"Sometimes, travelers turn into poets."
As someone who researches time series economic data, you can tell a story from the shape. I wish I am a better story teller.
Single hump (so far).
This group belongs to the climbers, although South Africa might have reached the top and is going downhill, which is a good thing when going up is bad.
The other guys. The other guys. Vietnam has been doing so well and the spike was so sudden.
Great art lingers. I only saw Nagisa Oshima’s controversial In the Realm of the Senses once and it left me an impression for years. The film was an excellent excuse for my young self to watch explicit sex scenes and call it art. Great art surprises. After a few shots (pun intended) that shocked my innocent mind, the sex in the film became tedious, numbing and depressing. In spite of the emotion and the intensity, there was no pleasure between the two lovers; at least, I did not recall any. Based on the true story of Abe Sada, the film is a nuanced critique of Japan.
Abe’s lover was Ishida Kichizo. He owned some properties, was financially secured and seemed to have lots of free time. Had Netflix, Pornhub and video games been created in the 1930s, he would be one who would binged watch shows and videos, or playing games all days, all nights. Given the reality, he had to settle with a sex work irl, unfortunately. When I started writing this post, I was trying to equate him to a modern day shut-in or Hikikomori. The analogy fails because Ishida was a middle-aged man and what he was running away from were not exactly the same, even though it is possible that the suppressing societal culture has not changed in the past 80 years.
In the film, Ishida seemed to be middle class and educated, some sort of a bourgeois. I recall the mentions of his socialist/communist friends who were either on the run or had already arrested by the government. [Spoiler alert] Before he was killed by Abe, he walked passed a group of young soldiers and he turned his head away. It was 1936, the war drum was loud, and the young men were marching for the hope and glory of the country under a nationalist narrative. When what you said meant nothing, when what you did would be lost, when your individual identity was denied, what would you do?
I don’t know how one would feel in the first half of the 20th century. I could never understand why, if I were a Canadian, would volunteer to fight in a trench thousand miles away where both sides would gassing each other with the newly invented chemical. I am lucky that I do not find myself in trenches. Nevertheless, the shocks and the following uncertainty since the Great Recession seem have created a new world that we do not understand. This is how I imagine one would feel in 1936, or in 1911, 1914, 1929, etc.
Now, time for internet shopping.
Disclaimer: Great art makes you think. I have not rewatched the film, so many of the details in this post may be a mere creation in my own mind.
Note: This post was inspired by an article on the relevance of Akira.
I want to continue discuss EconReporter’s interview with Paul Romer, which can be found here: https://en.econreporter.com/2020/06/interview-with-paul-romer-on-large-scale-covid-testing-the-transcript/
Since the Great Recession, I have been following discussion on macroeconomic methods, especially the DSGE models. Romer’s interview touched on the state of economics/macroeconomics. Economists have certain mindset that are different; a friend even once joked that we are all sociopaths.
***
A excerpt of the interview:
Q: In the light of the recent experiences in both the Covid-crisis and the ongoing social unrest, do you think that macroeconomics, or economics as a whole, put too much emphasis on the economy, rather than the people inside it?
P: Let me try and say it in a way that is more helpful. Macroeconomists, or economists more generally, try to help people. They understand that this is about helping people, but their notion of what would be helpful for a person is very narrow, focusing on things like income, material consumption. They don’t think about a broader set of issues.
Frankly, they haven’t paid very much attention to inequality in the past; not as much as they should have. People care about how much inequality there is in the society they live in. People also care about notions of being right and wrong, they have feelings about what is morally right or wrong.
Economists have paid far too little attention to the questions about values, like trust or commitment to integrity, like how much value we should put on the acceptance of diversity, or the feeling of true inclusion, where a large group of people think of themselves as an “us” and try to help other people in this group of “us”. Many successful nations managed to sustain a notion that the citizens are all in this together. They share a common faith and they support each other.
Economists have not thought about these kinds of issues. They talked about material gains and emphasize the value of selfishness; the notion that people being selfish will, by the invisible hand, lead to good outcomes in terms of material gain. I think that model of what leads to a good society is too narrow. This is where the critical voices of economics play a helpful role.
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Milton Friedman, I think, was the one who popularized the distinction between normative and positive economics. Normative economics is about what should be done. Positive economics is about what is. The issue was raised possibly as a response to the marginalism debate in the 30s and in the 40s. Friedman seems to prefer Karl Popper’s falsification, but “falsifies economics” just doesn’t sound right.
