A Large Writing Project for This Year. Detroit, Fallen Cities and the US Macro Economy.

I have finally begin to "ink" some ideas that I have for a large writing project this summer.
These preliminary ideas have a long way to go and I would happily receive comments thoughts from my readers.

My work will be threefold.

1. I will need to write a summary of the coinciding economic histories of the city of Detroit (housing patterns, taxes, etc.) and the corporations that dominate the auto industry (mostly GM, but also Ford and Chrysler) as they relate to Wayne county Michigan.  Numbers such as populations, employment numbers, etc. This is essentially to establish statistical correlation between these corporations and the county that houses them.  This will be an important aspect as it will (hopefully) numerically demonstrate how the people involved and the enterprises symbiotically both built and destroyed a major urban area.  Included will be analysis of both the corporations, but also public services etc. offered by local governments to their employees. 

2. I plan to update the Marxian conception of the corporation.  The generation of surplus labor takes place not only within the settings of the corporate environment, but also within a certain geographic area. I hope to contribute to the Marxist corporate literature from this perspective.  Topics such as type of labor available, as well as surplus generating policies of the enterprise need to be updated to discuss the relationship with the communities in which the enterprises are contained.  Surplus is generated by real people and they have to exist within a geographic area, this dynamic is not adequately discussed in Marxian economics or geography.  This section will also include an analysis of labor relations, relative bargaining power of the workers of these companies over time, union actions, etc.  Basically wage/labor relations history stuff, but in the context of these things affecting both the enterprise and the community (something new as far as I know>)

3. Finally, and this is vague still...I want to be able to say something meaningful about municipal policy, certainly as it relates to "fallen" cities like Detroit, Pittsburgh, Holyoke, etc. and how they should attempt to use the resources/factories that they have to stimulate recovery (with or without the gentrification pattern that is being followed in many American cities), but also, the future of other American urban areas that rely upon manufacturing today, as well as possibly some contributions on positives/negatives to the broader idea of the moving away from "real" production into the service sector that the American macro economy as a whole has experienced.

Comments very welcome!

US News and World Report: Ranking of Graduate Programs in Economics. A Thought...

http://grad-schools.usnews.rankingsandreviews.com/best-graduate-schools/top-humanities-schools/economics-rankings

Check the "rankings methodology".
It is essentially the academic equivalent of asking Anheuser Busch / Inbev employees to rank the best breweries.  Hegemony breeds hegemony and bourgeois thinkers love bourgeois thought.   The most remarkable thing here might be that I am even bothering to remark on this.  

Canadians Continue to Complain About "Price Gap"

http://www.theglobeandmail.com/report-on-business/economy/ripped-off-senate-report-urges-action-on-canada-us-price-gap/article8296607/

It is irritating for Canadians no doubt.  The Canadian and American dollars are currently at par, yet every time a resident of Canada goes to make an online purchased they are faced with the fact that the price is lower in the United States.  14% lower according to the article above (based on a Bank of Montreal study of a basket of goods).

I am still baffled as to why the main arguments here seem to be about tariffs and discrimination?  It doesn't take an econometric study to confidently state that distribution costs are much higher for large corporations in Canada. Getting goods to people just costs more! Although much of Canada's population is concentrated in South Western Ontario and on the west Coast of British Columbia it remains the case that Canada is a country of 9,984,670 sq km and only 34,300,083 (July 2012 est.) people.  Compare this to the United States with a population of 313,847,465 (July 2012 est.) inhabiting 9,826,675 sq km (including Alaska) and if anything it is surprising that the price discrepancy isn't larger.  The model of distribution for large online retailers is the same as the (struggling) postal service.  Charge more than shipping cost to people in concentrated population centers to offset the cost of getting goods to people is sparsely populated areas. 

This is a call to my fellow Canadian's.  Every since I can remember being first aware of the existence of the United States as a child, I felt as if all Canadians had a neglected little brother type inferiority complex.  It is time to stop feeling this way, economically and otherwise.  Perhaps prices are 15% higher, but is Canada not at least 15% more wonderful?  Subjectively speaking of course, but life expectancy, literacy rates and self reported happiness have to count for at least as much as prices on Amazon.com? 

Baseball and Economics Cross, Or, Another Thing Wrong With Mainstream Economics

To paraphrase Keith Law of ESPN's 'Baseball Today'

Something that pretty much sums up neoclassical economics in its modern manifestations:

"When stupid people use a meaningless stat it does not give the meaningless stat meaning, it means that stupid people are stupid."

Outstanding....

On Market Freedom

(thanks to my students at John Jay)

A free market is not a market where someone can buy or sell "anything" they want, or where people are free to deal in illegal goods.

The term free market has little to do with the freedom of the individuals participating in market transactions.  

The misconception that market freedom somehow relates to personal freedom is a commonly held min this society, and is dangerous in the sense that it equates a process (market transactions) that should be at best neutral, and is part of capital's power in this country, with a process that many of us deem to be positive (personal freedom).  

