Unconventional wisdom on global political economy.
Friday, April 25, 2008
Wednesday, April 23, 2008
Fear and Loathing in Pennsylvania
Well, that solved nothing.
Okay, so Hillary can sling mud for six weeks and win a primary. So what? While neither she nor Barack are likely to secure enough delegates for a clean nomination at the Denver DNC convention, she will continue to trail in delegates, popular vote, or any other measure of voter preference. In other words, Clinton's only potential to secure the nomination can come from sabotaging or usurping the candidate carrying more votes.
Suppose for a moment that Clinton is in fact "more electable" in a general campaign, that she is better equipped to fend off Republican attacks, and that she is a "better leader." Suppose she is able to weasel her way into the nomination. How can such an ill-gotten victory not become a Pyrrhic victory? Will not the perceived illegitimacy of her path to the nomination drive away the party enthusiasts needed to work the general election campaign efforts? Will it not validate right-wing aspersions that paint the Clintons' as duplicitous, driving away middle ground independent voters?
Will she still be so electable? Could she still draw enough votes to win? Will she, after this incredibly expensive game of primary chicken she is forcing, be able to marshal sufficient resources from the other half of the party base--you know, the donors who funded Obama's campaign, the guy who got more primary votes--to mount a successful general election campaign?
If not, then we're fucked. Because she has forced this game of chicken with Barack Obama and now won PA, there is no way for her to back to down while saving face. Either she will get the nomination and lose, or Obama will get the nomination with Clinton inflicting on him death by a thousand cuts and sapping his resources. Meanwhile, McCain--who really is a woefully weak candidate (why else would she risk splintering the party for the chance to contest against him?)--will be allowed to escape unscathed (with Clinton's apparent blessing) and skate right into the Whitehouse come November.
How is this good for the party? How is this good for democracy? For the country?
Wait a minute, I get it! Hillary Clinton really does hate America. It all makes sense now! Why else would she be working so hard to plague us with McCain as the next president?
UPDATE: Talking Points Memo, one of my favorite blogs-cum-investigative journalism sites, debunks the myth that PA shows Clinton is more electable. The key point stressed, that we should all remember, is that the results DO NOT show that Obama can't win white working class votes, only that Clinton attracts them more than Obama. To assess electability, the real question is how each one matches individually against McCain. Here the news is good for Dems, if not better for Obama than Clinton--according to TPM's analysis of recent state polling data. Have a watch:
Tuesday, April 22, 2008
Freakonomics and Statistical Illiteracy
I never actually read Freakonomics, only some of the scathing critiques levied against it (see John DiNardo's extensive review(s) for a lark). Merits of the book aside, like many academicians, I too am insanely jealous that I didn't write a wildly successful best-selling book and get offered a regular column in print and online at the New York Times. So admittedly, valid professional criticisms aside, I was genetically predisposed to not like brand "Freakonomics." But occasionally I click onto the blog to see if there is something interesting going on in the world of pop-economics of which I should be keeping abreast.
So today I clicked on this catchy post headline: "How Valid Are T.V. Weather Forecasts?". In it, the authors relay a loyal Freakonomics blog reader's efforts to evaluate local weather men/women's forecasting abilities. Clearly the reader has a bone to pick with them, but has put together a rather cute and exhaustive study of weather forecasters in his local area of Missouri. The reader is no statistician (unsurprisingly), so it is really not appropriate to criticize his analysis. But I was really taken aback by the blog's promotion of this work as an example of quality arm-chair Freakonomics, given that it was so rife with statistical fallacies. I shot off a quick comment explaining the problems, that were really too egregiously erroneous to let pass without comment. Then I realized the poster was Stephen Dubner--journalist--rather than Steven Levitt--economist. Clearly an economist--even a microeconomist (who in my experience rarely take courses in time series econometrics where forecasting is taught)--should know better. A journalist, though...well...I feel a little regret for saying what I did. But I suppose a journalist posing as an economics expert is sticking his neck out and maybe deserves a smackdown.
Anyhow, my point was that the blog author--in an egregious disservice to his readers and to promoting popular understanding of the world through the economist's lens--perpetuated fundamental misconceptions about the nature of probability and forecasts. Not to mention vilifying television weather forecasters, who are no doubt overpaid for what they do (but, hey, so are tenured economics professors). So if the reader and a pseudo-economics journalist has no clue, I thought it might be worth cluing in my loyal readers in to what's going on so that they can understand these things and not have to lose the same face.
