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Gregory Becker. 2015 US Department of Labor. via Wikimedia Commons. |
Wednesday, May 17, 2023
Banking on Trouble: The SVB Collapse and its Impact on Financial Stability.
Tuesday, May 16, 2023
America's Debt Dilemma: Hitting the Ceiling.
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"The Republican Elephant." Thomas Nast, 1874. via Wikimedia Commons. |
I've written previously on this, noting that the Biden administration's exploration of using the 14th Amendment to challenge the current federal borrowing limit has prompted heated debate among economic and legal advisors. Meanwhile, Kevin McCarthy is facing his first major test in leading the House of Representatives in Congress' negotiations to lift the debt ceiling, a controversial issue that requires bipartisan compromise while weighing both fiscal responsibility and the need for austerity. The ripple effects of the rise of the far-right within the Republican Party have left lasting damage to both faith in the political system and the party's overall stability. The rising tensions within the Republican Party over the debt ceiling are making it increasingly difficult to present a unified stance. To move ahead successfully, the Republican Party must find ways to address the factors contributing to its internal divisions and disarray.
Tuesday, April 18, 2023
Economics and the Mona Lisa Smile.
"Mona Lisa." Leonardo da Vinci. via Wikimedia Commons. |
One source of confusion arises from the discrepancy between "hard" and "soft" data—objective indicators such as unemployment rates, and subjective variables like individuals' future expectations. Typically, these two classifications of data are congruent. However, at present, they exhibit a stark contrast. "Soft" measures indicate a recessionary trend, while "hard" measures suggest a reasonable economic expansion. This divergence may be attributed to the public's discontent with inflation. In affluent nations, prices continue to escalate at an annual rate of 9%.
Friday, April 14, 2023
Red States, Blue Cities, Dynamic America.
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"President Barack Obama and Cabinet." White House East Room, September 10, 2009. via Wikimedia Commons. |
David Brook's career began as a police reporter in Chicago, and he recognizes the significant impact it had on his perspectives. His experiences on the crime beat shifted his views from a more liberal standpoint to a more conservative one. Brooks seems to be highly conscious of the concept of black-and-white morality, which leads him to seek a balanced approach where both sides of an argument have valid points. In essence, Brooks proposes that a third option, which incorporates ideas from both sides, is often attainable.
Here, I think Brooks misses some of the essential characteristics of how cabinet-style dynamics function, which I generally accept as a starting point for analysis of most government decisionmaking. In "The English Constitution," Walter Bagehot highlights the significance of blending old and new minds in the British parliamentary cabinet system for effective governance, emphasizing the importance of secrecy and trust in maintaining unity and functionality. By combining experienced ministers' continuity and institutional knowledge with new ministers' fresh ideas and energy, the cabinet can adapt to changing circumstances and address contemporary issues. Secrecy ensures confidential cabinet discussions and disagreements, fostering open dialogue and consensus-based decisions. Trust among cabinet members is essential for upholding collective responsibility and loyalty, even when personal disagreements occur. Ultimately, Bagehot argues that the balance of experience and innovation, combined with secrecy and trust, contributes to the effective functioning of the government.
Bagehot argues that the most dangerous person to a cabinet government is the disloyal insider. A disloyal insider can undermine the collective responsibility principle, where all ministers must publicly support cabinet decisions, even if they personally disagreed during internal discussions. By breaking this trust and revealing confidential information or dissenting opinions, the disloyal insider can weaken the solidarity and unity of the cabinet, disrupt its decision-making process, and potentially harm the government's credibility and stability. Thus, Bagehot emphasizes that disloyal insiders pose a significant threat to the cabinet government's effectiveness and overall political structure.
Bagehot's central argument highlights the importance of consensus in a government composed of both cautious old minds and and fresh energetic ones. Brooks fails to consider that a political party's drive to act stems from their shared values and the aspiration to advance them. Brooks appears to suggest that experienced and fresh minds together would embrace a logical compromise on the very shared values that unite them. However, it is more probable that both groups would view this approach as flawed and dismiss those promoting it.
