overwhelming majority—80 percent—of the blood cholesterol, with only 20 percent coming from diet. Cholesterol is often portrayed as some harmful poisonous substance that must be eliminated, but nothing could be farther from the truth. Cholesterol is a key building block in the membranes that surround all the cells in our body. In fact, it’s so vital that every cell in the body except the brain has the ability to make it. If you reduce cholesterol in your diet, your body will simply make more.

The Seven Countries Study had two major problems, although neither was very obvious at the time. First, it was a correlation study. As such, its findings could not prove causation. Correlation studies are dangerous because it is very easy to mistakenly draw causal conclusions. However, they are often the only source of long-term data available. It is always important to remember that they can only generate hypotheses to be tested in more rigorous trials. The heart benefit of the low-fat diet was not proven false until 2006 with the publication of the Women’s Health Initiative Dietary Modification Trial and the Low-Fat Dietary Pattern and Risk of Cardiovascular Disease study, some thirty years after the low-fat approach became enshrined in nutritional lore. By that time, like a supertanker, the low-fat movement had gained so much momentum that it was impossible to turn it aside.

The association of heart disease and saturated fat intake is not proof that saturated fat causes heart disease. Some recognized this fatal flaw immediately and argued against making dramatic dietary recommendations based on such flimsy evidence. The seemingly strong link between heart disease and saturated fat consumption was forged with quotation and repetition, not with scientifically sound evidence. There were many possible interpretations of the Seven Countries Study. Animal protein, saturated fats and sugar were all correlated to heart disease. Higher sucrose intake could just as easily have explained the correlation to heart disease, as Dr. Keys himself had acknowledged.

It is also possible that higher intakes of animal protein, saturated fats and sugar are all merely markers of industrialization. Counties with higher levels of industrialization tended to eat more animal products (meat and dairy) and also tended to have higher rates of heart disease. Perhaps it was the processed foods. All of these hypotheses could have been generated from the same data. But what we got was the diet-heart hypothesis and the resulting low-fat crusade.


IN 1948, HARVARD University began a decades-long community-wide prospective study of the diets and habits of the town of Framingham, Massachusetts. Every two years, all residents would undergo screening with blood work and questionnaires. High cholesterol levels in the blood had been associated with heart disease. But what caused this increase? A leading hypothesis was that high dietary fat was a prime factor in raising cholesterol levels. By the early 1960s, the results of the Framingham Diet Study were available. Hoping to find a definitive link between saturated-fat intake, blood cholesterol and heart disease, the study instead found... nothing at all.

There was absolutely no correlation. Saturated fats did not increase blood cholesterol. The study concluded, “No association between percent of calories from fat and serum cholesterol level was shown; nor between ratio of plant fat to animal fat intake and serum cholesterol level.”

Did saturated fat intake increase risk of heart disease? In a word, no. Here are the final conclusions of this forgotten jewel: “There is, in short, no suggestion of any relation between diet and the subsequent development of CHD [coronary heart disease] in the study group.” 

This negative result would be repeatedly confirmed over the next half century. No matter how hard we looked, there was no discernible relationship between dietary fat and blood cholesterol. Some trials, such as the Puerto Rico Heart Health Program, were huge, boasting more than 10,000 patients. Other trials lasted more than twenty years. The results were always the same. Saturated-fat intake could not be linked to heart disease.

But researchers had drunk the Kool-Aid. They believed their hypothesis so completely that they were willing to ignore the results of their own study. For example, in the widely cited Western Electric Study, the authors note that “the amount of saturated fatty acids in the diet was not significantly associated with the risk of death from CHD.” This lack of association, however, did not dissuade the authors from concluding “the results support the conclusion that lipid composition of the diet affects serum cholesterol concentration and risk of coronary death.”

All these findings should have buried the diet-heart hypothesis. But no amount of data could dissuade the diehards that dietary fat caused heart disease. Researchers saw what they wanted to see. Instead, researchers saved the hypothesis and buried the results. Despite the massive effort and expense, the Framingham Diet Study was never published in a peer-reviewed journal. Instead, results were tabulated and quietly put away in a dusty corner—which condemned us to fifty years of a low-fat future that included an epidemic of diabetes and obesity.


