Halfway There

Today, I am officially an MSc in Economics. But, no fanfare, no ceremony, just moving on to finishing my dissertation prospectus so I can defect to Communist Paradise (China) for my field research.



Yesterday I polished off my last required final exam, which was a thorough explication of this dude, Leon Walras (pronounced Valras). Basically he dreamed up the most absurd vision of a sunshine and lolipops economy where everything comes out neat and perfect in the end--so long as pesky, villainous government doesn't get in the way.

Walras was a victim of Physics lust. But unfortunately, for Walras, at the time he had not taken an incredibly boring and useless graduate course in general equilibrium Walrasian microeconomics. So he had yet to figure out the laundry list of technical mathematical proofs that would "validate" his quixotic vision. It took this math nerd,



Kenneth Arrow, to dream up the techincal "proof" of a "competitive equilibrium" where there would be no unemployment, total efficiency, and everyone would get a pony. Of course, Arrow hoped to show the absurd restrictions on the real world that one has to assume/impose in order to achieve the pony-economy result, as such showing how indeed absurd it is to think that free markets on their own could deliver a socially optimal result.

Unfortunately, Economics largely didn't take it that way, but rather embraced the result wholeheartedly as validating their collective normative beliefs about the workings of free markets--a set of beliefs held dear by all economists who read (and misappropriate) but one or two paragraphs out of Adam Smith's unscientific (1776) 1000+ page tome.

When Economists Go Wrong

From the Federal Reserve Bank of SF Working Papers Series on Basic Economic Research at the Federal Reserve Bank of San Francisco

Relative Status and Well-Being: Evidence from U.S. Suicide Deaths (pdf) by Mary C. Daly, Daniel J. Wilson, and Norman J. Johnson. From the abstract:

We model suicide as a choice variable, conditional on exogenous risk factors, reflecting an individual's assessment of current and expected future utility.

Of course. Last time I calculated the present value of my expected future utility, I made a rational choice not to end my life. Thank goodness for neoclassical economics.

More likely is a grad student killing themselves because they are sick of solving the Hamiltonian a person would need to compute in order to decide whether to off one's self or not, according to the rational actor model of Mary Daly, et. al.

How Ironic

The NYT editorial page has finally broken the silence on the FU (Friedman Unit) critique:

What Mr. Maliki needs to do to slow Iraq’s bloodletting is no mystery. Iraq’s security forces must stop siding with the Shiite militias. Iraq’s oil revenue must be apportioned fairly. Anti-Baathist laws now used to deny Sunni Arabs employment and political opportunities must be rewritten to target only those responsible for the crimes of the Saddam Hussein era.

Without these steps, Mr. Maliki and his allies cannot even minimally claim to be a real national government. With them, there is at least a chance that Iraqis can muster the strength to contain the chaos when, as is inevitable, American forces begin to leave. Mr. Bush acknowledges that these benchmarks are important. Yet he refuses to insist, or let Congress insist, that Baghdad achieve them or face real consequences. Each time Baghdad fails a test, Mr. Bush lowers his requirements and postpones his target dates — the kind of destructive denial Mr. Bush called, in another context, the soft bigotry of low expectations.

And yet, they won't fire that douche bag Thomas Friedman.

Odd.