Archive for the ‘Economist’ Category

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:

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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….

 

Remembering Geoff Harcourt, the beating heart of Australian economics

December 10, 2021

Prof Geoff Harcourt, historian of economics ideas passed away recently.

John Hawkins of University of Canberra and Selwyn Cornish of Australian National University pay tribute to the Australian economist.

 

“If you compete with us, we shan’t marry you”: The Mary Paley and Alfred Marshall story

November 15, 2021

History of Economic Thought comes back in interesting ways.

Rohini Pande & Helena Roy in this NBER paper write on Alfred Marshall’s changing views on gender norms and inequality:

Keynes’s Treatise on Probability at 100 years: its most enduring message

November 9, 2021

Keynes published Treatise on Probability in 1921.

Prof Carlo Zappia of University of Siena in this paper reviews 100 years of the book:

On the occasion of the assessment of the enduring influence of Keynes’s Treatise on Probability at 100 years, this paper focuses on its relevance for decision theory.

he paper places emphasis on Keynes’s introduction of the epistemic notion of probabilities that often are non-numerical, as a theoretical object intended to replace frequency probabilities.

The paper argues that, as non-numerical probabilities make it possible to deal with uncertainty as if individuals were endowed with interval-valued probabilities, Keynes’s 1921 critique of contemporary frequency probability theory turns out to be relevant also with regard to the yet to be established subjective probability theory. Although non-numerical probabilities were used by Keynes to criticize the contemporary application of probability to conduct, it must be acknowledged that, still today, they may constitute an appropriate tool for decision-making when confronting uncertainty, as he hinted at in his late 1930s correspondence with Hugh Townshend.

Keynes was so multifaceted. His contributions in different fields continue to attract scholars…

O.M.W. Sprague (the Man Who “Wrote the Book” on Financial Crises) meets the Great Depression

November 5, 2021

Wishing all the Mostly Economics visitors and well-wishers a very Happy and prosperous Diwali.

Hugh Rockoff in this new NBER paper reflects on the works and thoughts of OMW Sprague. Sprague was a leading financial thinker during great depression but he did not really get the depression. If he had and wrote on the need to intervene, may be the story would have been different:

Sprague’s main work which led to his thinking is here

How economics took a wrong turn post World War II and an alternative theoretical framework for economics

October 28, 2021

Prof Meir Kohn of Dartmouth College in this Cato Journal Paper writes how economics took a different turn post WWII:

As a profession, economics is thriving. The number of economists is large and growing. The volume of their output is exploding—more articles are published each year in a growing number of journals. As a science, however, economics is not doing so well. The questions addressed by all those articles seem to be getting smaller and smaller. And there seems to be little or no progress on the big questions of economics such as economic development and growth, economic fluctuations, and the proper role of government in the economy. Most of the articles published are econometric, and the results of many are of questionable quality.

These problems of economics are, however, far from unique. There has been much talk in recent years of a general crisis of science. Despite ever more resources devoted to scientific research, the pace of scientific progress has slowed markedly. And the problems with statistical work in economics are part of a much broader “replicability crisis” in statistical work in general.

A major underlying cause of the general crisis of science is bureaucratization. Since World War II, scientific research has increasingly become concentrated in universities, and universities have become increasingly bureaucratized. Academic advancement has come to depend on metrics such as the number of publications in leading journals and the number of citations.

Judging the significance of work is rarely even attempted: “deans can’t read, but they can count.” Incentives matter, and these bureaucratic incentives promote low‐​risk, low‐​value research. Bureaucratization is the result, in turn, of two related developments—the increasing adoption by universities of the model of the German research university, and the growing role of government in funding scientific research.

While economics shares with science in general the underlying cause of its problems, there is a specific factor in economics that has exacerbated these problems significantly—namely, a major wrong turn in economic theory. I will begin by describing the nature of this wrong turn, and then consider why it has been accepted so readily and why, indeed, it is a wrong turn. I will then discuss how economics has responded to the problems created by the wrong turn in theory and why that response has been inadequate. I will argue that the only real solution is to adopt a different theoretical framework. I will then describe, very briefly, a theory I have been developing and explain why this offers a better theoretical framework for economics as a whole. I will conclude by considering how economists might be persuaded to adopt this alternative framework.

Ouch to the emphasized text!

