What Do Graduate Schools Want?
FRBSF: Economic Letter - Unemployment and Productivity (10/12/2001)

Sounds like there are no grand theories on connections between unemployment and productivity (at least in the long run).

The article states 2 ways in which technology improvements can cause permanent changes to the natural unemployment rate:
1. Job search technology speeds up the process of finding the right employer for the unemployed worker. The natural unemployment rate is 'natural' because all workers spend some time in between jobs. If this in-between time is shorter than fewer people will be unemployed at any one time.
2. Productivity growth increases profit (more output per unit of labor) which encourages firms to want to produce more by hiring more workers.

There's one 'it depends' model presented that shows that examines the fact that some technical progress may destroy more jobs than it creates. The determining factor is the cost of upgrading jobs as capital becomes obsolete. If it costs a lot to upgrade an existing job as the capital used in that job becomes obsolete, that job will be abandoned. The problem with this model is that the relationship between unemployment and productivity depends on the type of job and the technology. In other words, it says nothing of the relationship between the two in aggregate.

Too bad, this last model has appeal. I wonder if we can talk about productivity in terms of its relationship to unemployment by examine its decreasing and increasing components... change in employment equals change in leveraged productivity (technical progress that improves existing jobs) minus change in replicative productivity (technical progress that replaces existing jobs). How would you measure aggregate productivity broken into its leveraged and replicative components? I'm sure I could find out more here, but I'm going to pass on paying $30 to see the article... Berkeley has it, and I guess you can access the article via ScienceDirect if your inside Berkeley's network.
Web Allows People Like You
And Me to Spot Trends. Uh-Oh.

"But I have grander ambitions for the software. I foresee a day when everyone online will be linked into one big collaboratively filtered network, instantly knowing what everyone else with the same sensibilities is thinking and doing."

I wonder what this 'trend' does for the definition of "pop culture"...
The Wedge Between Output and Employment Growth: Archive Entry From Brad DeLong's Webjournal

Seem's pretty straight forward. The economy grows because of productivity improvements. Each worker can produce more stuff. Also, if the unemployment rate goes up, the economy shrinks. Less workers to produce the stuff. So employment and productivity are substitutes for each other.

Well, today we have a situation were productivity and the economy are rising but unemployment is rising, too. This is easy to explain by saying that income gains from productivity increases are outstripping the income losses from unemployment.

Question: is there a causal relationship between productivity and unemployment or are they really perfect substitutes? I mean, is there some future economy that has such high productivity that it only takes one worker to produce all the output. Two follow-ups: First, what happens if productivity goes to infinity? No workers required and 100% unemployment? Second, is it 'bad' for productivity to replace employment?
Thomas Sowell: Who's Rich

Sowell points out that there is often confusion between wealth and income. He claims that rich people may have insignificant income as its their wealth that makes them rich. He would have you conclude that discussions about taxing the rich are misplaced because rich people are wealthy and don't necessarily have high incomes. Futhermore, when you 'unfairly' tax high income earners, you're punishing folks that are making high contributions to the economy. You punish those folks, you punish the economy. Which means you punish us all.

I suppose this is correct in terms of income derived from labor, but what about investment income... I agree that there should be low(ish) taxes on income derived from labor, but this is not an argument for low taxes on investment income or on wealth in general.

It doesn't seem fair to tax income based on work performed. A virtuous tax policy would have low tax on income from salary. It does seem just to tax wealth and income derived from wealth.

On a completely different note: why are there no aggregate wealth statistics that are widely reported? I mean you hear about GDP everyday it seems in one article or another. It seems that the health of the economy, as businesses, can be judged by looking at income AND the balance sheet (which I take to mean wealth).
Books to Study Before Going to Graduate School in Economics

Ok, I'm not real sure why I didn't look at about.com before...
Letters of Rec for old farts like me (I'm 5 years out of school)

Yeah, I've been looking for an answer to this question!

I wonder if its possible for me to get research experience?
Three Pillars of Learning
- Depth; What ideas are important?
- Breadth; What connections are there between ideas?
- Process; How do people think about things? Models.

