Archive for the ‘Economist’ Category

Religion, the Scottish Enlightenment, and the Rise of Liberalism

October 3, 2022

Erik W. Matson and Jordan J. Ballor in this article

Does the liberal project presuppose, as some have claimed, an unrealistic and individualistic anthropology (Deneen 2018; Macpherson
1962)? Does modern economics share such presuppositions (see discussions in Bowles 1998; 2016)? Do our sensibilities about the individual and the ethics of pluralism derive from religious beliefs (Siedentop 2014)? Can those sensibilities be maintained if their motivating beliefs are no longer widely held? Were there, as Hayek also argued, different varieties of liberalism on offer from the eighteenth century and beyond? What might a liberal system of political economy look like when based on “speculative and rationalistic” perspectives as opposed to “empirical and unsystematic” approaches (Hayek 2011, 108; see also Freire 2021)?

It is with such questions in mind that we organized the present symposium, “Religion, the Scottish Enlightenment, and the Rise of Liberalism.” Building on recent literature (e.g. Oslington 2011; 2018; Ballor and van der Kooi 2022), we aimed to facilitate discussions on the
development of political economy and early liberal discourse in eighteenth-century Scotland by  considering the religious and cultural framework from which they emerged.

Axel Leijonhufvud: A life among the Econ, 1933 to 2022

October 3, 2022

Prof Roger Farmer pays tribute to Prof Axel Leijonhufvud

Axel Leijonhufvud, who passed away in May 2022, was one of the most creative macroeconomists of his generation. This column, written by a long-time friend and colleague, outlines the development of his thought, including his work on Keynes and Keynesian economics; his enthusiasm for agent-based modelling; his insistence that good macroeconomists need to understand the past before they can understand the present or the future; his view that modern macroeconomics is a degenerative research programme that took a wrong turn in the 1950s; and his many contributions to policy discussions on VoxEU during the Global Financial Crisis and the ensuing Great Recession.

Vanity and Luck in Adam Smith’s Economic Growth

September 15, 2022

Maria Pia Paganelli of Trinity University in this new paper:

What are the causes of prosperity? In addition to saving, capital accumulation, and good institutions, Adam Smith explains opulence through vanity and luck, two variables we tend to forget today. For Smith, wealth comes from our propensity to better our condition, combined with freedom and the security of the law. The propensity to better our condition is grounded in our vanity, and can take the form of both parsimony and prodigality. The laws that guarantee freedom and security seem to be more of an accident of history rather than deliberate attempts to create prosperity. For Smith, vanity and accidents play a relevant role in economic growth.

 

Religion and the Rise of Capitalism

September 2, 2022

Interesting article by Prof Benjamin Friedman of Harvard university. The article is based on his book on role of religion in rise of capitalism.

Where do our ideas about how the economy works, and our views on economic policy, come from? Most people in the Western world, and especially in America, simply take for granted that we organize one of the most essential aspects of human activity—the economic
sphere—primarily around private initiative channeled through markets. But where did that presumption come from?And why do so many people, again especially Americans, often see any challenge to our market-centered conduct of economic affairs as a fundamental threat to our way of life?

Our ideas about economics and economic policy have long-standing roots in religious thinking. Most are unaware of  how religious ideas shape our economic thinking, and when such links are occasionally suggested they are mostly misunderstood. But religion—not just the daily or annual cycle of ritual observances, but the inner belief structure that forms an essential part of people’s view of the world in which they live—has shaped human thinking since before there were written words to record it. The influence of religious beliefs on modern Western economics has been profound, and it remains important today. Critics of today’s economics sometimes complain that belief in free markets, among economists and many ordinary citizens too, is itself a form of religion. It turns out that there is something to the idea: not in the way the critics mean, but in a deeper, more historically grounded sense.

Read the article for more insights.

Adam Smith and Pin-making: Some Inconvenient Truths

August 25, 2022

Prof Timothy Taylor on his fab blog conversable economist says smith’s pin factory example is not a great example of gains of division of labour:

One of the famous anecdotes in economics is about division of labor in a pin factory, as told by Adam Smith starting in the third paragraph of The Wealth of Nations. (One suspects the fame of the story is partly related to the fact anyone who cracks open the book will find it at the very beginning.) Smith notes in the text that his example was already common at the time he used it. But those who specialize in this area have pointed that Smith’s example was based on second- and third-hand reporting, while actual studies of pin-making in the 18th century suggest that it may not be a great example of the gains from division of labor.