The Freakonomics blog reader basically tracks forecasts made by a group of local weather men/women in his area and compares their forecasts to the actual weather. Again, I am not criticizing him. He actually did exhaustive and careful work documenting these things. Unfortunately though, because of the statistical fallacies, his analysis is meaningless and conclusions and criticisms of television weather people are unfounded. (They may ultimately be true, but the analysis does not provide evidence to support the conclusion).
One observation from his analysis is that weather forecasters make very similar weather predictions. The reader concludes from this that most TV weather forecasters are equally full of shit. I don’t know much about weather forecasting methods, but assume that most are using the same or very similar forecasting models based on the state of available meteorological knowledge. Moreover, most are likely running the same or very similar historical data through said models. Also likely, local weather men/women may be outsourcing to some third party forecaster (e.g. Accuweather). Thus, it should not be very surprising that the forecasting results are clustered as such.
A forecasting model basically works like this: based on what is known now, there is some probability distribution (think Bell Curve) of something happening in the future. The farther in the future one looks, the wider this probability distribution gets and thus the less precise the predictions. I hope it is obvious why this would be the case that it is harder to predict farther in the future.
So, they run their models, which generates some results (for temperature, rain probability, etc.) with some probabilistic RANGE of possible values (in statistical terms, we get a "point estimate" and a "confidence interval"). The reader also conducted a survey of TV weather forecasters, from which we learn that a standard margin of error is +/- 3 degrees. So, if the forecast is for 50 degrees, then they are predicting a 95% chance the temperature will be in the RANGE of 47 to 53 degrees. Furthermore, the model is predicting that only 5% of the time will the temperature be outside of this range.
After generating some forecast of predicted weather, it is then the forecaster’s responsibility to make some subjective decisions about his or her CONFIDENCE in these forecast values. (Just because some number comes out the end of a mathematical equation, doesn't mean I have to believe it is the Truth). Now, if the forecaster is somehow misleading us about his/her confidence in the forecasts, this is indeed a problem. But just saying that the predictions do not fit well with observed outcomes does not mean that these people are bad forecasters (do you think your local weather person is any better/worse than your average Wall Street forecaster?). This is not a valid assessment of forecast quality.
Instead, this forecast must be compared against the performance of another forecast. The simplest forecast (and the one economists usually employ as a benchmark for evaluating more sophisticated forecast methods) is to assume a forecast of “no change” from the last observed real outcome. In other words, if today it was 50 degrees and rainy, the simple forecast for tomorrow is 50 degrees and rainy. Or, if you want to evaluate the longer term forecasts, the the simple forecast for X days ahead would also be 50 degrees and rainy.
Then, we could compare which forecast tracks more closely to the true observed weather, and there are a number of available statistics that can provide a measure of this. Thank you Mr. Theil. If it is the case that the simple method outperforms the sophisticated TV weather forecaster, then, YES, we can all bash the local weatherman/woman. But until then, the rest of us can augment our visceral Freakonomics revulsion with the knowledge that they are promoting statistical illiteracy.
Sunday, April 13, 2008
You don't see this too often
Hyman Minsky: Yes, "it" will happen again
The Financial Times reports that the world's central bankers and global financiers are in open conflict over the course of of appropriate financial regulation in the wake of the latest and greatest world financial crisis.
I'll summarize: at the G7/IMF/World Bank semi-annual meetings over the weekend, the world's private sector bankers told financial officials from the world's top countries, "Yeah we fucked up the financial system pretty fierce. But, seriously, I think we've all learned a big lesson here. We're awful sorry and super triple dog promise it will never happen again. There's no reason why you need to regulate us with this five point, 75 page reform proposal (pdf). We've changed...and by the way, could you spare a few billion?"
Central bankers: "Are you high?"
Says the FT:
And they did not impress one G7 official present, who described their requests as “extraordinary”, making it clear that after the banks had admitted much of the responsibility for the credit crisis, they would have to accept greater oversight and greater constraints on lending in future.
Wednesday, April 09, 2008
Bought a new laptop late last year to replace my (third) HP. The HP was perennially not working due to software and hardware issues. Never again will I buy one of those. This time, I bought a Lenovo--model not available in the US market. It's pretty sweet, sturdy, and with a lot of nice design features. The only problem was that it came with crappy Windows Vista OS.
Ah, Windows Vista. The crashes, the hangs, the slow bloated loads, the everything-has-been-redesigned-so-I-can't-find-anything-I-knew-how-to-do-in-XP design elements. What was not to love?
