What’s up with the bartender?

He comes into the game with a dazed look, as if he’s been imbibing in the bullpen. Despite his considerable natural ability, he gives the impression that his mind is elsewhere.

Last night, in a rare save opportunity for the Mariners, closer Tom Wilhelmsen strode to the mound in San Diego, his team given the lead via a Jason Bay home run in the top of the ninth. The bartender, as he’s called (he used to be one), promptly walked the lead off man, putting the tying run on base. He then farted around, lobbing slow curve balls toward the middle of the plate that were promptly pelted by Padre batters. He finished the inning, with the score now tied. He blew the save.

I couldn’t bring myself to watch the next inning. The Mariners lost, with Medina surrendering three hits and the winning run in the bottom of the 10th.

Give the bartender a jolt of caffeine, or something stimulative. Let us know that the lights are on upstairs. No more zombie-like appearances. Please.

Pay attention

My long-departed sister often warned me to pay attention to the other side, in our case, the right wing. She was prescient, as I didn’t see the whacko revolution coming.

Now, this was thirty or more years ago, before she passed away at a much too-young age, so the Republicans had not yet become the bastion of bat-shit crazy loonies, as they are today, with even Bob Dole admitting that Ronald Reagan, once the standard bearer for all things conservative, would be unceremoniously ousted by the modern GOP. But I confess. I never could stomach the party of Ronnie and Tricky Dick and especially G.W. Bush and Dick Cheney. My tolerance has only subsided since the advent of Michelle Bachman and Sarah Palin.

It appears that I’m missing something, though—as in entertainment. Ginandtacos tells me why:

Fox News has gone from something that I couldn’t bear to watch to a craving that I develop if I miss it for more than a few days. It’s hard to put into words the number of levels on which I enjoy this horseshit. They’re not even trying to act like a real news network, and yet the majority of their viewers think they are one.

The great innovator

Does America’s “cutthroat capitalism” foster innovation? Would adopting a more “cuddly capitalism” remove the incentives presumed necessary to innovate? These and other questions form Thomas Edsall’s column in today’s New York Times.

He cites initially the collaborative work of three academics. They conclude that if the U.S. were to become more Nordic, with a generous welfare state, we would dampen the entrepreneurial spirit, which the authors believe derives from a winner-take-all system. Moreover, if America were to adopt the social democratic policies of Sweden et al., the rest of the world would suffer, since, the authors contend, U.S. innovation delivers global benefits, much like the U.S. military provides for the security of other nations along with its own—or so the argument goes.

Edsall corresponds with one of the authors, MIT economist Daron Acemoglu, trying to tease out the bases for his conclusions. Not content to let matters lie, Edsall also engages other economists who disagree with the conclusions of Acemoglu. He quotes Harvard economist Dani Rodrik at length:

This is an interesting thought exercise, but I would guess that even the authors themselves would caution against taking the ideas in it too far. Surely, global interdependence plays somehow into different nations’ choices of institutional arrangements. But I find it implausible that Scandinavians stick with their “cuddly” form of capitalism because they have the luxury of free riding on America’s technological leadership. For one thing, Scandinavians and others with extensive welfare states have in fact been moving in the American direction as globalization has advanced; global interdependence has had the effect of undermining cuddly forms of capitalism instead of reinforcing them. Second, the Scandinavian and other models of capitalism have deep roots in the historical evolution of their societies that predate the contemporary era of globalization. Finally, the idea that Scandinavian societies are somehow less innovative than the U.S. one is itself contentious.

Acemoglu and his colleagues suggest that gross inequality, the mark of U.S. society, is a necessary condition for innovation. It’s all about proper incentives. If my innovation is successful, I reap the rewards. In a more cuddly environment, those rewards would be distributed to others, thus reducing my incentive.