Once the skewing effect of trans fats was taken into account, the studies consistently showed that high dietary fat intake was not harmful. The enormous Nurses’ Health Study followed 80,082 nurses over fourteen years. After removing the effect of trans fats, this study concluded that “total fat intake was not significantly related to the risk of coronary disease.” Dietary cholesterol was also safe. The Swedish Malmo Diet and Cancer Study and a 2014 meta-analysis published in the Annals of Internal Medicine reached similar conclusions.

And the good news for saturated fats kept rolling in. Dr. R. Krause published a careful analysis of twenty-one studies covering 347,747 patients and found “no significant evidence for concluding that dietary saturated fat is associated with an increased risk of CHD.” [Siri-Tarino PW et al. Meta-analysis of prospective cohort studies evaluating the association of saturated fat with cardiovascular disease. Am J Clin Nutr. 2010 Mar; 91(3):535–46. In fact, there was even a small protective effect on stroke. The protective effects of saturated fats were also found in the fourteen-year, 58,543-person Japan Collaborative Cohort Study for Evaluation of Cancer and the ten-year Health Professionals Follow-up Study of 43,757 men.


To back up Jason Fung's interpretation of the the Framingham Diet Study, take a look at Michael Eades's blog post "Framingham follies," which Jason Fung cites. And certainly don't dismiss the idea that "dietary fat is innocent of the charges leveled against it without reading "Framingham follies" as an indication of the kind of scientific conduct one needs to be at least alert for in the area of nutritional research. 

Also see the Wikipedia article "Saturated fat and cardiovascular disease controversy." 

When checking out all the links, remember the problem of multiple hypothesis testing. There are many possible health outcomes. If a researcher tests 20 of them, then even if there is no real relationship between a variable and any of the outcomes, there should on average be an apparent association with one of them by chance that can be reported as "significant at the 5% level." And the number of tests actually done can easily exceed the number of tests reported. 

Does the Journal System Distort Scientific Research?

A big theme of Stephen Buranyi's Guardian article "Is the staggeringly profitable business of scientific publishing bad for science?" is the enormous profits made by the scientific publishing industry, and whether the services they provide merit that kind of return. But I am more concerned about whether the journal system we know so well distorts scientific research. Stephen's article is long enough that the small percentage addressed to the possible distortion of scientific research by the journal system adds up to quite a bit. Below are the 4 key passages, with my comments.

Spectacular—and Often False—Results vs. Often Boring True Results 

Stephen: Journals prize new and spectacular results – after all, they are in the business of selling subscriptions – and scientists, knowing exactly what kind of work gets published, align their submissions accordingly. This produces a steady stream of papers, the importance of which is immediately apparent. But it also means that scientists do not have an accurate map of their field of inquiry. Researchers may end up inadvertently exploring dead ends that their fellow scientists have already run up against, solely because the information about previous failures has never been given space in the pages of the relevant scientific publications. A 2013 study, for example, reported that half of all clinical trials in the US are never published in a journal.

My coauthor Dan Benjamin (see "My Experiences with Gary Becker" and these other posts: 1, 2, 3, 4, 5) is an advocate, along with others, for raising the standard for using the words "statistically significant" to a p-value of .005 or lower instead of .05 or lower. (Results with a higher p-value could only be called "statistically suggestive.")

Part of the argument is evidence that so many undesired statistical results remain unpublished, and the truth is often boring enough to be an undesired result, that most things that are said to be "statistically significant" at the 5% level are in fact false. By contrast, results that are said to be statistically significant at the 1% or .5% level might have, say an 80% probability of actually being true. In an early outline for this advocacy piece, Dan and coauthors write:

There is some empirical evidence from the recent replication projects in psychology and experimental economics.  In both fields, the replication record is roughly double for initial studies with P < 0.005 relative to initial studies with 0.005 < P < 0.05: 50% versus 24% for psychology (OSC, 2015), and 85% versus 44% for experimental economics (Camerer et al., 2016).  These numbers are based on relatively small samples of studies (93 in psychology, 16 in experimental economics) but are suggestive of the gains in replicability that may occur.

I think a rule reserving the words "statistically significant" for p-values less than .005%, with "statistically suggestive" for any higher p-value would be very helpful—and interestingly, would use the power of the journals to enforce a salutary rule—but the problem is created in the first place by people's preference for something interesting but likely false over something boring but true. 