Brooks doesn't offer realistic solutions for a feasible third way, and his argument appears at odds with the realities of media influence and political communication. Rather than individuals blending positions, a stronger argument would recognize that blue cities in red states play a vital role in holding their governments accountable, encouraging debate, and preventing complacency in the ruling red-state governments. By remaining committed to the nation and their democratic values, these blue cities enhance the political system's stability and effectiveness while pushing the red-state governments to improve and refine their policies. Ultimately a stronger America emerges from that dynamism, as has been noted in the Economist recently.
Wednesday, April 12, 2023
The Nature of the Firm and the limits of Economics.
Ronald Coase University of Chicago Law School via Wikimedia Commons https://tinyurl.com/26ffzfkp |
Economists have made strides in understanding firms through concepts such as team production, incomplete contracts, and the principal-agent problem. However, these theories still fall short of providing practical advice on corporate strategy. Economics often fails to capture the importance of corporate culture, shared values, and pride in the workplace, which are essential to a flourishing business. Moreover, economics is limited in its ability to address the specificity of business problems, as they require detailed knowledge of various fields outside the discipline. While economic ideas can offer some insights, the study of business remains an outpost that economics is unlikely to conquer fully.
It was beyond the scope of the article, but a government agency (or, as a shorthand, an "agency") can also be viewed as a firm responsible for providing public goods or services and implementing policies. Like traditional firms, government agencies coordinate resources and make decisions under the principle of "bounded rationality." The major difference is that these agencies differ in their objectives, as they aim to maximize social welfare and address market failures, rather than seeking profit maximization, but which I would note, makes the insights of the Free Exchange column even more trenchant. Further, because government agencies also face unique challenges in terms of bureaucracy, political influences, and accountability, their efficiency and decision-making processes are even less susceptible to an economics-based analysis.
While apocryphally attributed to Twain, William S. Burroughs' advice to "write about what you know" leads me to look at my home in light of this. I note, over and over, that the critical issues my community encounters are almost always decided in an interchange and an interplay between firms and agencies. If anything, economics is something of a base meridian used to calibrate during the continuing conversations with multiple actors that are directed by fiat using bounded rationality to either pursue profit or improve social welfare, a problem only marginally susceptible to economics-based analysis.
Almost all of the important questions instead require detailed knowledge of various fields outside of economics. Indeed, to the extent that economics is used after the point-of-reference stage, it is of limited utility by itself. The dozen other factors noted above, including but not limited to corporate culture, shared values, pride in a workplace, bounded rationality, team production, incomplete contracts, the principal-agent problem, political influence, bureaucracy, accountability, market failure, and social welfare, are generally the factors to address in any analysis of the (for lack of a better phrase) political economy of most local decision-making that I have encountered -- a nice checklist for future reference.
Sunday, April 2, 2023
The Sullivan Doctrine.
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"Harbour Scene" Dutch marine painter Abraham Storck (1644-1708). Image source: Wikimedia Commons, Public Domain. |
Saturday, April 1, 2023
Disruption versus Destruction.
Wednesday, September 28, 2022
Space Rendezvous.
One of the most technically difficult and impressive acts humanity has ever achieved is the rendezvous of spacecraft in orbit. Interestingly, the American and Soviet approaches to the problem were different; while astronauts until quite recently controlled the process manually (Buzz Aldrin's Ph.D thesis concerned how to do so), since 1967 the Soyuz spacecraft have been able to do so autonomously. The Igla system, followed by Kurs, paved the way for autonomous resupply of Mir space stations at a fraction of the cost of manned spaceflight, a feat only matched by the Dragon capsules of SpaceX as recently as 2012.
From the Economist. |
I mention this point today in light of the rapid perceived advances in AI (artificial intelligence) and ML (machine learning). Much ink has been spilled regarding recent advances in language processing and image creation (this article is a nice example from the Economist).
But such technologies have long existed in some of the most challenging engineering spaces faced by humankind. Is the current surprise regarding AI/ML more due to the fact that it is now able to address the routine activities formerly used to sideline (if not belittle) the technology, when the practical application of the same has long since progressed past triviality to indispensability?