A free market is one where the price is free to move and is not constrained by regulations, etc. Nothing more, nothing less. 

    

Don't You Know?

The there is no difference between the two.  Efficient for whom is a nonsensical statement.
From "MR" this morning:

It is the comment that I am commenting on.

Parking spots as price controls

by Tyler Cowen on March 15, 2012 at 5:49 pm in Economics | Permalink

But not everywhere:

San Francisco is trying to shorten the hunt with an ambitious experiment that aims to make sure that there is always at least one empty parking spot available on every block that has meters. The program, which uses new technology and the law of supply and demand, raises the price of parking on the city’s most crowded blocks and lowers it on its emptiest blocks. While the new prices are still being phased in — the most expensive spots have risen to $4.50 an hour, but could reach $6 — preliminary data suggests that the change may be having a positive effect in some areas.

THE COMMENT THAT I LOVE:


 "They won’t stop at socially efficient prices. They’ll stop at revenue-maximizing prices. The latter may be considerably higher. If income inequality is high and there exists a class of super-rich people (e.g. internet entrepreneurs or venture capitalists), the city might discover that it can raise more revenue by charging one rich guy $25 per hour than by charging five middle-income people $4.50 per hour."


Really?
Do you really think that there is anyone with "middle-income" left in the American city.   These people left right after the second great war.  Cities are just the rich, and people who "service" the rich. Starting the day with a nice pun. 

More to Follow....Export lead growth? garbage?

Well no....
But without preempting an upcoming paper...
We are starting to see some evidence that the path to development in Africa is to sell to even less developed countries.  Find your technological comparative advantage and use the proceeds to strengthen said advantage.  I only mention this now to have it on record that in some degree we were here first!  (not in "absolute" terms of course but....still there is something there.
Go regression analysis!
Earth shattering policy implications to follow in future weeks....
Really I am just curious what you all, my loyal readers think of the theories of skipping steps on the development ladder by selling to "more developed" countries.  It makes sense right? 
Sense and economics of course very rarely have anything to do with each other.

A Brief Call for Change in The Economics Profession

As the stock market continues to boom, driven by strong macro economic indicators of the possible end of the Great Recession, it is only a matter of time before the policies of my neoclassical colleagues result in another downturn in the business cycle.  If the Debt situation in the EU doesn't cause the collapse fist of course.  I would love if my profession would accept even these small changes:

 The global economic systems needs new economic thinking because of unnecessary slowing of technological growth during recessions, and the social harm suffered when recession occurs.
  My decision to study economics is from a personal (technological) humanism.  The ability of people to develop their material lives has brought vast changes in living standards and productivity in my life time.  The greatest constraint on advancement is slowing of economies by market failures and productivity losses periodically experienced.

The processes that limit human advancement also can cause unnecessary suffering.  There is strong correlation between unemployment levels and health outcomes, family stability, and substance abuse.  New economic thinking could lead to much less suffering in the developed, and developing world.

The new economic thinking necessary needs to come in two forms:  Movement away from the neoclassical model of the individual (and firm).  Largely because a less ahistorical approach to the economy could lead to a much broader policy implication space.  Secondly, an increase in pluralism of methodology to open up economic outcomes beyond the limits of statistical analysis.  An expansion of accepted method could result in an expansion of solutions to some of the cyclical problems economies currently face.

I am not usually a champion of reform over revolution, but even small steps are better than none.

Crossing Boundaries of Economic Commentary

Albeit for very different reasons:
Respected colleague, David Ruccio, and Harvard's answer to Hitler, Greg Mankiw have the exact same quote on their respective blogs this morning. 
View Ruccio's here
View Mankiw's here
What is this world coming to?


PS, I am not claiming that N. Gregory Mankiw is anti-Semitic.  The reference to Hitler is as one who knowingly indoctrinates his followers with false and dangerous information to serve his own purposes. 

Engaging Conservative Economics

The inspiration for this post came from a recent exchange on the list serve of graduate students in the economics department at the University of Massachusetts Amherst (many of whom also blog, a list of these blogs can be found HERE).

I will not summarize the email thread for reasons that should become clear in the following post.

I feel that far to much effort on the part of so called "heterodox economists" is spent criticizing what is often referred to as "mainstream" or "neoclassical" economics.

I do not dispute that critical analysis of the mainstream is an important part of our task as radical economists. The very nature of the terms mainstream and radical (or heterodox) imply that their theories are more commonly accepted than ours, and thus are more widely taught, and unfortunately accepted.

The flip side of this which is commonly ignored by many of my colleagues is that the very process of criticism legitimizes neoclassical economic theories as being worth our time. The process of criticism relies on the implicit assumption that these theories are worth the time to think about.

A person presenting a theory that human civilization started on jupiter and migrated to earth when jupiter was full would find their basic intelligence criticized, not aspects within the theory that they are presenting (such as how people traveled through the solar system). This big picture approach needs to find a larger role withing radical economics. By accepting assumptions of the mainstream economic theories we are wasting valuable resources (time) that could (and I argue should) be spent further developing weak points in our own theories of the workings of the economy instead of implicitly validating equilibrium based nonsense.