In a related 2015 paper, Dan, M.J. Bayarri, James O. Berger, and Thomas M. Sellke coauthors argue for the importance of statistical power in "Rejection Odds and Rejection Ratios: A Proposal for Statistical Practice in Testing Hypotheses":

Abstract: Much of science is (rightly or wrongly) driven by hypothesis testing. Even in situations where the hypothesis testing paradigm is correct, the common practice of basing inferences solely on p-values has been under intense criticism for over 50 years. We propose, as an alternative, the use of the odds of a correct rejection of the null hypothesis to incorrect rejection. Both pre-experimental versions (involving the power and Type I error) and post-experimental versions (depending on the actual data) are considered. Implementations are provided that range from depending only on the p-value to consideration of full Bayesian analysis. A surprise is that all implementations — even the full Bayesian analysis — have complete frequentist justification. Versions of our proposal can be implemented that require only minor modifications to existing practices yet overcome some of their most severe shortcomings.

At the 2017 Russel Sage Foundation Summer Institute on Social Science Genomics that Dan organized, I got as swag this tote bag, reflecting Dan's views: 

The Social Science genetics team in which Dan is a leading light has done a lot to foster higher power and greater attention to multiple hypothesis testing, in part because the history of genetics research is littered with nonreplicable results of doubtful truth. But Genetics is only one of several disciplines with a problem of results that don't replicate and so are of doubtful truth. Here are some links to articles discussing "replication crises" for each discipline:

Not too long ago, I attended a conference where I talked to a young untenured psychologist, who suggested that tenured psychologists harping on the importance of practices that would lead to more replicable results were being self-righteous and hypocritical because they would cut the very same corners if they didn't have tenure yet. But the point of high scientific standards is not comparative moral preening or accusations of self-righteousness—it is a practical matter: if we don't do it, we don't get to know the truth! If standards weren't imposed in the past, a lot of scientific effort was wasted; the misdirection of scientific effort should stop—even if it means that people need to be given tenure for establishing more boring true results with larger sample sizes instead of claiming flashy false results based on small sample sizes. 

Nassim Taleb goes to far when he writes in his Medium post "An Expert Called Lindy"

If you hear advice from a grandmother or elders, odds are that it works at ninety percent. On the other hand, in part because of scientism and academic prostitution, in part because the world is hard, if you read anything by psychologists and behavioral scientists, odds are it works at less than ten percent, unless it is also what has been covered by the grandmother and the classics, in which case why would you need a nerd-psychologist? 

But Carl Sagan has it right when he says "Extraordinary claims require extraordinary evidence." Prosaically, this means at a minimum that surprising and thereby interesting results require small p-values (certainly 1% or below) to be credible. 

Styles of Research: High-Concept Scientists vs. Fabian Scientists

The Wikipedia article "High-concept" gives this definition: 

High-concept is a type of artistic work that can be easily pitched with a succinctly stated premise.[1] It can be contrasted with low-concept, which is more concerned with character development and other subtleties that are not as easily summarized. 

This is a useful analogy for understanding this passage in Stephen Buranyi's article:

Stephen: Today, every scientist knows that their career depends on being published, and professional success is especially determined by getting work into the most prestigious journals. The long, slow, nearly directionless work pursued by some of the most influential scientists of the 20th century is no longer a viable career option. Under today’s system, the father of genetic sequencing, Fred Sanger, who published very little in the two decades between his 1958 and 1980 Nobel prizes, may well have found himself out of a job.

Economic historian David Galenson provides an important perspective on "high-concept" research vs. gradually figuring things out, which I will call the "Fabian" style of research after the five-time Roman Consul Quintus Fabius Maximus Verrucosus who defeated Hannibal with guerilla warfare. David Galenson's work on the careers of artists has obvious parallels to scientific researchers. He uses the terms "conceptual artist" and "experimental artist" to refer to individuals with the corresponding work styles, but the phrases "conceptual economist" and "experimental economist" have other meanings that conflict with the style-of-work categories David Galenson is pointing to, so let me use the terminology "high-concept economist" and "Fabian economist." (Being a Fabian economist has no inherent association with being a "Fabian socialist" other than the adjective "Fabian" indicating a gradual, persistent mode of addressing issues.)

So the analogy is

conceptual artist: experimental artist :: high-concept economist: Fabian economist.

The corresponding terminology works for scientists in general:

conceptual artist: experimental artist :: high-concept scientist: Fabian scientist.

David Galenson has written many books, but I have mostly read David's work in the form of National Bureau of Economic Research Working Papers. You can see his NBER working papers listed here. Let me copy here the abstracts of some papers on this contrast between "high-concept" work styles and "Fabian" work styles. Using this analogy, you will learn a lot of you have the patience to work your way through this long list of abstracts. If you have less patience, read one or two and skip to the end of the list of abstracts. 