Previous posts on Economist issues:
- Nordic Success.
- @TheEconomist (Ann Wroe?) on Dr. Robert McClelland and #JFK.
- Further Reading.
- Where Newspapers Are Headed ...
- @TheEconomist on a hybrid #VirtualParliament.
- @TheEconomist on #Homelessness in @SFGov.
- The Life Pressed Out.
- Why Travel Matters.
- @econbartleby and @billswindell at @TheEconomist and @NorthBayNews, respectively.
- @AmExperiencePBS @RobertKenner-- the 1918 Pandemic.
- The Return of #Cash.
- California, where Malala Yousafzai becomes Janet Yellen.
- The Plutonium Standard.
- Beikoku and Eikoku.
- Secession is a bad idea, full stop.
- QE4.
- Brown, Budgets, Prisons, and Contempt.
- Executive Orders.
- #rebeccapurple.
- The Streets Should Fit the Trees.
- @TheEconomist on Alcohol and Health.
- What Do Bubbles Look Like, Pt. 2.
- "Bringing Up Baby Bilingual"
- Freshman Teams, Student Performance, and the Case For SVUSD's Master Plan.
- Dual Immersion Enhances Attention.
- Trust Levels of News Sources.
- Slouching Towards Utopia.
Tuesday, September 27, 2022
Slouching Towards Utopia.
Brad DeLong |
Brad DeLong has come up on this blog before -- here's a list of the times I've mentioned him previously:
Tuesday, June 16, 2020
The Life Pressed Out.
"The Life Pressed Out"
Obituary, George Floyd
The Economist, June 4, 2020
available at https://tinyurl.com/yagm25jm
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Sonoma Valley Equity & Inclusion Task Force, 2016
Report available at https://tinyurl.com/ybo9tyg6
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Tuesday, May 5, 2020
@TheEconomist on a hybrid #VirtualParliament.
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"Back to Abnormal"
Bagehot, The Economist, April 25, 2020
available at https://tinyurl.com/y8xn8dyb |
I wonder how we will regard the hybrid approach described herein in a few years. While change has come for everyone, not least the "Mother of Parliaments" (churches were closed in the UK this year for Easter for the first time since apparently 1218), the piece makes clear the essential work that elected officials must do to support newspapers in their efforts to scrutinize the government. In the UK it is essentially only MPs that possess the combination of three critical tools -- they may ask written questions that the relevant ministers are obliged to answer, they have detailed knowledge of their own local constituencies, and they have the ability to speak on behalf of the voters.
Perhaps the "hybrid" we should be watching is not online versus in person meetings of Parliament. Instead it may be that recognizing that government accountability in the United Kingdom increasingly depends upon cooperative joint scrutiny by MPs and the press. Perhaps it would be best to call this the era of the dual hybrid Parliament ...
Sunday, October 20, 2019
@TheEconomist on Alcohol and Health.
"A Sober Brawl," available at https://shrtm.nu/8Jwl Sources: “Drug harms in the UK: a multicriteria decision analysis”, by D. Nutt et al., The Lancet; “How dependent is the alcohol industry on heavy drinking in England?” by A. Bhattacharya et al., Addiction; Centre for Responsive Politics; NHS |
True, firms engage in public messaging to the contrary. But it appears public health officials question their commitment. The article points out that the National Institutes of Health recently stopped working with the industry as a consequence, as did the World Health Organization. Perhaps sensing the danger, lobbying spending by alcohol firms has been on the rise. It now exceeds that of the tobacco industry by 31%.
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image available at http://tinyurl.com/qh8ww2f |
Yet the industry those rows of vines serve has its problems. To paraphrase Brooks, the highest form of wisdom is balancing the networks that shape our reality by perceiving, evaluating, and acting upon evidence. Doing so means recognizing that the beauty of Napa and Sonoma, as ever, can come with an uncomfortable cost. Per the bard, roses have thorns, and silver fountains, mud, while clouds and eclipses stain both moon and sun. Sobering thoughts indeed.
