Ask Edgeworth

Dr. Boks and the Rational Toilet

I, Dr. Edgeworth Boks, Professor Emeritus, take this opportunity to respond to P.S.Babcock's previous post about the job market for academic economists. It grieves me that he uses this column to malign the beloved profession. Graduate students! When will they learn?

If you wish to be an academic economist, I advise you thus:

Imagine yourself a plumber. Someone wants you to fix a toilet. If you are a talentless hack, you diagnose the problem accurately. You note that the hook has fallen off the chain, you slip it through, and lo, you have fixed the faulty toilet in under a minute.

If you are an economist, you do not notice that the hook has fallen from the chain. Why not? Because you are an economist! You are far too smart to be wasting your time looking at toilet chains. If toilets were rational, their hooks wouldn't fall from their chains in the first place! Moreover, if you were to fix the toilet by investigating carefully, by thinking clearly about the toilet, by posing the right question (and openly defying the rational toilets hypothesis), then no one would ever know how smart you were. They would see you thread the hook through the chain. Big deal. Any idiot can do that.

No, my dear economist-plumber, what you must do is this: You must take the toilet apart and put it back together again so that water leaks from every joint and crevice and so that nothing works correctly except for a small platinum egg timer you install on the side of the bowl. Then you must call attention to the workmanship and high quality of the egg timer. Every one will marvel at your intelligence. You have added a previously non-existent feature to the standard toilet that has been used by others in the profession: the platinum egg timer. And it was hard. (Which was the whole point).

Better yet, you could install the toilet upside down. It is extremely difficult to install a toilet upside down. Your colleagues will marvel that you have done something hard. You must be sure to tell them how hard it was and explain why it was hard. They will learn 2 things: You are not lazy and you are very close to being clinically insane. Both of these are virtues. The inverted toilet does not actually work, of course, but you need not mention this. What matters is that it was very hard and that you had to be very smart to do it.

Take my advice, young economists, as you embark on this journey through the job market and on to academia:

Dream big. Reach for the stars. And find a toilet to invert.

Best Regards,
Edgie

Mating Season for the Dismal Science

The job market. That's what they call it. The formal process by which emerging economists crawl from the cocoon of graduate school, spread their wings, and flutter forth into the glorious garden of professional life. [A garden, I might add, whose harvest consists of articles in economics journals--fruits and vegetables in the abstract. Policy-makers regularly starve to death trying to extract some nutritive value from them.]

I will be on the job market this year. Should be fun. I might post about this, as time goes by, and then again, I might not. This site is linked to my home page and, well, recruiters could stumble upon the mischievious and somewhat disrespectful scribblings contained herein. Being on the job market is like running for political office. You have to mind your P's ans Q's. Or so I'm told.

This blog, with its disrepectful portrayal of dear Dr. Edgeworth Boks, could be the equivalent of memos about past service in the national guard. (I wonder: Could I insist that the entries were forged? Posted by an evil hacker? Planted by a rival job applicant? I deny any knowledge of this Boks fellow, here and now. I was duped. I was misled. Could I use the CBS "fake but accurate" defense? Could Dr. Boks be described as fake but accurate? )

There are unspoken rules about what to say and what to wear when you're on the job market. Not exactly unspoken. The AEA web site has journal-length articles here on what you're supposed to do. The job market, as far as I can tell, is a mating ritual, the kind you watch on the discovery channel with a mixture of fascination and nausea. Mating Habits of the Australian Sea Slug.

There are rules about how you must dress and what you must say. Good news is that you can use Powerpoint for presentations these days. Or so I'm told. (Several years ago people frowned on Powerpoint slideshows. They signaled that you cared too much about actually communicating, according to Dr. Boks.) Still, if you use Powerpoint, you should stick to a white background. Keep away from appealing colors at all costs. Remember: You must convince the audience that you are an economist, which is to say you think only in black and white.