From the New Wave to the New Hollywood: The Life Cycles of Important Movie Directors from Godard and Truffaut to Spielberg and Eastwood 
with Joshua Kotin

Two great movie directors were both born in 1930. One of them, Jean-Luc Godard, revolutionized filmmaking during his 30s, and declined in creativity thereafter. In contrast, Clint Eastwood did not direct his first movie until he had passed the age of 40, and did not emerge as an important director until after 60. This dramatic difference in life cycles was not accidental, but was a characteristic example of a pattern that has been identified across the arts: Godard was a conceptual innovator who peaked early, whereas Eastwood was an experimental innovator who improved with experience. This paper examines the goals, methods, and creative life cycles of Godard, Eastwood, and eight other directors who were the most important filmmakers of the second half of the twentieth century. Francis Ford Coppola, Stanley Kubrick, Stephen Spielberg, and François Truffaut join Godard in the category of conceptual young geniuses, while Woody Allen, Robert Altman, John Cassavetes, and Martin Scorsese are classed with Eastwood as experimental old masters. In an era in which conceptual innovators have dominated a number of artistic activities, the strong representation of experimental innovators among the greatest film directors is an interesting phenomenon.

From "White Christmas" to Sgt. Pepper: The Conceptual Revolution in Popular Music 

Irving Berlin, Cole Porter, and other songwriters of the Golden Era wrote popular songs that treated common topics clearly and simply. During the mid-1960s Bob Dylan, John Lennon, and Paul McCartney created a new kind of popular music that was personal and often obscure. This shift, which transformed popular music from an experimental into a conceptual art, produced a distinct change in the creative life cycles of songwriters. Golden Era songwriters were generally at their best during their 30s and 40s, whereas since the mid-'60s popular songwriters have consistently done their best work during their 20s. The revolution in popular music occurred at a time when young innovators were making similar transformations in other arts: Jean-Luc Godard and his fellow New Wave directors created a conceptual revolution in film in the early '60s, just as Andy Warhol and other Pop artists made painting a conceptual activity.

Innovators: Architects 

Frank Lloyd Wright, Le Corbusier, and Frank Gehry were experimental architects: all worked visually, and arrived at their designs by discovering forms as they sketched. Their styles evolved gradually over long periods, and all three produced the buildings that are generally considered their greatest masterpieces after the age of 60. In contrast, Maya Lin is a conceptual architect: her designs originate in ideas, and they arrive fully formed. The work that dominates her career, the Vietnam Veterans Memorial, was designed as an assignment for a course she took during her senior year of college. The dominance of a single early work makes Lin's career comparable to those of a number of precocious conceptual innovators in other arts, including the painter Paul Sérusier, the sculptor Meret Oppenheim, the novelist J.D. Salinger, and the poet Allen Ginsberg.

Two Paths to Abstract Art: Kandinsky and Malevich 

Wassily Kandinsky and Kazimir Malevich were both great Russian painters who became pioneers of abstract art during the second decade of the twentieth century. Yet the forms of their art differed radically, as did their artistic methods and goals. Kandinsky, an experimental artist, approached abstraction tentatively and visually, by gradually and progressively concealing forms drawn from nature, whereas Malevich, a conceptual innovator, plunged precipitously into abstraction, by creating symbolic elements that had no representational origins. The conceptual Malevich also made his greatest innovations considerably earlier in his life than the experimental Kandinsky. Interestingly, at the age of 50 Kandinsky wrote an essay that clearly described these two categories of artist, contrasting the facile and protean young virtuoso with the single-minded individual who matured more slowly but was ultimately more original.

Analyzing Artistic Innovation: The Greatest Breakthroughs of the Twentieth Century 
David W. Galenson

... great conceptual innovators, like Picasso, Matisse, and Warhol, made their greatest discoveries abruptly, whereas great experimental innovators, like Mondrian, Kandinsky, and Pollock, made their discoveries more gradually. The finding that artists who innovate early in their lives do so suddenly, while those who innovate late do so more gradually, adds an important dimension to our understanding of human creativity.