Read the post for more details.

Profile and contribution of Richard Posner: transformed law and economics to economic analysis of law

August 1, 2022

Jean-Baptiste Fleury and Alain Marciano profile works of Richard Posner:

Richard A. Posner was the most important actor in the transformation from “law and economics” to an “economic analysis of law”. Posner applied Chicago price theory to the analysis of law and legal rules. He not only contributed to the field but also structured it. This is what this chapters shows. We also show that Posner’s work illustrates the Chicagoan dimension of his economic analysis of law. That Posner, especially later in his career, introduced some elements that might seem to be at odds with Chicago economics – pragmatism, notably – or that he claimed having become a Keynesian does not change much to the claim that it was Posner who crafted Chicago’s economic analysis of law.

 

The rise of the ‘Invisible Hand’ metaphor

July 20, 2022

Kwok Ping Tsang of Virginia Polytechnic Institute & State University in this SSRN paper:

This article explains the rise of Smith’s metaphor near the end of the nineteenth century. I provide evidence that the reappearance was partly triggered by the rise of the Moral Sciences Tripos at Cambridge, as exemplified by a publication by Maitland. Against the backdrop of liberal trade policies and wealth inequality, most references to the “invisible hand” metaphor at the turn of the twentieth century are against the idea of laissez faire and unregulated pursuit of interests, and the metaphor was invoked to argue that Smith does not treat economy harmonies as an a priori truth that always and everywhere applies.

 

The glories of Irish economics and economists

June 29, 2022

We often talk about Scottish enlightenment where a bunch of Scottish thinkers thought and worked on many ideas which laid the foundations of modern economic growth and industrial revolution.

Tyler Cowen blogs about the highly underrated Irish enlightenment and its famous economists:

Yesterday I mentioned the underrated Irish Enlightenment (don’t forget Toland!), today I will briefly lay out how many top early economists came from Ireland.  Here is a partial list of those economists and their contributions:

1. Richard Cantillon, 1680s-1734.  Perhaps the second greatest economist of his century after Adam Smith, he developed the ideas of entrepreneurship and opportunity cost and in general embraced common sense.  Jevons called his Essay on the Nature of Commerce in General the “cradle of political economy.”  He was a major influence on Smith.

2. Edmund Burke, 1729-1797.  Burke has been underrated as an economist, see the recent book by Greg Collins on Burke’s economic thought.  Here is a short essay on Burke’s conservative case for markets.

3. Robert Torrens, 1780-1864.  A major thinker on international trade, he developed the theory of comparative advantage before Ricardo did, and was a sophisticated analyst on a broad range of questions, including terms of trade and currency policy.  He also promoted a version of the charter city idea for southern Australia, and to this day some things in Adelaide bear his name.

4. Richard Whately, 1787-1863.  Mostly an archbishop, theologian, and philosopher, his writings on economics developed the notion of “catallactics,” namely economics as the science of exchange.

3. Mountifort Longfield, 1802-1884.  A first-rate common sense economist, and arguably the first writer to clearly state the laws of supply and demand.  He also developed a marginal productivity theory for the value of labor and capital.  The first professor of political economy at Trinity College.

5. John Elliott Cairnes, 1823-1875.  An important thinker on the methodology of the social sciences, an all-around excellent economist, and his diagnosis of the economics and sociology of slavery (it ruined and infected all parts of Southern society) was spot on.  He is sometimes considered “the last of the classical economists.”

6. Isaac Butt, 1813-1879.  Best-known for his role in Irish political history and the Home Rule movement, he produced what is arguably the first coherent account of the marginal product theory of distribution and factor prices.  He also analyzed the Irish system in terms of the economics of misallocated land, and he promoted welfare state ideas.