Sunday, October 6, 2019
@econbartleby and @billswindell at @TheEconomist and @NorthBayNews, respectively.
As I lamented the result from St James' Park this morning, I looked for an insightful article from The Economist. A nice part of focusing on one piece is the chance to learn about the writer. Knowing these journalists grow up and live in a certain context humanizes them. For example, I ran across a piece by Motoko Rich of the New York Times a few years ago, and was surprised to find she grew up in the small town literally next door in Sonoma County.
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Philip Coggan
available at https://shrtm.nu/EYpO
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"We take small pleasures from our pets. The purr of a cat as it is stroked; the excitement of a dog as it chases a ball; the occasional bursts of madness as a cat attacks a piece of string or a dog chases its own tail. They create a rhythm to the day; the morning feed, the afternoon walk, the night-time arrival of cat on bed, eager for shared bodily warmth. And there is satisfaction from a relationship that is so uncomplicated; in return for food and affection, the dog or cat will stay around. There are no arguments; no sudden estrangements. These small joys help us through the long days and nights. My cat will no longer be the first to greet me when I open the front door. How can I not be sad that he’s gone?"
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Julian Richer
available at https://shrtm.nu/o5fQ
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When asked why, Coggan writes that Richer claims inspiration from the nearly 40-year-old book "In Search of Excellence." Richer maintains (and Coggan appears to agree) that the case studies therein illustrate that top performing companies treat both customers and employees well. "Organizations that create a culture based on fairness, honesty, and respect reap the rewards ... [t]hey attract motivated staff who are there for the long haul."
Coggan does not concede that Richer's arguments are ones for general application. He notes that Richer Sounds' turnover is a mere $157 million. That about matches the four supermarkets in the little City of Sonoma. However, he points out that the UK's high street retailers and supermarkets (M&S, Asda) have sought Richer out for his insight, suggesting lessons for the business community as a whole.

Over the past months and years, increasingly, navel-gazing about the raison d'être of companies has been a recurrent theme in the business press. The Economist has been no different. Contemporary capitalism often feels simultaneously disconnected from place while focused on individual cults of personality, provoking something of a crisis. It has not always been thus. When so many large business organizations in the United States came into existence in the Gilded Age, the personalities involved were known to one another, and the ownership thereof was often family-based, if dysfunctional. Discomfort with family-type structures may therefore be present for good reasons -- embarrassing, emotional strife was and is common, messy details are inevitable, and nothing saps a meritocracy like nepotism.
Business is replete with family fortunes won-and-lost, the proverbial "shirtsleeves to shirtsleeves in three generations." It is understandable then, that with family life often resembling nothing so much as a blooper reel, that businesses would have a long-deep discomfort with management principles that may very well be family-derived. What irony there is, then, in the unstated suggestion of Mr. Coggan's piece — that at the core of successful businesses, those impersonal machines of prosperity, is the resiliency, reciprocity, and, yes, care for one another upon which family depends?
Sunday, September 29, 2019
@TheEconomist (Ann Wroe?) on Dr. Robert McClelland and #JFK.
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Wikipedia, "John F. Kennedy"
image available at https://shrtm.nu/8I21
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This week it was the obituary, and I suspect it was written by Ann Wroe (The Economist eschews bylines). She took a first in History and a doctorate in medieval history (Oxford, 1975), then worked for the BBC before joining The Economist in 1976 to cover American politics. She eventually became the Books and Arts editor (1988-1992) and US editor (1992-2000). She has edited the Obituaries page, usually writing the obituaries herself, since October 2003. I personally started reading the Economist in 1991 or 1992, so I've been reading her work for nearly 30 years, although usually unaware of the fact when I'm doing so.