These pillars work with each other in a virtuous cycle of learning. Models of how the world works help you to understand it. Those models help to build deep understanding of a particular idea. The deep understanding means that you understand the model further, you generalize and then apply the model to other areas or fields. Because no model is perfect in a more general setting, applying the model more generally forces you to reevaluate the model and improve it or scrape it. The outcome is a better model and the cycle continues.

Graduate school is a social environment that allows this cycle to continue unhindered.
Questions To Ask When Thinking About Pursuing a PhD

"Research shows that up to half of the students who begin doctoral study never receive the Ph.D. One culprit in attrition is a poor match. Doctoral study may be a poor choice in the first place, or there may be a poor fit between the student and the program."

Questions that need an answer:
1. Why a PhD?
2. Why economics?
3. Why Berkeley?
4. What advisors at Berkeley? Why?
EconLog, High income and Wealth: Library of Economics and Liberty

I like this one... I'll come back to it. Basically, what would be a just distribution of wealth? What would a virtuous distribution look like? Assume each, justice and virtue, are mutually exclusive (I'm not sure if that's the right term... in other words, justice plus virture adds up to 100% of your morals, I guess). Square the virtuous and just models of wealth distribution with their respective importance.

Also, I want to look into the 'Survey of Consumer Finances' more... For my personal financial planning if nothing else...
Len Burman et al. on the Alternative Minimum Tax

Interesting the politics of tax policy. You hear raise taxes, lower taxes, but in reality revenue needs to be had and services need to be paid for (especially new, expense entitlement programs, cough cough perscription drugs). This article talks about the AMT. If the politicians do nothing, more and more folks will be subject to the alternate tax and the politicians, in effect, have raised taxes and nobody can hold them responsible.

Another example is the hullabaloo regarding expensing stock options. Stock gains (aka capital gains) are taxed at a famous maximum of 15%. Income is taxed upwards of 35%. Assume the policy change encourages companies to switch from stock options to straight salary compensation and you're talking a 20% tax increase on the margin!

Even better, wages are subject to workers comp whereas stock option compensation is not.

In any case, they've risen taxes with impunity. What a deal!
War Overview

Good one!

Mr. Clueless reviews the arguements for war. His presentation seems a bit like post-rationalization, but its also probable that such a case would not have enjoyed so much political success... Side note: its strange that an argument made before a war is so much different then a case after and that these differences seem politically necessary. Point being: we would not have been able to go to war under the auspices of 'rearchitecting the middle east'. It took the 'they are going to kill us with bad weapons' argument to get folks behind the war.

In the Bush adminstration and the larger neocon movement, am I witness to great leadership or to a Machevellian political agenda to rule the world? The answer seems to depend on my mood more than the arguments one side or another makes! Most likely, this is due to the fact that both sides are right.
Tony Blair for President

Tony Blair's speech to Congress

Blair for President! Seriously though, are there any cogent counterarguments to the points Blair articulated so well in his speech to Congress last week?

A quick review:
- terrorism is bred of poverty and illiberity
- terrorism plus destructive technology is a security threat to ALL the west
- the best way to combate terrorism is to spread liberty
- we mustn't let terrorists get their hands on WMD
- the only way to prevent terrorist from getting WMD and to spread liberty are to be sure the world is in lock-step with us

Is there another way to look at the state of the world? If not, are the only arguments remaining to do with HOW to implement the last point?
  Mankiw vs. Greenspan?
Mankiw is saying that growth, spurred by the administration's tax policy, will increase the government's top line and reduce the deficit.  Greenspan is saying that deficit's are bad when the economy is at full employment.  It's not clear that these two men would disagree with each other.  What counterposes their opinions?

The only difference seems to be the writers' editorial bent.
Movie review: Flash Dance

Alex is a welder by day and she is a exotic dancer at night. As the movie opens, we come to understand that her dream is to become a classical dancer. As a kid, her Nana took her to ballet and her father taught her to see the music at classical music concerts. Now she is grown up and in a fork in the road of her life. Does she realize her dream or does she accept her position in life?

The film is filled with characters that have had their dreams crushed or have not realized their dream. Hanna wanted to be an ice skater, but that dream was crushed by one poor performance. Do you really only have one shot? Richy wants to be a stand-up comic, but will he realize his dream? He's failed once before will he try again? Johnny never even had a dream.