Romer’s comments point out a few things, very politely.
Actions, or lack thereof, reflects the value of the agent. Choosing to focus on materialistic gain while dismissing elements other people care is by itself a value judgment. I can think of two reasons for the choice. One is economists’ fascination of hard science and facts. Another, as some may claim, is the alleged capitalist ideology. Sometimes, it is hard to distinguish one from the other.
I recall Friedman’s pencil example in which he eloquently explained how amazing and complex the market is in serving people. What is amiss in the narrative are the human beings and the natural resources who have contributed to the supply chain that create that little pencil. We live in the 1950s no more; nowadays we know how destructive a certain supply chain could be. I have often heard of the deforestation and the displacement of indigenous people of the Amazon. The market is “amazing” if we treat everything in it a physical particle. It is less so if one has to live in it.
Economist Paul Romer won the Nobel Memorial Prize of Economics in 2018 for his contribution to the theory of endogenous growth. He was recently interviewed by EconReporter, a Hong Kong based journalist specialized in the economy and economic research. I was going to write a thing or two on my experiences in the United States and Hong Kong. The interview has given me a way to frame my thought. Click here for the interview:
| HONG KONG | MINNESOTA | |
| Population | 7.45 million (2018) | 5.64 million (2019) |
| COVID-19 Cases | 1,204 | 35,584 |
| COIVD-19 Deaths | 7 | 1,460 |
The Midwest fares better than the rest of the United States. Minnesota was one of the early states that enacted a stay-at-home order in March. As the “Land of the Free”, however, it is both politically and culturally impossible to restrict much of the movements within and in-and-out of the country. Adding to that, there is a significant resistance in wearing masks and a big push to reopen the economy. At the time of writing, the country has recored a daily number of new cases that surpasses the peak in April.
Hong Kong is a city that was scarred by SARS in 2003. This time, partly due to public pressure, they acted early to seal the border. In March, they imposed a strict quarantine rule for all returning citizens (and their spouses, and work visa workers) as the number of imported cases surged. Currently, all travelers who have been in South Asia (except Sri Lanka) and South Africa for the past two weeks must go to government quarantine facilities for 14 days. Other travelers are luckier and can choose to self-quarantine at home or in one of the hotels that sell quarantine packages. My friends in the U.S. were shocked to learn that all these arrangements are for people who are tested negative at the airport. People who are tested positive would be sent straight to hospital. The tests are free, and the government covers all the cost if one has to go to a government facility or the hospital. The self-quarantine period is simple and strict–you cannot step out of the quarantine unit, whether it is an apartment or a hotel room. You would have to wear a bracelet that syncs with your cell phone, and folks at the Department of Health would call you, or even knock on your door during that 14 days.
The entire process was not fun. After the first test, I had to wait for 8 hours at the Asian World Expo, a convention center built next to the Hong Kong airport, for the result. When I was in my hotel room, I could not step outside or talk to anyone in person. Delivery service Foodpanda became the highlight of the day.
Test-and-track is a simple idea. Hong Kong executes it effectively. People still wear masks on the street and the city is now on the path of full reopening. At some point, there was a hope that the United States would follow some of these best practices. Paul Romer has a plan but now he is skeptical whether something like that would be adopted at all.
From the interview:
“In Wuhan, the Chinese government spent about USD 13 per person they tested. Suppose it costs USD 20 to test each person in the US, to test 330 million people that costs about USD 7 billion. So, we could spend USD 7 billion on testing and solve this pandemic. Instead, the pandemic is costing us USD 8 trillion. It’s just crazy we are not spending the money to test and stop the losses.”
“I think this is partly a political failure — we don’t have good leadership right now. It’s partly a social failure — we don’t have the consensus that people have to follow rules sometimes, even it’s inconvenient for them but good for the nation.”
United States has a decentralized private healthcare system. It is not a well-functioning in normal times and its fatal flaw cannot be more apparent during this pandemic. A good leadership may help organize the agents in this complex system, I am skeptical that it can perform as seamlessly as the one Hong Kong has. The starting lines are not the same for the two, and the transaction cost in implementing an emergency policy action is probably lower for an established public healthcare system.
