Ken Rogoff and Ed Phelps both commenting on the need to think about future growth prospects and "structual" supply-side problems.
I think they both are getting at something important, but we probably need more research (and commentary) in this area to pin things down. What are the real structural problems here? What policies would target them specifically? While Phelps suggests a few idea, it's an op-ed so they lack specifics. Even in sound-bite form, though, they don't sound like the answer to me, save the tax-credit for low-wage workers which is worth looking into.
Showing posts with label growth theory. Show all posts
Showing posts with label growth theory. Show all posts
Wednesday, August 18, 2010
Friday, August 6, 2010
Diversity inspires Creativity?
Today I'm going to combine commentary on two very, very bad op-eds that espouse conventional wisdom.
A few days ago Thomas Friedman explained why he "do[esn't] object to a mosque being built near the World Trade Center site." In short, he claims that Americans' "competitive advantage" is a product of the "creative energy that comes when you mix all our diverse people and cultures together." First, the phrase "competitive advantage" draws him perilously close to an old-age trade myth that economic growth is a zero-sum game: if China produces all the toys and Japan makes all the cars, Americans will have nothing to do. They wouldn't, except for the fact that people are thinking up new things to produce all the time--computers, football games, and convoluted gambling schemes.
So assume Friedman is just talking about growth. His claims are (1) growth is a product of creativity and (2) that creativity is (in-part) a product of cultural and ethnic diversity. (1) is conventional wisdom in economics. Technological progress, captured by the Solow residual, accounts for the vast majority of growth, esp. in developed countries.
(2) is also conventional wisdom, but not among economists. I think it makes no sense. Here's why: Friedman notes, correctly I think, that creativity comes from first thinking divergently and then thinking convergently. You generate a lot of news ideas, usually by making analogies with concepts in different fields, and then refine the best of those ideas into something workable. (Newsweek had a great story on this.)
Then he implies that "great books, iPads [and] new cancer drugs" are borne from mixing cultures since mixing cultures helps think divergently. I don't buy it. All the revolutions in the iPad had nothing to do with culture. Multi-touch is the best implementation of technology that has been in the works for a while. Everything that led to it had to do with computer science and learning engineering concepts. iOS is the first mass-market implementation of a ZUI or Zooming User Inference, a concept Jeff Raskin thought up and popularized before he died. I'm sure the creativity energy at Apple (his employer) in the 80s sparked some of those ideas, but the creative energy at Apple back then surely wasn't a product of ethnic diversity (nearly everyone was white and male). New cancer drugs are, likewise, products of careful research in chemistry and biology, and no one in those fields thinks that familiarity with African music is going to give you much of a leg up in understanding pathways and designing experiments.
I just wish someone would produce a little empirical evidence for the ethnical diversity = technological progress thesis. Is there cross-sectional evidence that the most diverse countries are the richest? Is there cross-sectional evidence that the most innovative companies have the most diverse workforces? I don't think either would be compelling--that innovative companies have diverse workforces is just a by-product of needing to tap all sources of talent to recruit the best of the best and rich nations become rich then draw immigrants from around the world: diversity is a product of wealth.* But at least it'd be a start in thinking scientifically about a suspect claim.
In an old, related op-ed, Jay Mathews, an excellent education writer, writes about the importance and difficulty of learning Chinese. He says seems obvious that more Americans should be studying Chinese:
He goes on to note that "Chinese culture -- its philosophy, its art, its code of conduct, its food, its literature -- is one of the wonders of human civilization." I'm not sure if he means that as a fact or his opinion. If the former, he needs to open his eyes to the diversity of tastes in art and food. If the later, why (to be blunt) does he think anyone cares? One piece of evidence he fails to cite is that, if surveys can be trusted, Asian people are surprisingly miserable given their wealth. Hong Kong is, by eyeballing, the largest negative outlier and China, South Korea, and Japan all have negative residuals. That makes me hesitantly question how wonderful Chinese culture is.
He does note a different drawbacks of the Chinese language: "it is also true that having to learn thousands of ideographic characters . . . has forced Chinese education into a deep, narrow groove . . . relying on memorization. . . . There is less creative thinking in the schools as a result . . ." (Note the irony there vis a vis Friedman.) I'm a little skeptical of that claim given what I know (very little) of the linguistics literature on the subject. They also say Chinese people have a hard time thinking of counterfactuals because of the structure of the language, but given the importance of thinking up counterfactuals to science and the plethora of good Chinese scientists, I'm skeptical.
Mathews gets to the crux of the issue later in his essay, though he never asks the key question. He cites a source that says learning Chinese fluently takes 1,300 hours but notes that a more realistic estimate is probably 2,200 hours. That is a massive investment of time: the average top-tier (UC, Duke) college student spends about 2,250 hours to earn their degree, and at MIT students at expected to spend about 12 hours per class a week (on average they spend about 9) and it takes about 14 classes in computer science to get a B.S. from MIT. In other words, if you spend 2,352 hours studying computers you've probably learned about as much as an MIT grad (well, not quite since MIT-people learn fast).
So here is the trade-off for policy-makers and students: what is a better use of time, learning Chinese or leaning computer science. Friedman think the next iPad will come from throwing different colored people in a room and practicing vodoo engineering. I think it will come from teams of techno-wizards hammering out code and designing circuits. You decide which path is better for our growth prospects.
* - This is my guess for the source of the confusion. Being open to immigrants and tolerant of different religions is probably correlated with institutions that promote new ideas in art (e.g. movies) and technology (e.g. computers).