7. Francis Ysidro Edgeworth, 1845-1926.  One of the founders and leading lights of mathematical economics, he produced an early version of the Coase Theorem, the notion that market price converges on a competitive equilibrium as the number of buyers and sellers grows, explained the importance of tangency conditions for economic equilibrium, developed the economics of progressive taxation, fleshed out the economics of monopoly pricing, and he initiated the use of offer curves for international trade theory.

And please, none of your b.s. about Anglo-Irish, Norman, Spanish, etc. — they were Irish!  I think of these individuals as continuing the earlier Irish Enlightenment of the eighteenth century.

Nobel endevours with Nobel laureates

June 15, 2022

Superb set of questions to Nobel laureates and enriching answers from including two from economics David Card and Angus Deaton (HT: Ashish Kulkarni of Everydayecon blog).  There are lessons in humility too.

This one by Angus Deaton is gold:

Q: Nobel Prize-winning physicist Richard Feynman once said ‘If you think you understand quantum mechanics, you don’t understand quantum mechanics.’ As people who’ve never professed to understand quantum mechanics, The Fence find this statement quite presumptuous, but decided we’d ask some of the world’s biggest boffins how much they do or don’t know about their jobs, life and everything else besides.

profangus deaton (economics, 2015)

For me, macroeconomics is like quantum mechanics. Though it is not just me. It changes shape all of the time, and I have done economics long enough to see what is true – and what is not true – change places over and over again. Slightly differently, there is an idea in statistics, used also in economics, called ‘regression to the mean’. Ask any economist or statistician if they understand it, and they will all say yes, of course. But the great statistician David Freedman used to say of testifying in court that whoever has to explain ‘regression to the mean’ to the judge has thereby lost the case. As an example, suppose poorer countries always grow faster than richer countries. So their income must get closer together over time? No, not necessarily. That is an example of ‘regression to the mean’  sowing confusion.

🙂

 

Joan Robinson on Karl Marx: “His Sense of Reality Is Far Stronger”

May 16, 2022

Carolina Alves in the recent issue Journal of Economic Perspectives on Joan Robinson’s turn to Marxism:

Robinson’s essay on Marxism here

 

Hayekian Economic Policy

May 3, 2022

Lars P. Feld and Daniel Nientiedt of Walter Eucken Institute in this paper:

What is the appropriate role of the state in economic policy-making? This paper shows that Friedrich Hayek, who is often considered a proponent of laissez-faire liberalism, offers three different answers to this problem.

First, Hayek argues that the state should provide a legal framework for competitive markets.

Second, he proposes to employ the rule of law criteria – generality, equality, and certainty – to distinguish permissible from non-permissible state interventions.

Third, he rejects deliberate legislation and moves closer to the Misean idea of a minimal state.

The paper considers these answers in light of Hayek’s analysis of the knowledge problem. We suggest that a Hayekian approach to economic policy-making should focus on improving the framework of general rules that guide individual behavior, thereby enabling spontaneous ordering processes and reducing the epistemological burden placed on policy-makers.

 

Remembering 1966 B.R. Shenoy Report on Sri Lanka : An instance of missed opportunity for Sri Lanka?

April 5, 2022

Each time Sri Lanka goes into a crisis, we need to remember the profound insights of Indian economist BR Shenoy. Perhaps if his policy suggestions were accepted by the Sri Lankan government in 1966, Sri Lanka could have avoided future crisis. But this is a big if and perhaps.

Sri Lanka was going through a crisis in the 1960s. The Government of Sri Lanka appointed Shenoy to study and suggest economic policy going forward.  Shenoy submitted a report outlining many suggestions which were quite amazing and futuristic.

In this article, W.A Wijewardena, a former Deputy governor of the Central Bank of Sri Lanka takes us through the background of SL crisis in 1960s and what led the Government to appoint Shenoy:

(more…)

The Ukrainian economist who is fighting the Russians with logistics

March 22, 2022

Tyler Cowen on Marginal Revolution blog profiles Tymofiy Mylovanov, a Ukrainian economist fighting the Russians with logistics.