Late Bloomers in the Arts and Sciences: Answers and Questions 

Recent research has shown that all the arts have had important practitioners of two different types -- conceptual innovators who make their greatest contributions early in their careers, and experimental innovators who produce their greatest work later in their lives. This contradicts a persistent but mistaken belief that artistic creativity has been dominated by the young. We do not yet have systematic studies of the relative importance of conceptual and experimental innovators in the sciences. But in the absence of such studies, it may be damaging for economic growth to continue to assume that innovations in science are made only by the young.

Wisdom and Creativity in Old Age: Lessons from the Impressionists 

Psychologists have not considered wisdom and creativity to be closely associated. This reflects their failure to recognize that creativity is not exclusively the result of bold discoveries by young conceptual innovators. Important advances can equally be made by older, experimental innovators. Yet we have had no examination of why some experimental artists have remained creative much later in their lives than others. Considering the major artists who worked together during the first decade of Impressionism, this paper compares the attitudes and practices of two important experimental innovators who made significant contributions after the age of 50 with two of their colleagues whose creativity failed to persist past 50. Unlike Pissarro and Renoir, who reacted to adversity in mid-career by attempting to emulate the methods of conceptual artists, Cézanne and Monet adopted elements of other artists' approaches while maintaining their own experimental methods and goals. For both Cézanne and Monet, recognizing how they themselves learned was a key to turning experience into wisdom. Their greatness in old age appears to have been a product of their understanding that although the improvement in their art might be painstaking and slow, over long periods its cumulative effect could be very great.

Conceptual Revolutions in Twentieth-Century Art

Art critics and scholars have acknowledged the breakdown of their explanations and narratives of contemporary art in the face of what they consider the incoherent era of "pluralism" or "postmodernism" that began in the late twentieth century. This failure is in fact a result of their inability to understand the nature of the development of advanced art throughout the entire twentieth century, and particularly the novel behavior of young conceptual innovators in a new market environment. The rise of a competitive market for advanced art in the late nineteenth century freed artists from the constraint of having to satisfy powerful patrons, and gave them unprecedented freedom to innovate. As the rewards for radical and conspicuous innovation increased, conceptual artists could respond to these incentives more quickly and decisively than their experimental counterparts. Early in the twentieth century, the young conceptual genius Pablo Picasso initiated two new practices, by alternating styles at will and inventing a new artistic genre, that became basic elements of the art of a series of later conceptual innovators. By the late twentieth century, extensions of these practices had led to the emergence of important individual artists whose work appeared to have no unified style, and to the balkanization of advanced art, as the dominance of painting gave way before novel uses of old genres and the creation of many new ones. Understanding not only contemporary art, but the art of the past century as a whole, will require art scholars to abandon their outmoded insistence on analyzing art in terms of style, and to recognize the many novel patterns of behavior that have been created over the course of the past century by young conceptual innovators.

I see myself as a Fabian economist. That is true for the way I worked even in getting to my early successes. I see Robert Lucas as a high-concept economist, but Milton Friedman as a Fabian economist. Though I feel less sure here, among my professors in graduate school, I see Greg Mankiw as more high-concept than Larry Summers. 

Both high-concept scientists and Fabian scientists are important for scientific progress. Stephen Buranyi's point above is that the journal system handicaps Fabian scientists, and so throws the mix of contributions out of balance.  

The Rise in the Power of Referees and Journal Editors and Disempowerment of Authors, with the Associated Bias Toward Novelty and Ideas that Can Be Neatly Tied Up With a Bow

Who could be against polished perfection and novelty in science? But asking for novelty and polished perfection with all the loose ends tied up has the cost of turning our attention away from old ideas and messy aspects of the truth. When papers pointing to puzzles do get published, they often stimulate a fascinating scientific debate. But how many papers pointing to puzzles, paradoxes, contradictions or serious difficulties never get published? (As economists try to square this circle, it has become common in recent years for economists to write papers with excellent, deep empirical work brilliantly laying out a surprising or puzzling stylized fact, combined with a shallow, unpersuasive model supposedly resolving that puzzle tacked on at the end.)

Much less obviously, an emphasis on polished perfection has shifted the balance of power toward referees and journal editors at the expense of authors. Stephen gives a fascinating historical account of how this happened in biology.

Stephen: In the mid-1970s, though, publishers began to meddle with the practice of science itself, starting down a path that would lock scientists’ careers into the publishing system, and impose the business’s own standards on the direction of research. One journal became the symbol of this transformation.