On a different note: I'm pleased to have dicovered (a little too late) through Chris Silvey's splendid blog (and clearinghouse for econ student blogs), a graduate economics blog by Ngan Dinh at Universty of Chicago. Her posts are imaginative, poetic, mysterious, subtle, and alive. (How, one wonders, could they have come from an economist?) If this is the new wave, it gives me hope for the profession. God bless, Ngan.

P.S.Babcock

Attack of the Economic Girlie Men

Am not a big fan of Arnold Schwartzeneger as an actor. Was slow to warm to his candidacy. But... the best line of this whole political season has to be Schwartzeneger's "Don't be economic girlie men." (The California legislature tried to make a big deal about the inappropriateness and offensiveness of the phrase, proving once again that the guardians of sensitivity have no sense.)

What does it mean to be an economic girlie man? It means you construe mixed economic news as bad news and any bad news as the end of the world.

Free markets would collapse in mass unemployment. High inflation would last forever. Depletion of natural resources would lead to catastrophic declines in the standard of living. The oil embargo would destroy the economy for decades. Budget deficits under Reagan would destroy the economy. Competition with Japan would destroy the economy. Trade deficits would destroy the economy. Tax cuts would destroy the economy. Tax increases would destroy the economy. The stock market crash of Black Monday signified the destruction of the economy. Nafta would lead to a great sucking sound that would destroy the economy. Global competition and outsourcing would destroy the economy.

The economy has been on the road to catastrophe since... forever.

Often the projections of disaster are absurd. Sometimes there is substance to the worries. Almost always the consequences are exagerated. I liked the "girlie man" reference because it's what I want to scream every time I read a NYTimes column on the economy. The writers are wusses. Knee-jerk alarmists who find reasons to worry about everything and never see the upside. It is as though they believe worrying about silly things signals compassion and sophistication, whereas in reality, it is a sign of economic naivete and debilitating wussiness. This would not be so unfortunate were it not for the fact that genuine problems do arise. Things we really should be concerned about.

These get lost in that scratchy white noise that is the wailing of the wusses.

Concerns about fiscal solvency and the retirement of the baby boomers are warranted. But small increases in interest rates, say, should not be a source of worry (contrary to the Times front page). Senior citizen debt should not be particularly disturbing. And income inequality is not a sign of impending disaster, despite this recent (and particularly silly) Bob Herbert column. The column has "economic girlie man" written all over it. Herbert bemoans the rise in income inequality since the 80's. The consensus among economists is that income inequaity resulted largely from skill-biased technological change. Technological change increased the productivity of high-skilled workers more than low-skilled workers. Thus, they benefited disproportionately. What is Herbert's solution? He pines for the good old days of unions, technological stagnation, and low productivity.

This is a solution?

And here we come to the damaging byproduct of economic wussiness: the constant cry for interventions worse than the supposed problems they address.

It has been an uninspiring political season. But at least it has given us one line that should last. I am grateful for small favors.

P.S.Babcock

Of Hitler and Halliburton

The Hitler rule is that the first side to bring up Hitler in a debate automatically loses. Chris Suellentrop, in a desperately shallow column last week, tried to expand the Hitler rule to include all references to WWII. (Some thoughts on that piece of silliness here.) I started thinking about other Hitler rules--well not about Hitler rules, per se, but about political statements and modes of argumentation as signals. Some statements communicate little in the way of direct information but speak volumes about those who make them.

Who buys books like "Stupid White Men" or "Slander: Liberal Lies About the American Right"? There is evidence that consumers do not purchase these books for information. If the buyer's intention were to become better informed, the buyer would read authors from both sides. But no one does. Valdis Krebs has shown that in their Amazon.com purchases, virtually no one buys both a crass right wing bestseller and a crass left wing bestseller.) People buy these books to feel good about what they already believe, not to learn more about other perspectives.

Gary Becker has an entertaining model in which agents acquire knowledge of fine art in order to signal that they are "high status" types. Low types want to appear to be high types but the cost of acquiring artistic knowledge is higher for low types. (If I recall the model accurately, it is costly to acquire knowledge of the arts and low types have lower endowments.) No one really "cares" about art in this model. But in equilibrium, acting as though you care about art signals your high status.