This Bloomberg piece by Scott Duke Kominers is an interview with the heroic Tymofiy Mylovanov.  He is an economist, also of the University of Pittsburgh, who is organizing many of the logistics in Ukraine and also running the Kyiv School of Economics.  I am honored to know Tymofiy, here is one bit of a much broader story:

Mylovanov: Within the first couple of days, you see how people respond differently. Some people get traumatized; some become dysfunctional; others become almost super-efficient, like me and my team. But you have to figure out how to function in war or you die. Your loved ones will die. And we had a plan — war-time protocols at the university. We even had a war committee, and everyone was responsible for specific tasks, and they have to start executing them. Otherwise we collapse.

If someone doesn’t show up to a meeting, that doesn’t matter. Decisions are made without them. No wavering, no trembling hand. You either do it or you don’t do it and you accept the consequences. So we managed to shut down our facilities and put security in our buildings and the people there had food and water, and they’ve been staying there for two weeks.

There is much more detail in the article, which is interesting throughout.  And:

Mylovanov: One specific thing: We need 307,000 medical kits. I have the specification. Let’s say Israel can only supply 30,000 and Canada probably can supply 20 or 30,000. But we have suppliers who can provide the medical kits. We give this specification to [Ukraine’s] Ministry of Health, and our charitable foundation will pay. So tag me or email me or ping me on Twitter — and then donate, please donate.

All the fundraising goes directly to logistics. I have a website at the university of the charitable foundation [Kyiv School of Economics Humanitarian Relief Fund], and there is a Twitter post at my account. If I get a hundred dollars on that charitable foundation, it goes towards medical kits and it’s likely going to save a life.

By the way, Tymofiy Mylovanov is widely published in economics journals, including Econometrica and JET.  Here is Tymofiy on Twitter.

Discussion with Lant Pritchett: Where did development economics go wrong?

March 22, 2022

Shruti Rajgopalan has a conversation with Prof Lant Pritchett on the IdeasofIndia podcast.

In this episode, Shruti speaks with Lant Pritchett about economic convergence, academic skepticism about growth, flawed methodologies in development economics, the shortcomings of India’s educational system and much more. Pritchett is a development economist from Idaho. He is currently affiliated with Oxford’s Blavatnik School of Government as the research director of the RISE Programme, is the Research Director at LaMP (Labor Mobility Partnerships) and is a fellow at the London School of Economics. He previously worked with the World Bank from 1988 to 2007, living in Indonesia 1998-2000 and India 2004-2007. His publications span a wide range of development topics including economic growth, state capability, education, labor mobility and development assistance.

The earlier problem was how much to read. Now it is how much to hear!

Implicit discrimination against women economists

March 8, 2022

On the international women’s day, Par Cecilia García-Peñalosa et Soledad Zignago of Banque de France write on the implicit discrimination against women economists:

In several sectors, including academic economics, considerable efforts have been made over at least the past two decades to combat gender discrimination. One of the most frequently debated policies over recent years has been positive discrimination. Hiring or promoting an equally qualified woman over a man is argued to have a positive impact on all individuals in the profession as it will reduce prejudice and provide role models for younger women. Despite these efforts, women still appear to be vastly underrepresented amongst researchers in economic and earn far less credit than men for their academic work.

A Student’s Plea to Professor Douglass North for support against the closing of the sociology department

March 8, 2022

Rafael Galvão de Almeida of Federal University of Minas Gerais (UFMG) in this short paper:

This paper introduces and reproduces a letter written to Douglass North asking for support against the closing of the sociology department at Washington University in St. Louis.

Apparently we do not know what North did about the department but he preserved the letter in his Archives. So it did mean something to him.

More in the paper which is titled as: A Student’s Plea to Professor North: An Episode in Academic Politics and Interdisciplinarity in the Reagan Years.

Academic politics can be nasty for sure..

Reports from China: Joan Robinson as Observer and Travel Writer, 1953-78

January 18, 2022

Mauro Boianovsky of Universidade de Brasilia and Gerardo Serra of London School of Economics in this paper discuss Joan Robinson’s infatuation with China:

Joan Robinson’s infatuation with Mao’s China remains the most controversial episode of the Cambridge economist’s life. Drawing on the literatures on observation in science and economics, and economists’ travels, we aim at overcoming the dichotomy between Robinson as a ‘political pilgrim’ and as a ‘development economist’. Instead, we take a closer look at her observation practices, her literary choices, and her position within different political and intellectual communities. The structure of the paper is quasi-chronological: each trip to China is described in its own right, but also treated as an entry point to shed light on a particular aspect of Robinson’s engagement with the country.