Not too long after, in mid-March, Microsoft came out with their first "service pack" updates to fix all the things that should have worked in the initial release. So I downloaded it, installed, and went on my merry way. But Vista still crashed, hung, was bloated, and so on. But at least, I thought, it was better than before. Right?
Wrong. So it turns out I took a placebo. I discovered this morning, when I went to install some other software designed for Vista SP1. The new software informed me it could not be installed because I was not running Vista SP1. Huh? How could that be? After all, I manually downloaded and installed the update AND I have Windows configured to automatically download and install all system updates. So even if I somehow goofed (which is entirely possible), Windows should have backed me up and installed SP1 automatically.
Curse you Windows Vista!
I would love to be able to just pitch the whole Microsoft thing entirely, and it is almost--so maddeningly close to--possible to do so for my needs. Unless you've been living under a virtual rock, you've probably heard about this thing called Linux--a free, open-source operating system for which loads of free, open-source software are available. While most people never see Linux, it is actually the backbone of much computing and internet architecture that we know and love. Internet servers, banking and finance, major database systems, many, many, many, many things run on this Linux stuff.
Against all neoclassical economic logic, nerds from around the world collaborate to develop and produce computer software that they give away to the rest of us for free. Despite the apparent public goods/team production problem that should preclude such behavior (or at least result in an inferior good), the model works. And it works a hell of a lot better than Microsoft Windows Vista, for which market forces and the profit incentive are thought to deliver the superior good (upgrades from earlier Windows to Vista start at $100, i.e. you must already have purchased an earlier licensed version of Windows).
If you have been curious, but never tried Linux (or other open-source software), it is a fairly painless and risk-free process. My preferred--and probably the easiest to use--flavor is called Ubuntu. [Note: Like the nerds who argue over whether Battlestar Galactica or Star Trek (and which version of Star Trek, to boot) is better, there are many different varieties of Linux out there. All have the same OS program at their core (I think) but have different user interface shells built around them.]
You can try Ubuntu for free and without changing ANYTHING on your computer by downloading a "Live CD," burning, then restarting your computer with the CD inserted in the CD-ROM drive (this runs a little bit slower, obviously, because the OS is being read off a CD rather than your hard drive). Why not take it for a test drive? Then you have the option of installing or not. You can even set up your computer to dual boot, i.e. run BOTH Windows and Linux (not at the same time, you choose which one at start up) with a few relatively easy to follow steps.
How do these nerds do it? I have no idea. But not only is the product superior, the innovation cycle is much more accelerated than for Microsoft Windows. Example: the last major release of Ubuntu (named Gutsy Gibbon) went public on October 18, 2007. The next major release is due out on April 23, 2008 (called Hardy Heron). That is, it's a whole new thing, like moving from Windows XP to Windows Vista. And in just six months. In between, there is a constant barrage of system updates.
For comparison's sake, Windows Vista was released in January 2007 and did not even get around to fixing its mistakes until more than a year later. Right now Microsoft is planning for its next Windows version to go to market sometime in 2010. This will probably be pushed back, the same way the Vista release was delayed due to technical/design problems. Oh, and because Linux is open source, Microsoft software developers can (and do) easily incorporate Linux innovations into Windows (but obviously not well and fast enough).
And if you have a problem, there is a worldwide network of nerds on the ready to offer solutions in various chat rooms and message boards. Have a problem with Windows? You could try calling Seattle, but...nothing.
I know most people are not ready to go whole hog into Linux (and for many people, it is just not a good fit). But you can still enjoy the benefits of economics-defying open source software. Don't want to shell out $300 for Microsoft Office? Look no further than the Open Office suite of productivity applications. Yes, it is totally free. Yes, it totally replaces Microsoft Office. Yes, it runs on your current Windows set up. And yes, it works pretty much just like MS Office and is totally compatible with it, but also with some other neat features. And did I mention free? Still working with the free version of MS Works that came pre-installed on your machine? Then Open Office is your chance to move up in the world.
Alas, Linux is not the panacea that us Utopians would like it to be. One thing stands between me and whole hog Lin-ization: Skype. Skype is pretty amazing, allowing you to video chat for free over the internet (or call from your computer to real phones for a very low fee). Nothing else available can even rival Skype's technology for the price (almost free). But Skype does not offer a Linux version that supports video chat. WTF? And, living half a world away from my love ones, that video connection is pretty important.