Sometimes family or friends will get in the way. Their own crushed dreams will make them uninspiring, even without words. The blow can come in the form of a rolling of the eyes or just plain disinterest. Sometimes their own failures will cause them to conspire to make sure you don't reach your dream. They might actively try to dissuade you to give up your dream. Some will want to see you put in your place (your place, of course, is no where near your dream). If you don't resist their calls to remain were you are, then you will. What would have happened if Alex didn't make Johnny let go of her in that alley?

In the end, the worst enemy of your realization of your dream is you. You'll be afraid to bring your dream into focus and you won't know what to strive for. Or you'll know your dream, but you'll be afraid to go after it. The hardest part will be to take the first step: to fill out the application, to lift the first weight, to take the test or to write the first line. Why did Alex leave the line to fill out the application to the ballet school? Seeing others fail before her needn't have stopped her from taking that first step.

Some never take that first step and their dream fades away. Tina, another dancer at the club, doesn't know why she didn't grow beyond the night club. You could ask "why does this happen? Why do people lose sight of their dreams?" But the answer doesn't matter. The most academic explanations involving Tina's psychology or descriptions of her upbringing, will not change the fact that she never realized her dream. What really matters is that you don't lose sight of your dreams.

Alex got some help, a "kick in the ass", by Nick. He is her self-made, successful boss and owner of the steal factory. He has realized his dream and now he wants to see her realize hers. He nudged her into finally applying to the ballet school. Of course, luck plays its part and Nick, who happens to know the music conservatory director, makes a few phone calls to get her an audition.

The story in Flashdance is, at the same time, timeless and dated. Discovering and realizing your dreams is a classic story. For Alex, she was from humble beginnings and she had to break free from the boundaries of poverty. Her's is the classic story of the American dream. Despite economic adversity, she worked hard and was passionate. She has no agenda and she pursued her passion for its own sake. With a little luck and determination, she made it to the audition.

Today, the story of the American dream has to be modified. Most people grow up with out the economic hardship that Alex had. For the average kid, everything is handed to them. They don't have to struggle find the open door, many doors are open for them at birth. It's easy to realize your dream, when you don't have to strive for it, right?

Can the American dream be salvaged with such a lack of struggle?

Your dream, the American dream, is what defines your purpose in life. To have purpose is a struggle for everyone not just those in poverty. Where poverty denies you options, privilege saturates you with them. In poverty, the path you choose defines you. In privilege, you have to choose among your many options and you're defined by what you chose and what you didn't chose. In both poverty and privilege, your path is not set but it will appear to be. And in both you have to overcome the temptation to accept your standing in life and to discover your true ambition. From there, whatever your challenge, you need focus to become great.

Whether your obstacle is poverty, privilege or something else: "Take a deep breath and jump". After that first step, what if you don't make it? You will, I know you will.

Lyrics to the What a feeling.

A seemingly objective and well thought out article by a member of congress(!). Neo-conservatives have taken over the government (congress and the executive). They believe in Machiavellian philosophy of authoritarian government, perpetual war and "honorable" lies.

The congressman argues that neo-conservative actions are eroding the constitution and the principles of the Founders when they 'entangle' us in foreign affairs and support the welfare state. The first point is better made, it seems probable that the current foreign policy of the US government is contrary to our neutral/isolationist tradition. While the declaration of independence proclaimed universal, inalienable rights of all humans, the subsequent constitution never required us to spread these ideals overseas. In our tradition, foreign policy is only made in respect to our defense. Of the two options for defense strategy, altruistic neutrality or proactive meddling (including preemptive war), I think the constitution, and certainly the founders, would favor the former. In any case, it wouldn't hurt for someone to remake the argument for neutrality. (My first reaction to this idea is negative as I think 'isolationism'... How can you square neo-liberal ideas of free trade and the American tradition of neutrality? Both seem to be sane ideas, more sane than pre-emptive war.)

The second point is not as effectively made. Why does big government undermine the constitution? My gut agrees with this assertion, but the proper argument wasn't made in the article.