What happened after WWII?

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Economics of socialism and transition: The life and work of János Kornai, 1928-2021

October 26, 2021

Prof Janos Kornai passed away recently.

Prof Gerald Ronald of University of California, Berkeley pays tribute to Kornai in this voxeu piece.

The famous Hungarian economist János Kornai has left us. He was one of the most important intellectuals of the twentieth century. He suffered personally from both Nazism and communism, the two totalitarian regimes of the twentieth century. As a young Jew growing up in Budapest, he lost his father and a brother to the Nazis. Like many young Jews in Central Europe who survived the holocaust, he was for a couple of years an enthusiastic supporter of communism, the arch-enemy of Nazism. He became disillusioned after a few years, especially when learning about the Stalinist purges in Hungary in the early 1950s. He had been a journalist at that time.

His doctoral dissertation in economics, Overcentralization in Economic Administration, was full of facts about the flaws of central planning and represented a great breath of fresh air in the intellectual atmosphere of the times. He defended that dissertation just before the Soviet repression of the Hungarian revolution of 1956. His defence was attended by a big crowd and was one of the important intellectual events of that year. Given the visibility of his doctoral thesis, when the repression came, he lost his job at the Institute of Economics (later a hotbed of thinking about reforms), was interrogated, and eventually got marginal jobs, first at the Light Industry Planning Bureau and later at the Textile Industry Research Institute. 

Instead of becoming discouraged or cynical, he used the free time he had in these obscure jobs to study economics seriously and to get better acquainted with economic research that was being practiced in the West, on the other side of the Iron Curtain. His work on two-level planning with Tamás Lipták was published in Econometrica and became an important paper in the literature on the economics of planning. This earned him the recognition of top economists of the time: Kenneth Arrow, Leonid Hurwicz, Tjalling Koopmans, Edmond Malinvaud and others. The Hungarian authorities, who were more liberal than other communist regimes, even allowed him to travel to conferences in the West, albeit under heavy supervision of the secret police. 

Should Keynes’s General Theory book have been titled instead as ‘Special Theory of Employment, Interest and Money’?

October 13, 2021

I had pointed that Monetary Authority of Singapore has completed its 50 years in 1971 and the central bank has released a commemorative volume on its 50 years.

In the volume there is a speech (page 8-13) by Dr Goh Keng Swee who was chair of MAS from 1980 to 1985.

He reflects on his college days when he studied economics and Keynes released the General Theory:

When I was studying economics at Raffles College in pre-War days, the Keynesian revolution broke out with the publication of John Keynes’
The General Theory of Employment, Interest and Money. Today, critics, including Sir John Hicks, are agreed that it was a badly written work and made for difficult reading. I can attest to the latter. As an undergraduate, I read the book from cover to cover no fewer than three times, some chapters even more. What puzzled me most was that Keynes measured variables and aggregates, such as National Income and Money Supply, in terms of what he called “Wage Units”. I asked my professor what this meant and why Keynes did this, but could not get a satisfactory reply. Nor did the literature of the day prove more helpful.

Years later, the truth dawned on me. The Keynesian remedy for curing unemployment — the burning issue of the day left behind by the Great
Depression years — involved a serious risk of inflation. Of course, Keynes knew this. The remedy he recommended took the form of expansion of bank credit through central bank policies to finance government expenditure. This extra spending will create additional demand for goods
and services, thereby reducing unemployment. But if economic variables are measured in wage units, inflation would be factored out as wages will rise in keeping with price increases. If variables such as the consumer price index or interest rates and aggregates like money supply, were measured in wage units, their increases would be reduced to the extent to which wages rise.

There is a further difficulty to contend with. The Keynesian system is a closed one, that is, it takes no account of foreign trade. This is admissible in theory, but in practice, since all modern states engage in foreign trade, a Keynesian stimulus will lead eventually to balance of payments deficits if governments do not exercise restraint in time. A part of the increased incomes people receive will be spent on imports and when exports do not increase in proportion, a trade deficit will occur. In the immediate postWar years, Keynesian economics won widespread acceptance in both academic and government circles in Britain and the United States. Confidence increased in the ability of governments to maintain full employment and stable economic growth through Central Bank credit policies and government fiscal (budgetary) policies.