And so it goes.

If an agent considers his or her fanatical political ideology to be an essential component of his or her identity, then it might be important to identify other fanatics and to let others know of his or her own fanaticism. It can take a long time to get to know someone's true political views. Moreover, political preferences are easy to falsify. (Politeness often dictates that we keep these opinions to ourselves.) A good way to communicate one's "type" is to spout some obscure piece of ideology that only true believers would ever think to express. Knowing what Michael Moore has to say, and perhaps repeating it in casual conversation, signals your type at minimum cost. Moreover, no one need fear that you have engaged in preference falsification. The time cost of reading a Michael Moore book--to an evenhanded, truth-seeking person--is prohibitively high: hours wasted on shallow illogical hypocrisies (and quite possibly a few brain cells destroyed). Learning obscure conspiracy theories about Vince Foster's suicide served a similar purpose for right-wing types, a few years back.

As I recall, when the phrase "politically correct" first made the rounds, it was meant as a compliment. "Jack? Oh, yes. He's a good fellow. Dresses well. And politically correct, I might add." It was too difficult and time consuming to describe someone's political views in detail so cultured academic types began saying "politically correct" to convey that someone's views conformed to the unspoken orthodoxy. Only later did it become an insult--the label for brainless, intolerant group-think.

Labels, it seems, can be redefined by one's enemies. Thus, there are better ways to signal one's fanatical loyalty to a party or subgroup. I've mentioned Vince Foster conspiracy theories during the Clinton era. My favorite example from the present era has to do with references to Halliburton. There is much to criticize in the Bush administration, but anyone who mentions Halliburton communicates instantly his or her adherence to a set of entertainingly paranoid fantasies, e.g., oil companies are evil, the invasion of Iraq was about oil and corporate greed and took place because Halliburton wanted some contracts.

Debunking these claims is hardly worth the space, as they are closer to emotions than to assertions of fact. If anything, the Iraqi invasion loomed as bad news for the oil industry as a whole. It meant the end of sanctions and the prospect of price decreases as Iraqi oil came back online. (Prices haven’t fallen, of course. There has been increased demand from China and other developing countries). Heightened anti-American sentiment in Saudi Arabia and elsewhere in the Muslim world makes it harder for oil-related companies to function there. And there’s no evidence that Halliburton has received a disproportionate share of government contracts or that it has made large profits from contracts in Iraq.

For those who haven’t worked in the oil industry, Halliburton is a mysterious company. But for those of us who’ve spent some time in the industry, Halliburton is like J.C. Penney’s. Not flashy. Not glamorous. Blue collar. One of a handful of big companies that provide services for oil wells. Listening to people rave about Haliburton is a bit surreal. It is as though a portion of the country woke up one morning and started insisting that J.C. Penney’s was out to take over the world by selling khaki pants to everyone. I sometimes wonder what people would be saying if Cheney had been C.E.O. of, say, Baskin Robbins. (The U.S. invaded Iraq because Cheney knew it was hot and the troops would want ice cream?)

The mere mention of Halliburton in casual conversation connotes shady Republican machinations. In one of the worst expressions of the “Cheney+Halliburton=Evil” meme, the cover of Paul Krugman’s book (UK edition) portrayed Dick Cheney with a Hitler mustache made of oil. Krugman said he didn’t remember seeing the cover until prepublication copies were sent to reviewers, but this strains credulity (as others have already pointed out.) This is an economist’s mantra. Integrity is a superstition. If it helps me sell more books in the U.K. and people in the U.S. won’t notice it, then keep the cover and who cares what it means!

One shouldn’t complain, though. Halliburton conspiracy theories perform a vital service by saving time for the politically extreme, allowing them to signal their beliefs and screen for the like-minded at minimal cost.

Would that dating services worked as well.