Why Be an Economist?

Subtitle:
A Profound Question

or more realistically

A self absorbed journey through some linguistic constructs in an attempt to justify my existence, and silence the proverbial Jewish mother in my brain that is telling me "it is not to late to go to medical school."

Waking up today and finding myself in my 4th year of a PhD program in economics has lead me to question what is this profession that I am spending so long to become a part of? Many days I find myself hating "economists" and thinking "I am nothing like these people", other days I consider myself lucky to be surrounded by such interesting and thought provoking individuals, who are also good, and caring human beings (reminder I attend UMass not a "normal econ school").

Regardless of my feelings about those around me I usually don't feel like an economist, I certainly am following a vastly different career path than most economists. I often can't remember what attracted me to the field in the first place. The following writings are an attempt to examine in a broad sense what the role of economics is, and hopefully arrive at an answer as to why I continue to follow this path.

So what is it that an economist does? In the biggest picture sense an economist is a social theorist who chooses economic processes as entry points of their social analysis. Already have arrived at a problem. The traditional (at least within my epistemological training) way of viewing society is as a jumble of political, cultural, economic, and natural processes. These processes overdetermine each other (are each other's causes and effects, and neither cause or effect), however what draws the lines between these processes into distinct linguistic categories? What makes a given process a political process rather than a cultural process? Voting for instance, traditionally defined as a political process, but how do I know this? In the linguistics of the analysis lies the answer (traditionally). These linguistic categories are historically contingent and overdetermined. That is, how we have used words in the past to define processes, and how processes have been analyzed before, as well as many other factors, allows us to use these linguistic categories to compartmentalize processes into political, economic, etc. Relying on this method of distinguishing processes based on linguistic tradition is essential for me, or the world falls out of any recognizable order, and meaningful analysis becomes impossible...Therefore an economist is someone who chooses economic entry points for social analysis.

At some point in my life the economic processes of society seemed to have primacy, or at very least seemed like a logical entry point to achieve my goals. I wanted to be an economist. There was no "ah ha" moment for me in economics, and frankly no specific things stand out in my consciousness that helped to overdetermine the choice to peruse economics. This seems important as it is different from how my mind works in reflection on most other topics, for instance I remember two specific determinants that shaped my decision to propose Catholic marriage to Alison. That being said, logically when I decided to study economics, if political entry points had made more sense to me, or cultural, or natural, I would have made another choice as to my path through the education system. The choice to enter the academic system at all is being intentionally ignored here.

Having reached a point in my life (today) where I more or less accept that economic processes are valid as (over)determinants, but they do not hold any special place in my heart why continue in this field? What good can be done here? It is clear that work along these lines (self analyzing postmodern gibberish) will never be accepted by a discipline that values mathematical proof, however I continue to engage in it. Why do I stay in a field and refuse to work within the commonly accepted boundaries of that field? What is to be gained? I still want to be an economist, but I don't want to do what I perceive most economists as doing. In terms of the big picture however the choice of an economic entry point does not feel wrong, we have been reduced to level of abstract intuition. Returning again, what do economists do that attracts me?

Economists choose an entry point out of the infinity of processes that fit into our linguistic construct of what constitutes economics, and then theorize about it, or in the case of our bastard cousins econometricians, try to empirically show that their selected process holds to some arbitrary standard of truth. It is essential to believe that theorizing about our economic entry points is shaping the world in a positive way to have desire to continue in the profession.

So leaving aside what has determined the choice of entry point to be economic, we move forward into a theory. Our analysis of these theories will change the world, there is no doubt about that. It is impossible not to change the world when we do theory if they are by their natures overdetermined. My teaching, my social interaction, my very life is complexly shaped by my engagement with theories that have economic entry points, as well as those that do not, however I am making a conscious decision to have economic entry points in my own work. But the underlying question remains: Am I changing the world for the better, or just changing the world? (This is not to say that my changes are not insignificant or arbitrary, but my very existence changes the world) I know that my goals in theory are for a better world, but really I cannot by definition begin to understand all of the consequences of my actions.
This is where I am stuck. The big problem.
I know that I want greater world equality, to live under a less exploitative system of production, but more importantly to advance human civilization through science and technology at the fastest rate possible, to know God....while yippee aren't I a fucking wonderful person? But is studying economics the best way to chase my goals? In a broader sense are my goals worth chasing, and where will I obtain an answer to this question?

But the problem remains, if these are my goals, and the consequences of my actions are unknowable, why study economics? Because the consequences of influencing the world in the desired direction with other entry points besides economics are just as unknowable, and I have already invested a lot of time working in economics because of reasons I no longer remember? How very unsatisfactory of a reason. But for me it is part of the Why in the statement "I am an economist"
To return to the title "Why be an Economist?" I don't have a better answer than "It is as good as being a ......fill in the blank", and it is how you do your job matters just as much as what your job is.

That was hopefully the most narcissistic post for the remainder of the year.....I can't help but mix self absorption with self reflection.