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Ann Wroe
Obituaries Editor
The Economist
available at https://shrtm.nu/k5r8
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The maelstrom of theories regarding the Kennedy assassination has never held my interest, despite the fact that the man has always been a hero for me. That he died for his country, rather than how, has always loomed far larger in my psyche. As Mark Shields, the longtime PBS Newshour commentator notes, Americans form individual relationships with the presidents. Kennedy has always been the figure that comes to mind for me when I consider the office; as a near-mythical figure, and as the only Irish-Catholic (like me) to occupy the Oval Office, that is perhaps natural.
"To save a life" "Robert McClelland died on September 10th, 2019" The Economist available at https://shrtm.nu/QNHI |
The tone and tenor of the obituary treats Dr. McClelland as a faithful and reliable witness. My sense is that the author thought Dr. McClelland's theory was right. If indeed Wroe is the author, she is unquestionably an individual with a great degree of reporting skill. She has borne witness to the reality of American presidential politics at the highest level for nearly fifty years. What other discussions Ms. Wroe has had over the decades that informed her opinion, I and perhaps no one else can say.
But that she chose to draw attention to this careful, methodical, dedicated surgeon was no accident. Both she and he fully appreciated the importance of what happened on November 22, 1963. Dr. McClelland preserved the blood stained shirt in which he operated that day for the rest of his life. He had fought that afternoon to save the life of a 46-year-old father of two, who happened to also be the leader of the free world. He would fight every bit as hard two days later to save the life of the accused assassin. There are fewer higher tributes to the medical profession than the sense of duty that compelled this surgeon to render aid under both circumstances. For that, the McClelland family has much to be proud.
Thursday, June 7, 2018
@TheEconomist on #Homelessness in @SFGov.
It's disturbing reading. The author (The Economist eschews bylines) confronts the lived reality in terms that the reader can almost smell. But the striking sentence to me was "[t]o voters, though, the problem seems to be getting worse ... '[but t]here’s not more homelessness than before. It’s just a lot more visible,” says [Jeff] Kositsky [San Francisco's Director of Homelessness Services]."
We all struggle in the San Francisco Bay Area to understand how wealth disparities in the nine county area can rival those on display in what the article characterizes as "poor-world entrepôts." But that the situation has become clear to so many is not in dispute, and perhaps that is the silver lining -- for we must have awareness before we can take action together.
Tuesday, May 15, 2018
The Return of #Cash.
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Image available at http://tinyurl.com/yaxw3y5g |
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courtesy the Board of Governors of the Federal
Reserve System (US), retrieved from the Federal
Reserve Bank of St. Louis [FRED] May 15. 2018.
S&P 500 dividend yield courtesy mutlpl.com,
May 15, 2018. Excel data and graph available here.
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What does it mean? Stanford economist Bob Hall (who continues as chairman of the academic panel that dates American business cycles) notes that, economic syncopation being what it is, “[t]he next recession will come out of the blue ... just like all of its predecessors.” However, the Economist has pointed out previously that this economic cycle is already running exceptionally long at ~105 months, and it is now more than a year past the average of the last three (the longest ever, March of 91-March 01, was 120 months). Meanwhile, valuations continue to be particularly rich (the Shiller PE is at 32.33, in excess of the '29 crash and only matched by the dot-com bubble). My sense is that the financial columnists pointing to this data are wondering how "out of the blue" a contraction could be at this point. Which is an interesting point to consider, when one reflects on the power of narratives in financial markets.
Wednesday, October 22, 2014
Trust Levels of News Sources.

One irony of the survey is that the sources that Americans trust the most are the Economist (a British newspaper masquerading as a magazine) and the BBC (the British Broadcasting Corporation). The most trusted American sources are NPR and PBS, followed by the Wall Street Journal (which happens to be the only publication more trusted than not across the spectrum).
One interesting feature is the "hard shift" in this table, where the spectrum doesn't gradually adjust from one side to the other through the "equally trusted and distrusted" data point, and instead goes right to "distrusted" -- and where the "mixed" group also distrusts the source. There are only three -- The Daily Show, Sean Hannity, and Glenn Beck.
I also note (without comment) that even those who identify as "mostly conservative" express skepticism towards Rush Limbaugh, who is the least trusted generally known figure in the table ...