“At the start of my career, nobody took much notice of where you published, and then everything changed in 1974 with Cell,” Randy Schekman, the Berkeley molecular biologist and Nobel prize winner, told me. ... It was edited a young biologist named Ben Lewin, who approached his work with an intense, almost literary bent. Lewin prized long, rigorous papers that answered big questions – often representing years of research that would have yielded multiple papers in other venues – and, breaking with the idea that journals were passive instruments to communicate science, he rejected far more papers than he published.

What he created was a venue for scientific blockbusters, and scientists began shaping their work on his terms. “Lewin was clever. He realised scientists are very vain, and wanted to be part of this selective members club; Cell was ‘it’, and you had to get your paper in there,” Schekman said. ...

... Almost overnight, a new currency of prestige had been created in the scientific world. (Garfield later referred to his creation as “like nuclear energy … a mixed blessing”.)

It is difficult to overstate how much power a journal editor now had to shape a scientist’s career and the direction of science itself. “Young people tell me all the time, ‘If I don’t publish in CNS [a common acronym for Cell/Nature/Science, the most prestigious journals in biology], I won’t get a job,” says Schekman. He compared the pursuit of high-impact publications to an incentive system as rotten as banking bonuses. “They have a very big influence on where science goes,” he said.

And so science became a strange co-production between scientists and journal editors, with the former increasingly pursuing discoveries that would impress the latter. These days, given a choice of projects, a scientist will almost always reject both the prosaic work of confirming or disproving past studies, and the decades-long pursuit of a risky “moonshot”, in favour of a middle ground: a topic that is popular with editors and likely to yield regular publications. “Academics are incentivised to produce research that caters to these demands,” said the biologist and Nobel laureate Sydney Brenner in a 2014 interview, calling the system “corrupt.”

I'll bet there are similar stories that could be told for other disciplines. 

There are many positive aspects of peer review. First, other systems of judging have serious problems as well. Second, tough peer review can often encourage an author to figure things out, understand the issues more deeply, and raise a paper to a higher level than it otherwise would have reached. But there is a dark side to peer review, ably described by Nassim Taleb in "An Expert Called Lindy": 

I have had most of my, sort of, academic career no more than a quarter position. ... one (now sacked) department head, one day came to me and emitted the warning: “As a businessman and author you are judged by other businessmen and authors, here as an academic you are judged by other academics. Life is about peer assessment.”

It took me a while to overcome my disgust –I am still not fully familiar with the way non-risk takers work; they actually don’t realize that others are not like them, what makes people in the real world tick. No, businessmen as risk takers are not subjected to the judgment of other businessmen, only that of their personal accountant ...

You can define a free person precisely as someone whose fate is not centrally or directly dependent on his peer assessment

And as an essayist, I am not judged by other writers, book editors, and book reviewers, but by readers. Readers? maybe, but wait a minute… not today’s readers. Only those of tomorrow, and the day after tomorrow. ...

Peers devolve honors, memberships in academies, Nobels, invitations to Davos and similar venues, tea with the Queen, requests by rich name-droppers to attend cocktail parties where you only see people who are famous. Believe me, there are rich people whose lives revolve around these things. They usually claim to be trying to save the world, the planet, the children, the mountains, the deserts –all the ingredients of the broadcasting of virtue. ...

The Ritualistic Publishing Game

Nassim Taleb goes further to write

Academia can become a ritualistic publishing game ...

In some areas ... the ritualistic publishing game gradually maps less and less to real research ... researchers have their own agenda, at variance with what their clients, that is, society and the students, are paying them for. Knowing “economics” doesn’t mean in the academic lingo knowing anything about economics in the sense of the real activity, but the theories produced by economists. And courses in universities, for which hard working parents need to save over decades, easily degenerate into fashion. ...

while Stephen gives a reminder of the extent to which this ritualistic publishing game has been institutionalized:

Stephen: In a sense, it is not any one publisher’s fault that the scientific world seems to bend to the industry’s gravitational pull. When governments including those of China and Mexico offer financial bonuses for publishing in high-impact journals, they are not responding to a demand by any specific publisher, but following the rewards of an enormously complex system that has to accommodate the utopian ideals of science with the commercial goals of the publishers that dominate it. (“We scientists have not given a lot of thought to the water we’re swimming in,” Neal Young told me.)