In any case, I want to revisit this article and the "liberty committee".
Coldplay Lyrics: A Warning Sign

A warning sign
I missed the good part then I realised
I started looking and the bubble burst
I started looking for excuses

Come on in
I've got to tell you what a state I'm in
I've got to tell you in my loudest tones
That I started looking for a warning sign

When the truth is
I miss you
Yeah the truth is
That I miss you so.

A warning sign
You came back to haunt me and I realised
That you were an island and I passed you by
When you were an island to discover

Come on in
I've got to tell you what a state I'm in
I've got to tell you in my loudest tones
That I started looking for a warning sign

When the truth is
I miss you
Yeah the truth is
That I miss you so

And I'm tired
I should not have let you go

So I crawl back into your open arms
Yes I crawl back into your open arms
And I crawl back into your open arms
Yes I crawl back into your open arms
Coldplay Lyrics: The Scientist

The Scientist

Come up to meet you, tell you I'm sorry
You don't know how lovely you are

I had to find you
Tell you I need you
Tell you I set you apart

Tell me your secrets
And ask me your questions
Oh let's go back to the start

Running in circles
Coming up tails
Heads on a silence apart

Nobody said it was easy
It's such a shame for us to part
Nobody said it was easy
No one ever said it would be this hard

Oh take me back to the start

I was just guessing
At numbers and figures
Pulling your puzzles apart

Questions of science
Science and progress
Do not speak as loud as my heart

Tell me you love me
Come back and haunt me
Oh and I rush to the start

Running in circles
Chasing our tails
Coming back as we are

Nobody said it was easy
Oh it's such a shame for us to part
Nobody said it was easy
No one ever said it would be so hard

I'm going back to the start

Randy E. Barnett on Supreme Court & Sodomy on National Review Online

Randy's right on. He says we're all missing the boat on the Supreme Court sodomy case. The real story is that the burden of proof regarding whether or not a law governing private affairs is constititional has moved from the individual to the government. The court used to presume that laws passed by the Congress or by State legislatures were constitutional. You had to petition the court to prove that the law was not constituional. Now, the court will require the government to justify its limits on liberty.

My favorite line is this one: a legistlatures "judgment of immorality means nothing more than that a majority of the legislature disapproves of this conduct, which would be true whenever a legislature decides to outlaw something. Such a doctrine would amount to granting an unlimited police power to state legislatures."
Americans must preserve institution of marriage

Is it just me or does this editorial have no substance at all? To summarize: gay marriage is coming, marriage is important for society because you raise children through this institution, marriage is being destroyed because people are confused about what it is, society is headed to ruins. Oh and how dare those unelected charlatans (i.e. the nine Supreme Court justices) destroy our society without asking us?

If marriage is so damned important, why would making more people eligible to participate in the institution be a bad thing? Also, why, again, can't homos raise children?

What confuses me about marriage is that there are these arbitrary rules governing the institution. Marriage is only betwen men and woman. (Why?) Marraige is important to help raise kids. (What about couples that don't have kids?) The institution of Marraige must be supported by the government but that support must be unequal. (What other legal institution have this kind of baised governmental support?)

Policy should not be guided by personal preference. Senator Santorum should express his opinion, but he shouldn't insist that his preferences for how other people live be codified in the constitution.
Marriage 'tames' geniuses, criminals

Hah! I knew it...
Previously, I've heard that criminal 'instincts' are dulled by marriage. This is why marriage a stabilizing force in society and why societies that have strong institutions of marriage have 'evolved' to be less violent. The context being that American culture is headed to shit because of the decline of marriage.

This article goes one step further. Marriage dulls creativity. So to counter the conservative argument that marriage is good for society, this article suggests that it can be bad by distracting our best creative minds.
Put up or shut up

It's time that I put my words into actions. Repeatedly, I've said to myself and others that its more important to pursue your own ends, to be an individual first. I've said that the groups you belong to come second to yourself. Remarkably, its much easier to say then do.

I'm a tall, white man. I'm a geek. I'm college educated and I'm a manager at work. I'm the Man. I'm a member of KQED (the SF public TV station), the EFF, the ACLU, and I'm registered in the green party. I'm a member of the NRA, but I don't tote a gun. I don't smoke and I'm a jogger. I'm a genXer and a child of young boomers. And until a few weeks ago, I was one half of a 'couple'.