A few days ago Thomas Friedman explained why he "do[esn't] object to a mosque being built near the World Trade Center site." In short, he claims that Americans' "competitive advantage" is a product of the "creative energy that comes when you mix all our diverse people and cultures together." First, the phrase "competitive advantage" draws him perilously close to an old-age trade myth that economic growth is a zero-sum game: if China produces all the toys and Japan makes all the cars, Americans will have nothing to do. They wouldn't, except for the fact that people are thinking up new things to produce all the time--computers, football games, and convoluted gambling schemes.
So assume Friedman is just talking about growth. His claims are (1) growth is a product of creativity and (2) that creativity is (in-part) a product of cultural and ethnic diversity. (1) is conventional wisdom in economics. Technological progress, captured by the Solow residual, accounts for the vast majority of growth, esp. in developed countries.
(2) is also conventional wisdom, but not among economists. I think it makes no sense. Here's why: Friedman notes, correctly I think, that creativity comes from first thinking divergently and then thinking convergently. You generate a lot of news ideas, usually by making analogies with concepts in different fields, and then refine the best of those ideas into something workable. (Newsweek had a great story on this.)
Then he implies that "great books, iPads [and] new cancer drugs" are borne from mixing cultures since mixing cultures helps think divergently. I don't buy it. All the revolutions in the iPad had nothing to do with culture. Multi-touch is the best implementation of technology that has been in the works for a while. Everything that led to it had to do with computer science and learning engineering concepts. iOS is the first mass-market implementation of a ZUI or Zooming User Inference, a concept Jeff Raskin thought up and popularized before he died. I'm sure the creativity energy at Apple (his employer) in the 80s sparked some of those ideas, but the creative energy at Apple back then surely wasn't a product of ethnic diversity (nearly everyone was white and male). New cancer drugs are, likewise, products of careful research in chemistry and biology, and no one in those fields thinks that familiarity with African music is going to give you much of a leg up in understanding pathways and designing experiments.
I just wish someone would produce a little empirical evidence for the ethnical diversity = technological progress thesis. Is there cross-sectional evidence that the most diverse countries are the richest? Is there cross-sectional evidence that the most innovative companies have the most diverse workforces? I don't think either would be compelling--that innovative companies have diverse workforces is just a by-product of needing to tap all sources of talent to recruit the best of the best and rich nations become rich then draw immigrants from around the world: diversity is a product of wealth.* But at least it'd be a start in thinking scientifically about a suspect claim.
In an old, related op-ed, Jay Mathews, an excellent education writer, writes about the importance and difficulty of learning Chinese. He says seems obvious that more Americans should be studying Chinese:
China is our biggest trading partner, after Canada and Mexico. The country reminds me in some ways of America in the 1870s. It is recovering from horrid domestic events, getting stronger, with the potential to be the most important nation in the world.
He goes on to note that "Chinese culture -- its philosophy, its art, its code of conduct, its food, its literature -- is one of the wonders of human civilization." I'm not sure if he means that as a fact or his opinion. If the former, he needs to open his eyes to the diversity of tastes in art and food. If the later, why (to be blunt) does he think anyone cares? One piece of evidence he fails to cite is that, if surveys can be trusted, Asian people are surprisingly miserable given their wealth. Hong Kong is, by eyeballing, the largest negative outlier and China, South Korea, and Japan all have negative residuals. That makes me hesitantly question how wonderful Chinese culture is.
He does note a different drawbacks of the Chinese language: "it is also true that having to learn thousands of ideographic characters . . . has forced Chinese education into a deep, narrow groove . . . relying on memorization. . . . There is less creative thinking in the schools as a result . . ." (Note the irony there vis a vis Friedman.) I'm a little skeptical of that claim given what I know (very little) of the linguistics literature on the subject. They also say Chinese people have a hard time thinking of counterfactuals because of the structure of the language, but given the importance of thinking up counterfactuals to science and the plethora of good Chinese scientists, I'm skeptical.
Mathews gets to the crux of the issue later in his essay, though he never asks the key question. He cites a source that says learning Chinese fluently takes 1,300 hours but notes that a more realistic estimate is probably 2,200 hours. That is a massive investment of time: the average top-tier (UC, Duke) college student spends about 2,250 hours to earn their degree, and at MIT students at expected to spend about 12 hours per class a week (on average they spend about 9) and it takes about 14 classes in computer science to get a B.S. from MIT. In other words, if you spend 2,352 hours studying computers you've probably learned about as much as an MIT grad (well, not quite since MIT-people learn fast).
So here is the trade-off for policy-makers and students: what is a better use of time, learning Chinese or leaning computer science. Friedman think the next iPad will come from throwing different colored people in a room and practicing vodoo engineering. I think it will come from teams of techno-wizards hammering out code and designing circuits. You decide which path is better for our growth prospects.
* - This is my guess for the source of the confusion. Being open to immigrants and tolerant of different religions is probably correlated with institutions that promote new ideas in art (e.g. movies) and technology (e.g. computers).
Wednesday, June 9, 2010
Prison Population vs. Economic Freedom
If we graphed the percentage of the population in prison against the amount of economic freedom in a country, what relation would we expect?
My guess is a weakly positive correlation. Income inequality, which capitalism generates, gives people an incentive to steal. That would create a positive correlation between crime and economic freedom. More importantly, the institutions that make an economy free for business (enforcing contracts, functioning justice system, private property) are related to the institutions that lead to arrests (functioning justice system, capable police force).
Mike Konczal, blogging for Ezra Klein, finds the expected positive correlation. (Then says it's counter-intuitive and provides a number of bizarre explanations. File under "???" or "Liberals who hate the Cato Institute?")
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