To add two examples, at the Chicago Fed there is an automatic bonus for publishing in top journals, and at the University of Colorado Boulder where I now teach, there is a raise formula that mechanically includes publications in top journals. But these mechanical formulas are only a small part of the social reward for publishing papers. So much so, that in "Breaking the Chains" I use "publishing papers" as a metaphor for careerism more generally:

For most who go into academia, the salary they will get in academia is lower than they could get outside. So most who go into academia make that choice in part out of the joy of ideas, a burning desire for self-expression, a genuine fascination with learning how the world works, or out of idealism—the hope of making the world a better place through their efforts. But by the time those who are successful make it through the long grind of graduate school, getting a job and getting tenure, many have had that joy of ideas, desire for self-expression, thirst for understanding and idealism snuffed out. For many their work life has become a checklist of duties plus the narrow quest for publications in top journals. This fading away of higher, brighter goals betrays the reasons they chose academia in the first place.  

Conclusion

Society has sacrificed quite a bit to put those of us who are academics or relatively highly paid public servants with an opportunity to do research in the positions we are in. We owe them the scientific seriousness to try to figure out how the world works, even at some (often only short-run) sacrifice to our own apparent career success. But in addition to resisting careerist temptations, we should also contemplate how the current journal system creates temptations for us and those around us to do otherwise. 

 

Not Just a Piece of Paper

It is often said that marriage is just a piece of paper. That was not my experience at my daughter Diana's and new son-in-law Erik's wedding on June 24. Traditionally, a marriage ceremony brings together many friends and family, who through participating in the ceremony all become a little more invested in seeing the new marriage succeed. And the commitment of the two who wed one another is strengthened by expressing that commitment in front of friends and family. That means something. 

See also: 

Martin Wolf: Why Bankers are Intellectually Naked

Link to the article above.

Sadly, Allan Meltzer is dead. There is a straightforward way to honor him: keep banks from ripping us off and endangering the economy. James Haggerty writes this in a tribute to Allan Meltzer in the Wall Street Journal: 

Dr. Meltzer loathed the proliferation of regulations. Financial firms would sneak around them, and market changes would soon render the rules obsolete, he wrote. A wiser approach, he said, would be to require higher capital ratios for larger banks. That would deter banks from growing into behemoths deemed too big to fail, Dr. Meltzer said. If bankers “make the wrong calls,” he said in one interview, they and their shareholders “must be made to pay the price themselves.”

I summarized this passage in a tweet by

Even strongly anti-regulation Allan Meltzer wanted higher required capital ratios for larger banks.

Another way to put it is that Allan Meltzer shared my view that, for banks, especially large banks that can become too big to fail, insisting on high capital requirements that limit bank leverage is a matter of establishing appropriate property rights. With low levels of capital, the stockholders who provide the capital get the upside, but when things go south, they hold a gun to the head of the nation and the world, saying

You can bail us out, or we'll take the whole economy down with us.

Anat Admati, whom I mentioned in the tweet, flagged Martin Wolf's Martin Wolf's March 17, 2013 review of The Banker's New Clothes as one of the best short treatments of the key issues. Here are some key excerpts:

  1. It makes no sense to build either bridges or banks sure to collapse in the first big storm. One makes banks stronger by forcing them to fund themselves with more equity and less debt.
  2. Attentive readers will learn that financial fragility is a feature of the system, not a bug. Banking is more dangerous than they dare imagine. The public have, willy nilly, become risk-bearers of last resort. Protected by this generosity, bankers gain vastly on the upside while shifting the downside on to others. At worst, they can devour a state’s fiscal capacity.
  3. ... bankers and their apologists have spun intellectual raiment as invisible as the emperor’s new clothes.
  4. A related item of imaginary clothing is the argument that banks simply cannot raise equity and will have to shrink their balance sheets, instead. The riposte is simple: if the bank is profitable, it must simply be told to retain earnings until higher ratios are reached; if it is unprofitable, it needs to be wound up smartly, in any case.
  5. The problem is bigger than that banks are “too big” or “too interconnected” to fail. It is that they are so complex and so grossly undercapitalised. The model is intellectually bankrupt. The reason that this is not more widely accepted is that bankers are so influential and the economics are so widely misunderstood.

To put it bluntly, bank lobbyists cannot be trusted to tell the truth in this area. Moreover, the bankers themselves and their economist fellow-travelers have twisted their view of reality in order to justify what I once described this way:

... those in the financial industry use low levels of equity financing (often misleadingly called capital) to shift risks onto the backs of taxpayers and rewards into their own pockets. In quantum mechanics, electrons can “tunnel” from one side of a barrier to another. Using massive borrowing to ensure later government bailouts, the financial industry has perfected an even more amazing form of tunneling: the art of tunneling money from the government so that the profits appear on their balance sheets and in their pockets long before the money disappears from the US Treasury in bailouts.