I think this is a stretch. The argument requires several assumptions:

  • we are Pavlovian, externally motivated creatures
  • we are selfish; we don’t like sharing
  • without the “proper incentives” we’d sit on our butts wasting talents and skills
  • we are an incurious lot, we Americans, and would therefore not think to explore or experiment or create without the proverbial pot of gold at the end of our innovative quest

I could posit an alternative set of conditions, one that could also spur innovation:

  • a single-payer universal health care system, so no need to worry about getting treatment for sickness and disease
  • a more collegial environment that emphasizes cooperation over competition
  • a societal commitment to education and research (I have in mind Finland)

Edsall links to a blog by Lane Kenworthy, a professor at the University of Arizona. He takes on Acemoglu, asking the obvious question: If income inequality is necessary for innovation, why don’t other countries with high inequality innovate on a par with the U.S.? As it happens, there is no correlation between inequality and innovation. Kenworthy includes two graphs:

Screen Shot 2013-05-30 at 9.01.31 AM

Nuff said.

Getting a job [u]

If you search economics journals you will eventually cross paths with those who assert that all unemployment is voluntary. That you may out of a job is simply a matter of excessive wage demands. The obvious corollary: be willing to work for peanuts at anything.

Or, and you can find plenty of people making this point, you lack the skills employers need. Acquire those skills and, voilà, you’re employed. Thus spake Thomas Friedman is his column today. He writes:

Underneath the huge drop in demand that drove unemployment up to 9 percent during the recession, there’s been an important shift in the education-to-work model in America. Anyone who’s been looking for a job knows what I mean. It is best summed up by the mantra from the Harvard education expert Tony Wagner that the world doesn’t care anymore what you know; all it cares “is what you can do with what you know.” And since jobs are evolving so quickly, with so many new tools, a bachelor’s degree is no longer considered an adequate proxy by employers for your ability to do a particular job — and, therefore, be hired. So, more employers are designing their own tests to measure applicants’ skills. And they increasingly don’t care how those skills were acquired: home schooling, an online university, a massive open online course, or Yale. They just want to know one thing: Can you add value?

Friedman is being Friedman here. Fashioning a few anecdotes into a grand theory, this time on the pressing topic for millions of unemployed, “How to get a job,” which is the title of his essay.

But I have an alternative scenario, one that doesn’t involve education-based skillsets, regardless of how you develop them. If the economy ever recovers to pre-recession norms there will be plenty of new jobs, and most of those jobs will not require a college degree.

As I’ve posted before, I believe that a good case can be made that such a recovery will be led by a resumption of home-buying and construction. In turn, a healthier housing industry will beget a host of other jobs, including retail, entertainment, home-improvement, and the like. Again, none of these will require college.

UPDATE (May 30, 2013):

The Bureau of Labor Statistics published a report on the nation’s fastest growing jobs. Most do not require a college degree. As you’ll note, there’s an increasing demand for health-care workers. They will be necessary to care for old farts like me.

Accountability

We like to hold people “accountable” for their performance. Do well, or else. This attitude runs to teachers, society’s favorite whipping boys and girls, and, one would think, CEOs, though running a company typically rewards without a nod to merit. Here, I am back to discussing the fate of the Mariners, a never-ending saga, steeped in mediocrity and false promises.

So, the team’s powers that be moved in the fences, raised ticket prices, signed Kendrys Morales and two former Mariners, and extended Felix Hernandez’s contract. But the core of ineptitude remained, with the exception of Seager at third and the surprisingly good performance of Iwakuma at number two in the rotation. Wilhelmson knows few equals at closer, but the guy never gets a chance with this bunch.

The years of disappointment wear. Managers come and go, as do coaches, often to much better futures (e.g., Bob Melvin and Bryan Price). The one constant, aside from dismal ownership, is the general manager. Here’s Larry Stone, writing for the Seattle Times:

Meanwhile, this was not a good week for Jack Zduriencik and the Mariners’ blueprint for success — certainly not for the perception that the Mariners are headed toward their ultimate goal any time soon.  It’s almost painful to think how much farther along this ponderous rebuild would be if the Mariners had hit on the three huge pieces obtained along the way by Zduriencik – Dustin Ackley with the second overall pick in the 2009 draft, Justin Smoak as the centerpiece of the trade for the coveted Cliff Lee in July of 2010, and Jesus Montero as the primary return for All-Star pitcher Michael Pineda in January of 2012, back when he was a healthy fireballer who would have been desired by every team in baseball.