 

Watching economics on TikTok

December 30, 2021

Tyler Cowen on the MR Blog:

For my latest Bloomberg column, I ran the experiment of typing “economics” into the TikTok search function, and here is what came up:

The first video I saw was about the high pay of economics majors in the job market, relative to softer majors. The speaker has a strange British accent, and it is possible that he was deliberately trying to look and sound stupid. It has been liked more than 32,000 times. The next was a rant about the outrageous price of beer at sporting events. There is no obvious intelligence or analysis in the video. It has been liked almost 32,000 times.

I also saw a video called “Why I left economics,” in which a student who took an economics class at Brown explains how his professor taught about inequality but lived in a mansion with servants. He argues that economics as a subject distracts our attention from “what the **** we’re supposed to do.” The number of likes exceeds 258,000.

I watched a video of a woman loudly sighing in relief as a caption explains she has just dropped her economics class. Likes: more than 22,000. Then there was one mocking the idea of being an economics major, calling it another religion and suggesting the demand for economist friends is quite low. It had more than 34,000 likes.

But I am not upset at TikTok:

I think of TikTok as a useful wake-up call for economists.

First, TikTok is one of the dominant modes of presenting and debating issues and ideas, including economics, yet it is hardly used or even discussed by professional economists. (University of Houston Professor Chris Clarke is a notable exception.) Economists are ignoring the market signals — to our own detriment.

Second, TikTok’s preoccupation with the status and morality of economics exists beyond TikTok. TikTok offers economists a view of ourselves as much of the world sees us. We are judged not for our analytics, but rather by how we fit into various moral codes. Like it or not, that is something we economists have to come to terms with. Maybe we should thank TikTok for making this so clear.

Recommended.  And whether or not you like TikTok, you all should be spending a non-zero amount of time with it.

Hmm..

Arguing for a more anthropological approach to policymaking

December 29, 2021

Gillian Tett cultural anthropologist and chair of the editorial board of the Financial Times in this IMF article:

When the news broke in 2020 that scientists had raced ahead with efforts to create vaccines for COVID-19, policymakers and voters around the world cheered. No wonder: the development of these vaccines is a triumph for 21st century medical and computer science, raising the chances that the world will beat the pandemic.

However, in 2021 it has emerged that there is a catch: quite apart from the fact that distribution of the vaccine has proved to be lamentably—and dangerously—inequitable, not least because of the structures of the global political economy, vaccination even in some rich countries is turning out to be difficult. The reason? Culture—as defined by the web of half-acknowledged rituals, symbols, ideas, spatial patterns, and social affiliations that shape humans, wherever they live. Most notably, in places such as the United States, there has been so much vaccine resistance—or “hesitancy,” to use the polite euphemism—that it has undermined efforts to stop the pandemic.

And while some jurisdictions—such as France—have managed to overcome initial vaccination hesitancy (at least to some degree), the fact that there even are such battles illustrates a crucial, but oft-ignored, point about policymaking today. Effective responses to fast-moving (or even slow-moving) challenges require more than reliance on so-called hard sciences, such as medical research or the powers of big data. You need “soft” science too, to understand human behavior and culture. 

Or to put it another way, it is a profound mistake to try to solve public policy problems today just by relying on one set of intellectual tools, deployed with tunnel vision. You need lateral vision, to appreciate the wider human context and how elements that lie outside your model, big data set, or scientific trial could affect what is happening. Culture, as defined above, matters, along with environmental and political systems—and not just the pieces of our cultural systems that we openly notice (the “noise”) but also the pieces we tend to ignore because they are embarrassing or familiar or too complex to discuss (the “silence”). 

We need lateral vision to deal not only with pandemics but also with a host of other issues around economic development and policymaking—climate change, pensions, and so on. Trying to devise effective policy purely on a technical basis, such as with a narrowly bounded economic model or with engineering science, is akin to walking through a dark wood at night looking only at a compass dial. No matter how technically brilliant your tool might be, if your eyes are fixed on it alone, you will trip over a tree root. Context matters.