P.S.Babcock

No Thinking Allowed

The Republican National Convention has been entertaining. So too, the commentary. Lots of desperate writers, few of whom have expertise in anything at all, struggling to think of something original to say. MSN Slate's Chris Suellentrop built an entire column on a bad pun. If the pun is bad, the column is worse. But sometimes a column can be so bad, it's inspiring. This one inspired me. It opens innocently enough:

There's an old rule of thumb in high school and college debating: The first side that is forced to bring up Hitler to defend its case automatically loses.

Right. The Hitler rule. Often, though not always, when someone brings up Hitler, it is because the person has run out of arguments and is pushing for an emotional reaction. Similarly, when people call Bush a fascist or Kerry a communist, it is because they cannot communicate an argument with substance. Fair enough. But Sullentrop promptly throws the baby out with the bathwater by saying if you expand "the Hitler rule to include all references to World War II, President Bush would have lost this election on a technicality several years ago."

Such a "rule" would be absurd, of course, but Suellentrop never gives any indication that he realizes that. If we can't make references to instructive events in world history, if we can't use the past to guide us and to give us insights into what might happen in the future, we might as well give up all pretense of being thoughtful and responsible, might as well sit around watching MTV all day. Why stop with WWII? Why not prohibit all references to the fall of the Berlin wall? Tien-a mien square? The first gulf war? Anything historical at all?

Suellentrop doesn't really have an argument, just a glib attitude and a witless pun: (Dubya Dubya II, yuk-yuk-yuk). Giuliani talked about Winston Churchill in his speech. Suellentrop criticizes this. It is prohibited by the Suellentrop rule, of course. Why on earth should it be wrong to make a reference to Churchill and his early recognition of the theat posed by Hitler? Questions of when and where to use diplomacy, when it is appeasement and when it is not, which dictators have demonstrated a willingness to abide by agreements and which have not, are certainly fair game. Appeasement of Islamic extremist organizations IS something to worry about. Reasonable people can disagree about whether Giuliani's implicit analogy is well taken, but this issue is and ought to be a part of the civic debate. There is substance to the argument. If the analogy is flawed, it should be carefully rebutted--NOT PROHIBITED.

He goes on to compare references to WWII to the knee-jerk way in which the extreme left calls every military endeavor "another Vietnam." But these arguments rarely even attempt to explain how a given military action resembles Vietnam, other than by being another military action. In Ho Chi Minh, the U.S. opposed an extremely popular leader in Vietnam, the founder of the nation, their George Washington. Very hard to make that argument about Afghanistan, Iraq, or, Kosovo.

Suellentrop appears to believe we are in a setting in which the most serious threats can be difused by international organizations and through diplomacy, or that international organizations should at least play a larger role in U.S. strategy. It is his only argument of substance. He is entitled to argue this, and some people make the argument quite well. What he is not entitled to do is to contrive an infantile "rule" whereby those who disagree with him automatically lose. It is bizarre and childish to assert we should not be using historical events to illustrate points of disagreement.

There is much to criticize in the Republican National Convention. Oddly, Suellentrop has managed to find a point of substance, and then to argue that it should not have been there. The Republicans may be wrong or they may be right, but the debate is necessary. And history is a compelling way to make the argument. Alas, this is what a deadline does to some writers: it leads them to sell their souls for a bad pun.

To paraphrase a pithy maxim: Those who forget history (or would prohibit others from remembering it) are doomed to become smug Washington correspondents.

In any event, this truly bad column did inspire me to think bout "the Hitler Rule". Here comes the economics part this posting: How does signaling theory apply? Which kinds of references these days signal prejudice, desperation, or shallow thinking--and why? Are there other "Hitler rules"?

Stay tuned, if you find this notion entertaining.

More to come.

(Duty calls. Must finish devising a final exam for my economics undergraduates...)

Addendum: MSN Slate's Will Saletan, in his convention coverage, illustrated perfectly the uninformed "It's the economy, stupid" point of view lampooned here. Tough week for Slate.

P.S. Babcock