However Keynesian policies backfired in 1960s:

However, by the mid1960s, certain stubborn difficulties appeared and refused to go away. In Britain, this took the form of balance of payments troubles which led to the devaluation of the pound in November 1967.

America experienced troubles in a different form. Because all major world currencies fixed their par values in terms of the US dollar and the 
US dollar was pegged to gold at US$35 per ounce, America could not devalue the dollar except by raising the price of gold. This the government was unwilling to do for political reasons. Eventually, what happened was an increase in inflationary pressure in the US and a decline in confidence over the convertibility of the US dollar into gold at US$35 per ounce because of increasing US dollar balances accumulated overseas as a result of trade deficits. In the end, gold convertibility of the US dollar was suspended in August 1971 and, shortly thereafter, the regime of floating currencies came into being. World currencies continue to float till this day.

He points how Singapore was watching these developments and learnt from them.

Finally he says he is not against Keynes but the General Theory should have been named as

In conclusion, I want to correct any impression this article may have given that I think poorly of Keynes as an economist. I do not. He is the greatest economist the world has produced this century. He introduced a new way of looking at an economic system, in a different way from the classical greats such as Adam Smith, David Ricardo and Alfred Marshall. The classicals saw the system as one consisting of producers and
consumers, each making his own decision as a producer or a consumer. They studied how a free market harmonises their interests. Keynes looked at how the system functions as a whole. Keynes gave birth to a discipline we now call macroeconomics.   

….

If one has to fault Keynes on any point, it would be the title of his book. This should have been The Special Theory of Employment, Interest and Money. His prescriptions were intended to address the special circumstances created by the Great Depression. By calling it a General Theory, he led lesser minds than his into believing that his prescriptions could be applied under all circumstances, with unhappy consequences, as we have noted.

Schumpeter had made similar comments on General Theory as well..

Explainer: Nobel Economics Prize of 2021

October 12, 2021

The Nobel Prize in Economics for 2021 has been awarded to three economists: David Card, Guido Imbens and Joshua Angrist.

My article in Moneycontrol attempts to explain their work which led the Nobel Committee to award them the coveted economics prize.

 

Thorstein Veblen’s Theory of the Leisure Class—Evolution from leisure class to luxury belief class

October 11, 2021

Rob Henderson (PhD candidate at the University of Cambridge) in this article updates Veblen’s leisure class:

Thorstein Veblen’s famous “leisure class” has evolved into the “luxury belief class.” Veblen, an economist and sociologist, made his observations about social class in the late nineteenth century. He compiled his observations in his classic work, The Theory of the Leisure Class. A key idea is that because we can’t be certain of the financial standing of other people, a good way to size up their means is to see whether they can afford to waste money on goods and leisure. This explains why status symbols are so often difficult to obtain and costly to purchase. These include goods such as delicate and restrictive clothing like tuxedos and evening gowns, or expensive and time-consuming hobbies like golf or beagling. Such goods and leisurely activities could only be purchased or performed by those who did not live the life of a manual laborer and could spend time learning something with no practical utility. Veblen even goes so far as to say, “The chief use of servants is the evidence they afford of the master’s ability to pay.” For Veblen, Butlers are status symbols, too.

….

A couple of winters ago it was common to see students at Yale and Harvard wearing Canada Goose jackets. Is it necessary to spend $900 to stay warm in New England? No. But kids weren’t spending their parents’ money just for the warmth. They were spending the equivalent of the typical American’s weekly income ($865) for the logo. Likewise, are students spending $250,000 at prestigious universities for the education? Maybe. But they are also spending it for the logo.

This is not to say that elite colleges don’t educate their students, or that Canada Goose jackets don’t keep their wearers warm. But top universities are also crucial for induction into the luxury belief class. Take vocabulary. Your typical middle-class American could not tell you what “heteronormative” or “cisgender” means. But if you visit Harvard, you’ll find plenty of rich 19-year-olds who will eagerly explain them to you. When someone uses the phrase “cultural appropriation,” what they are really saying is “I was educated at a top college.” Consider the Veblen quote, “Refined tastes, manners, habits of life are a useful evidence of gentility, because good breeding requires time, application and expense, and can therefore not be compassed by those whose time and energy are taken up with work.” Only the affluent can afford to learn strange vocabulary because ordinary people have real problems to worry about.


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