Anat Admati is one of my heroes. There is an easy way to tell whether a proposal involving banks is a sound idea or an invitation to another financial crisis and ripoff of taxpayers: listen to Anat. She is right there on Twitter. And before you get Anat's opinion on the proposal, assume the worst. 

 

Related post: Anat Admati, Martin Hellwig and John Cochrane on Bank Capital Requirements

 

 

 

Intelligent Economist: Top 100 Economics Blogs of 2017

I am honored to be in Intelligent Economist's list of top 100 economics blogs. I was also on their list last year, and wrote "Friends and Sparring Partners: The Skyline from My Corner of the Blogosphere" about some of the others on the list and some who weren't on the list. 

Today is Independence Day for the United States of America. How to defend freedom and other key American values has been an important theme on this blog. Here are some examples:

I get choked up when I think of these values and the courageous people who have forwarded them.

I view the founding of the United States of America as a huge contribution to the world being a better place than it might have been in an alternate history in which King George III got what he considered his American colonies back. The framers of the US Constitution, with all of their flaws, put together something marvelous. I agree with Benjamin Franklin, who said this toward the end of the Constitutional Convention:

I confess that there are several parts of this constitution which I do not at present approve, but I am not sure I shall never approve them: For having lived long, I have experienced many instances of being obliged by better information, or fuller consideration, to change opinions even on important subjects, which I once thought right, but found to be otherwise. It is therefore that the older I grow, the more apt I am to doubt my own judgment, and to pay more respect to the judgment of others. Most men indeed as well as most sects in Religion, think themselves in possession of all truth, and that wherever others differ from them it is so far error. Steele a Protestant in a Dedication tells the Pope, that the only difference between our Churches in their opinions of the certainty of their doctrines is, the Church of Rome is infallible and the Church of England is never in the wrong. But though many private persons think almost as highly of their own infallibility as of that of their sect, few express it so naturally as a certain french lady, who in a dispute with her sister, said “I don’t know how it happens, Sister but I meet with no body but myself, that’s always in the right — Il n’y a que moi qui a toujours raison.”

In these sentiments, Sir, I agree to this Constitution with all its faults, if they are such; because I think a general Government necessary for us, and there is no form of Government but what may be a blessing to the people if well administered, and believe farther that this is likely to be well administered for a course of years, and can only end in Despotism, as other forms have done before it, when the people shall become so corrupted as to need despotic Government, being incapable of any other. I doubt too whether any other Convention we can obtain, may be able to make a better Constitution. For when you assemble a number of men to have the advantage of their joint wisdom, you inevitably assemble with those men, all their prejudices, their passions, their errors of opinion, their local interests, and their selfish views. From such an assembly can a perfect production be expected? It therefore astonishes me, Sir, to find this system approaching so near to perfection as it does; and I think it will astonish our enemies, who are waiting with confidence to hear that our councils are confounded like those of the Builders of Babel; and that our States are on the point of separation, only to meet hereafter for the purpose of cutting one another’s throats. Thus I consent, Sir, to this Constitution because I expect no better, and because I am not sure, that it is not the best. The opinions I have had of its errors, I sacrifice to the public good. I have never whispered a syllable of them abroad. Within these walls they were born, and here they shall die. If every one of us in returning to our Constituents were to report the objections he has had to it, and endeavor to gain partizans in support of them, we might prevent its being generally received, and thereby lose all the salutary effects & great advantages resulting naturally in our favor among foreign Nations as well as among ourselves, from our real or apparent unanimity. Much of the strength & efficiency of any Government in procuring and securing happiness to the people, depends, on opinion, on the general opinion of the goodness of the Government, as well as of the wisdom and integrity of its Governors. I hope therefore that for our own sakes as a part of the people, and for the sake of posterity, we shall act heartily and unanimously in recommending this Constitution (if approved by Congress & confirmed by the Conventions) wherever our influence may extend, and turn our future thoughts & endeavors to the means of having it well administred.

On the whole, Sir, I can not help expressing a wish that every member of the Convention who may still have objections to it, would with me, on this occasion doubt a little of his own infallibility, and to make manifest our unanimity, put his name to this instrument.