How to build this vision?

How can policymakers adopt that lateral vision? I would suggest that one way to do this is to borrow some ideas from a field I trained in, before becoming a financial journalist: cultural anthropology. This might sound odd to some policymakers, given the discipline’s often rather dusty, exotic image—its adherents viewed as academic versions of Indiana Jones who spend their time traveling to remote locations to study colorful rituals that seem far removed from 21st century economic challenges.

However, this stereotype is not just wrong—it also creates a gigantic missed opportunity. Yes, anthropologists are dedicated to studying human culture, in all its glorious spectrum of difference. But they do not do this in a patronizing manner (unlike the early 19th century anthropologists, who had a deplorably racist, sexist, and imperialist bent). Instead 21st century anthropologists believe that it is important to study different cultures, with respect, because that process not only yields empathy for strangers, which is crucial in a globally integrated world, it also helps us understand our own cultures better—wherever we initially hail from. It is a win-win.

Reserve Bank of Australia’s first economist: Leslie Melville [Who was RBI’s?]

December 14, 2021

Selwyn Cornish of Reserve Bank of Australia profiles the first economist of the Australian central bank – Leslie Melville.

In 1930, when officials from the Bank of England came to Australia to assist Australian governments with their budgetary problems, they found that the original Commonwealth Bank, then Australia’s central bank, did not have an economist on its staff.

They urged the Bank’s Governor to appoint a qualified economist and recommended Leslie Melville, Professor of Economics at the University of Adelaide. Melville joined the Bank in March 1931. Some two decades later, when he left to become Vice-Chancellor at the Australian National University, Dr HC Coombs wrote to him saying that he had ‘made a contribution to the theory and practice of central banking which is without equal in the world’.

As Melville’s 100th birthday approached in 2002, the Australian National University decided to hold a public lecture in his honour. Governor Ian Macfarlane was invited to give the inaugural lecture. He concluded that Melville was ‘one of the most distinguished Australians of the past century’.

The 20th Melville Lecture will be given in early 2022 by the Treasury Secretary, Dr Steven Kennedy. Ahead of this event, the latest records to be released in the Bank’s new digital archive, Unreserved, include Melville’s papers in digitised form. This article traces Melville’s life and career, and his significance as the Bank’s first economist.

Interesting way to use central bank’s archives and educate public via these Bulletin article.

Who was the first economist of RBI? RBI’s first history volume 1935-51 mentions Dr BK Madan as the first Director of Research-

With an increasing part of the time of the Officer-in-Charge of the Department taken up in maintaining personal contacts with the Provincial Governments, and the growing specialisation in the work of the Statistical and Research Section, it became clear that there was need for a competent economist to be entrusted with the duty of collecting and maintaining all the varied statistical and economic material so essential for the shaping of central banking policy.

A post of Director of Research to be in charge of this Section was therefore created early in 1941 and Dr. B. K. Madan who, since 1940, had been the Economic Adviser to the Government of Punjab became its first incumbent in the middle of that year. After holding higher positions like Economic Adviser and Executive Director, Dr. Madan became a Deputy Governor of the Bank in July 1964.

In the middle of 1943, the Research Section was expanded for undertaking a fuller study of problems of central banking and wartime fiscal and monetary developments as a background to the proper consideration of questions like controls, planning for reconstruction and development and international currency and exchange arrangements that were likely to arise in the post-war period.

Towards the end of that year, the Bank arranged to obtain the services of Mr. J. V. Joshi, the Deputy Economic Adviser to the Government of India, on loan as Senior Economist for the purpose not only of advising the Bank on economic matters including currency and central banking, but also for reviewing and suggesting improvements to the existing machinery for collection’ and coordination of economic intelligence; Mr. Joshi was later to become the Bank’s first Economic Adviser.

Mr. Joshi served the Bank for over a decade. After a four-month spell as Deputy Governor, in a leave vacancy in the latter half of 1952, Mr. Joshi worked as an Executive Director for two years, retiring in January 1955.

In an earlier post, I had discussed about the first chief economists of various commercial banks.

One hopes RBI engage in history similarly as RBA….

 


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