Policy makers need support from the public. People in Hong Kong are vigilante and were highly critical of the lack of action by the government in late January and early February. I was told that if I went out during the quarantine period with my bracelet, people would call the police on me. In this environment, pushing a strict quarantine procedure is easy.
Macroeconomists like to model the economy with no reference to history, institutions and culture. A good theory, according to the agenda, is one that is generally applicable to as many situations as possible; anything human is too concrete, too ad hoc and not abstract enough for this grandiose project. We had The General Theory that was immortalized into the IS-LM and later the Stochastic General Equilibrium (DSGE) model. The popularity of the IS-LM lasted long enough and the model is still a foundation of many textbooks. The DSGE model and its predecessors took the prominent position after its perceived failure in the 1970s and is still running strong in the academia.
I have been teaching economics since 2000. It has been getting more and more difficult to teach macroeconomics. A typical textbook tells the same old story: some smart people have discovered a trade-off between growth/unemployment and inflation, and some other smart people later discovered that this only happens in the short run, and once we figure out how to tame inflation we will be optimally happy ever after with reasonable real GDP growth and tolerable unemployment. I don’t mind starting with some ancient history–that’s how I feel about it, since most undergraduate students were born after 1999–but it is hard to explain why we need five or six chapters on the topic. I would like to spend more time on the sequel: the Great Moderation, the Great Recession, zero lower bound of the interest rate, secular stagnation and the death of inflation. We are lucky if the textbook manages to devote a chapter.
I met Eric in the mid-1990s when we were students at the Master of Science in Economics and Philosophy at the London School of Economics. We had a small group from different countries and backgrounds who hanged like to out and did our armchair philosophing. To me, classes are merely a gateway to a topic, and the real learning comes from after-class conversations over beer, starting at 6pm, on each weekday. Eric and his co-author Mark Blyth take a dialectic approach to their topics; this reminds me of my many conventions with the group. They are not writing a thesis on a grandiose general theory. In the era of Twitter, they know that starting a conversation and having timely impacts are far more important, and genuine. Supposedly, they chat over the Internet and used Siri or something to transcribe their dialogues into a script. I got the Kindle version on June 17, about three months since the West was getting serious against COVID-19 and less the a month since the killing of George Floyd in Minneapolis, a city I have been living for 10 years. Taking about timeliness.
There are two types of public anger, according to the authors. One is rooted from justified moral outrage against injustice: income inequality, systematic racism, to name a few. The other grew from tribalism. Sport fans and hooligans are a trivial example, nationalism and ethnic supremacy are the deadlier ones. Many movements involve both types of public anger and people in anger want to be heard. Economists who infamously coined the term rational expectation are probably the least trained to study emotion among all social scientists. This book is trying to fill the gap.
Philosophers would agree that the economy is an open social system that intervenes with culture, history and politics. Anger is not something unfamiliar to anthropologists, historians, psychologists and political scientists. Not every economist is ignorant about the role of anger. In Dialogue 4, the authors invite their economist friends from the past to the conversation: Karl, John and Mikhal. Karl pointed out that labor is not just another factor of production as our models describe. They are living creatures and they will organize to act against the market forces especially if the latter are driving towards an unfavorable equilibrium. To save the day (or capitalism) John proposed that the government could step in. The outcome would benefit workers at the cost of higher inflation and smaller profit margin. Mikhal thought this is a quick fix and did a reverse-Karl: the empire, or the capital, or the people with capital, would strike back, as it did in the 1970s and the 1980s. Economist slash political scientist Albert O. Hirschman describes market forces as exit and political movements as voice. Maybe we need to add “whisper” to describe the influence of business elites on the governments.
The authors end the main dialogues of the book with new tools to deal with the new economic environment. Dual interest rates are not entirely new. A national wealth funds based on private equity and data dividends may be more daring. These are new topics to me so I will withhold my opinions for now–I am an academic, I only write on an economic topic after two rounds of referee reports in three years. There is, however, a disconnect between this chapter from the rest of the book. In the midst of both moral outrage and tribalism, who would have the will and the power to work out some fo these ideas? The book has convinced me that no economic ideas alone would prevail without an understanding of politics and the societal backlash precisely because of these ideas. To date, neither Bernie Sanders’ MMT nor Andrew Yang’s UBI (or his version of data dividends) have made a mark significant enough to shift the platform of the party. The implementation of some of the creative ideas in the book rely trust in governments and central banks, which is currently in shortage.
If On A Winter's Night 