Each of those groups wants to grab a hold of my identity. The green party pamphlets, printed on triple recycled paper, come in the mail with my renewal notices from all the charity 'membership' organizations. My intercourses with them entice me with offers of money, pride and a sense of belonging. They shame me into their arms with sprinkles of white liberal guilt and suggestions of bad things to come without my support. I'm reminded how I should or should not live. Slight gestures dictate how I should or should not behave. Examples show me how I should or should not think.

I'm seduced into consuming this group fodder and the blame for this should is placed squarely on my own willingness to belong. That willingness is guided by insecurity and lack of confidence in myself. For wanting to belong is the opposite of being an individual. It takes courage to be an individual and you have to work at it. Lack of courage or laziness pushes you away from yourself and it becomes easier to consume others' thoughts and behaviors then it is to invent your own.

But individuality is insidiousness as it is its aim to undermine others' individuality. To have a thousand followers, is to be the ultimate individual. For to have followers means that you've created thoughts or movements that are so original and provocative that others give up their own to borrow yours. You must destroy others' individuality to complete your own.

On the flip side of the coin: as an individual who seeks to be creative, you're drawn to other individuals who are like-minded. Like gravity in the forming of solar systems, these individuals form groups. And of course, those groups, being groups, are hell bent on destroying the individuals in them.

Why do individuals gravitate towards each other? You cannot create anything out of a vacuum. An individual's creativity, whether its in art or science, is shaped by the observations made around them and it is shaped by the creations that came before. In painting for example, the artist fills his canvas with particular visualizations of the natural world. To be original and therefore creative, he must paint in response to others that have painted before him. Even if he paints the opposite of what has been painted before, he can only paint in the context of what was painted before or what is being painted now. In any case, the very notion that he is a painter requires that he has joined that group of people that wield paintbrushes and who know the names of all the colors on the color wheel. There's no such thing as the painter who is not a painter.

If you are an individual consumed with ideas, you are naturally attracted to other people that are consumed by similar ideas. Ideas, like works of art, build off each other. The group's purpose becomes allowing the individuals to efficiently build off each others ideas. The group develops short hand ways to talk about things, making it easier to create new ideas and subsequently attracting more people to the group. This is why economists talk of demand curves and sociologist talk of power dynamics. In physics, relativity was a revolutionary idea, but, contrary to some theories of otherworldly origins of Einstein, even it was developed in the context of the thinking on physics of the day. Who could really believe in the "ether", anyway?

In a sense, this all means that groups enable individuals to be creative. By presenting a dogma, the group allows individuals to build upon the faith or to bounce ideas off the canon. An individual's creation can be additive or it can be made in contrast to the present way of looking at things.

So groups are good, right? Right, except they also can be destructive to the individual. The group has the 'average' individual. Of course, the 'average' group member is not a real person, but if you took an individual out of the group, at random, you would find some of the traits of the 'average' individual. The larger the group gets, the easier it is for any one lazy individual in the group to pretend to be average. So instead of generating their own thoughts and actions, the lazy group members starts acting and thinking like the 'average' group member.

Well, I've been getting lazy lately. I was too willing to let my identity morph into the averages of the two primary groups I belonged to. First, I'm a manager at a small company. My thoughts were consumed by 401ks, stock options and all manners of business jargon and fad-speak. This is all typical of your average businessperson. Second, I got lazy in relation to my 'couple' group status. Buying a house and having children consumed my thoughts. Again, these things are typical of your average middle class male provider.

Truth be told, I'm not really big on making a lot of money or on deriving meaning in life via reproduction. My laziness and group identities were pulling me away from myself.

I'm resolved now to do the following because they better define me and speak to what I think is important in life:
- I will volunteer in the community, ideally helping children or the poor (within the month)
- I will meet interesting people that are interested in ideas and learning (ongoing)
- I will recruit and groom a replacement at work (starting in October)
- I will get into a top economics PhD program in a California public school (2005-2009)
- three letters of recommendation (1 by the end of the year, the other two before next summer)
- I will take math and economics-related courses at DeAnza (one each quarter)
- I will take the GRE (early next year)

I will make progress towards these goals every day. I'll note progress on this website. Please, loyal readers, keep me in check.

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