So, for now, I'm still stuck with cursed Windows. And my SP1 update finally finished downloading, so I can end this post.
Monday, April 07, 2008
The few, the proud
...the criminals whom we are providing combat training and arming with assault weapons. USA Today reports that the US Army is increasingly granting "conduct" waivers for people convicted of felonies and misdemeanors in order to meet recruiting goals for warm bodies.
They are also lowering educational standards. In 2001, 91 percent of recruits had finished high school; now only 79 percent have.
But I'm sure these criminal high school drop-outs will have the right stuff to navigate the subtle cultural minefield incumbent to winning Iraqi hearts and minds.
The Future of Economics
Or, what are assistant professors in America's top economics departments doing? Andrew Oswald and Hilda Ralsmark of the University of Warwick comb the CVs of 112 assistant profs for clues about where the discipline is going (pdf):
As part of a larger study of the brain drain among elite scientists, we have been collecting information on young American economists. This has been done by examining, and collating the patterns in, the CVs of all assistant professors at the top-10 departments in the USA... these young men and women arguably provide a glimpse of the future of American economics.
First, we find evidence of a severe brain drain -- what one might call a funnelling of talent into the United States -- at the bachelor-degree level. The typical assistant professor has a BSc from outside the USA and a PhD from inside the USA. Second, contrary to numerous gloomy assessments of the state of academic economics -- including some in the 1991 The Future of Economics centenary issue of the Economic Journal, compiled as a set of essays in Hey (1992)) -- the great majority of these young economists are doing empirical work. Many people who criticise economists as obsessively mathematical have a view of economics that is out-of-date: our data paint a clear and more modern picture.
The future of economics in the elite American universities seems likely to be heavily applied, not abstractly theoretical. Of our 112 researcherrs, few appear to be doing deductive theory for its own sake. Third, we show that the male-to-female ratio among assistant professors is now approximately 3 to 1, and that the most-studied areas of economics are now macroeconomics, econometrics, and labour economics (though these days this encompasses topics only obliquely related to labour markets).
And here's a reminder of where economics has been in the last century.
Labels: economics discipline
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People need to eat; people need to be educated; people need a few minutes down time at work every once in a while. It's win-win-win. As they say in Chicago, "Click early, click often."
Saturday, April 05, 2008
No, it's not President Bush's latest approval rating...it's Friday's Employment Situation Report from the Bureau of Labor Statistics. And with reports like this one, I'm sure glad to have another year and a half of student-dom in my future.
As usual, labor economist extraordinaire Jared Bernstein of the Economic Policy Institute has the lowdown on all the numbers. "How is the employment situation?" you ask...not too good:
The nation's job market appears solidly in recession, as payrolls contracted for the third month in a row...Since employment peaked in December, payrolls have contracted by 232,000. Private sector payrolls were down 98,000 last month and 109,000 in February. Since hiring in the government sector is less susceptible to cyclical swings in the overall economy, private sector job patterns provide a clearer signal of the weakening labor market. Private sector jobs are down 300,000 from their peak in November.
Particularly shocking of the most recent business cycle expansion was the fact that
the employment rate actually fell over this cycle, by 1.6 percentage points (March 2001-December 2007). This is the first cycle on record marked by a decline in the employment rate. It is also a potent indicator of the weakness of labor demand over the cycle, and one reason why workers' bargaining power was never strong enough to create much real wage pressure during this period.
But don't worry. Ben Bernanke, Hank Paulson, and even the President Pro Tem himself have the situation under control. What's that they say about dancing while Rome burns?
Friday, April 04, 2008
I wrote below about Zimbabwe's now week-old presidential and parliamentary election, for which the Zimbabwe Election Commission has yet to release "official" results. Since then, the ZEC has announced that the opposition Movement for Democratic Change (MDC) had won a majority of seats in Parliament, but nothing about the much anticipated presidential plebiscite. Will Robert Mugabe, president since independence, go--or will he desperately try to stay and at what cost to Zimbabwe and its people?
While the world is still waiting to see, the White House has now weighed in. According to spokeswoman Dana Perino, the Bush administration's position is "we are concerned about violence."
Not, "we are concerned about free and fair elections, democratic process, and violence."
No real surprise about the Bushies' priorities here, just the foolishness of this missed PR opportunity. When the world stage pitches you a softball--the chance to juxtapose yourselves against a reviled, corrupt dictator in the throes of stealing another election--you should hit it out of the park: "The United States is concerned about promoting democracy in..."
Perino didn't even swing.