I’ll go out on a very short limb: Jack Zduriencik sucks.

If only…

Walk or run? I used to do the former but am now confined to the latter.

As it happens, my prior running days may have had much to do with a thinner self, as this article suggests. Now—with the advance of age, arthritis, and bad knees—I walk, though getting up and down stairs offers pain and suffering. An interesting takeaway from the article:

After both sessions, the volunteers were set free in a room with a laden buffet and told to eat at will.

The walkers turned out to be hungry, consuming about 50 calories more than they had burned during their hourlong treadmill stroll.

The runners, on the other hand, picked at their food, taking in almost 200 calories less than they had burned while running.

I can relate.

Models [u]

Paul Krugman devotes multiple columns and blog entries to economists who got, and continue to get, things wrong. Those who preached austerity (“fiscal consolidation”), for example, predicted the return of “investor confidence” (on the assumption that capitalists can be voluntarily separated from their money if governments spend no more than they take in) and even economic expansion, on the supposition that the dollars governments lack are available to the private sector, which, as a matter of dogma rather than evidence, knows best. Other economists warned that monetary expansion would send prices soaring. Yet, even after the Federal Reserve has effectively tripled the money supply, inflation remains quite low.

To the legion of incorrect economists Krugman asks, if not demands, that they first admit that they were wrong and then revisit their models, which must surely be wrong. He, himself, confesses to a mistake, believing in the immediate post-recession months that deflation was a strong possibility. While prices dipped for a brief period, relatively modest inflation has been the new normal.

cpi annual change

Krugman suggests that it’s his IS/LM model that allows him to make more accurate predictions than non-Keynesian economists, who rely on, say, dynamic stochastic general equilibrium models, with the underlying belief that macroeconomics is merely microeconomics writ large. Krugman questions whatever models or theories the non-Keynesians use to develop their predictions, since they’re obviously not working. (Milton Friedman opined that the strength of any model or theory was its ability to accurately predict future events.)

Yet, what about Professor Krugman? He predicted deflation. It didn’t happen. If he relied on one or more Keynesian-based models, should he not also question that foundation? He writes:

Notice how Keynesians responded to the partial failure of a prediction: by asking what they got wrong, and how their model of the world needed to be adjusted. This, of course, shows what fools we are: everyone on the other side of these debates knows that you respond to mistakes by never acknowledging them, and doubling down on whatever you originally claimed.

Let me pose a slightly different question: Is the failure to predict deflation cause to jettison the entire Keynesian edifice? Also, does this slip undermine everything else Krugman says or writes?

While reasonable minds may disagree, few of us would denounce Einstein’s relativity theories because he never got around to developing a grand unification model, something he suspected was implied by his other postulates. Nor should we condemn Newton’s laws of motion for their failure to anticipate a space-time continuum or relative frames of reference. Better that we say Sir Isaac was “incomplete.”

So, too, is Krugman “incomplete.” He got most of the big stuff right. The admitted error seems insufficient to warrant wholesale dismissal of his popular writings. Given recent evidence, especially the economic downturns of those nations practicing austerity, the onus would appear to be on those who asserted the world would be grossly different, including Fed-caused conditions of hyper-inflation or austerity-driven economic expansion.

That said, a good modeler constantly tweaks. Here’s to the tweakers.

UPDATE (May 29, 2013):

Noah Smith, a real economist, discusses the uses of models, in particular those of the DSGE variety. While he seems to dismiss their forecasting powers in his initial post, he then suggests that a variation of one does a pretty good job of predicting the Great Recession—after the fact. One has to add in “financial frictions” to get the desired result, an element missing from previous versions.