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A New Pareto Liberal Paradox (reposted from 2004)

(Dan here….lifted from Robert’s Stochastic Thoughts)

A New Pareto Liberal Paradox (reposted from 2004)

One of the core principles of Liberalism is that there must be equality before the law. The law must not discriminate. In practice, this principle is often restricted to citizens and people are citizens only if they are born in the liberal polity or have the right ancestors. I personally consider this restriction absolutely inconsistent with my core beliefs.In any case, equality before the law is a core principle. Liberals might consider equality of income very important or not at all important, but we must defend legal equality or else we are not liberals.

I naively imagine that I am pretty utilitarian. Consequentialist enough to accept Pareto improvements anyway. I reconcile my absolute respect for legal equality with my absolute respect for utils ideologically, that is by convincing myself that reality is such that I can hold both moral beliefs. In plain English, I am deeply convinced that legal equality is not just good in itself but also is the most efficient legal rule. I think that hereditary priviledge is not only wrong but also leads to incompetence in key positions.

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A better name for The Kids Today: iGeneration

(Dan here…better late than not!)

by New Deal democrat

A better name for The Kids Today: iGeneration

You know the drill. It’s Sunday so I get to ruminate about all stuff that isn’t dry economics.
The oldest member of the Millennial generation is 38. Not only do I not think that The Kids Today would want to be lumped with that age group, but their uncool parents are probably precisely members of that group!
So what to name the generation that came after the Millennials? both “post-Millennials” and “Gen Z” are condescending and probably don’t cut it with The Kids Today. Remember, “Gen X” was originally called “the baby bust,” and Millennials were originally called “Gen Y” or “the echo boom,” before catchier names were found.
A good dividing point is whether or not you remember 9/11. If you do, and were born after 1980, you’re a Millennial. If you don’t, you’re not. Most studies seems to agree with this, using 1996 or so as the cut-off year after which you are not a Millennial. A similar if less apocalyptic marker is the Columbine school shooting of 1999. If you remember it, you’re a Millennial. If your schooling always included “active shooter” drills, you’re not.
But while the War on Terror or mass shootings have always been in the background for The Kids Today, everyday life has been dominated by something else.  If you were born after 1996, iPods were always around — and there’s a good chance you owned one. So were cell phones. For most of your youth — *always* for the younger part of this cohort — iPhones and flat screen TV’s have been around, and you probably have had one (or another smart phone) since junior high school. In fact you may spend most of your time glued to one! The term “iGeneration” captures this perfectly.

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A Guide to the (Financial) Universe: Part 1

by Joseph Joyce  

A Guide to the (Financial) Universe: Part 1

A decade after the global financial crisis, the contours of the financial system that has emerged from the wreckage are becoming clearer. While the capital flows that preceded the crisis have diminished in size, most of the assets and liabilities they created remain. But there are significant differences between advanced economies and emerging markets in their size and composition, and those nations that are financial centers hold large amounts of international investments. Moreover, the predominance of the U.S. dollar for official and private use seems undiminished, if not strengthened, despite the widespread predictions of its decline. A guide to this new financial universe reveals a number of features that were not anticipated ten years ago.

Philp R. Lane of the Central Bank of Ireland and Gian Milesi-Ferretti of the IMF in their latest survey of international financial integration (see also here) provide an update of their data on the size and composition of the external balance sheets. Financial openness, as measured by the sum of gross assets and liabilities, peaked on the eve of the crisis, and for most countries has remained approximately the same. But its magnitude differs greatly amongst countries.  Financial openness in the advanced economies excluding the financial centers, as measured by the sum of external assets and liabilities scaled by GDP, is over 300%, which is approximately three times as large as the corresponding figure in the emerging and developing economies. This is consistent with the large gross flows among the advanced economies that preceded the crisis. However, the same measure in the financial centers is over 2,000%. These centers include small countries with large financial sectors, such as Ireland, Luxembourg, and the Netherlands, as well as those with larger economies, such as Switzerland and the United Kingdom.

Some advanced economies, such as Germany and Japan, are net creditors, while others including the U.S. and France are net debtors. The emerging market nations excluding China are usually debtors, while major oil exporters are creditors. These net positions reflect not only the acquisition/issuance of assets and liabilities, but also changes in their values through price movements and exchange rate fluctuations. Changes in these net positions can influence domestic expenditures through wealth effects. They affect net investment income investment flows, although these are also determined by the composition of the assets and liabilities (see below). In many countries, such as Japan and the United Kingdom, international investment income flows have come to play a large role in the determination of the current account, and can lead to a divergence of Gross Domestic Product and Gross National Income.

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What Happened to the Political Price for Lying? (Part 2)

by Jeff Soplop

What Happened to the Political Price for Lying? (Part 2)

Recently I wrote about the political price of lying and how there is a serious disconnect between voters (including republican voters) saying they want honesty in a politician and how they act. My initial conclusion was that many voters are lying to themselves and so, consequently, end up lying to pollsters.

With this in mind, the next question is this: just how dishonest are voters about their priorities? Behavioral science may help fill in part of the picture.

Some of the most salient behavioral research considers how we perceive honesty and integrity in others. In one notable study, researchers focused on how individual beliefs about the nature of intelligence altered these perceptions

The researchers divided study participants into two groups that are defined by their view of intelligence, entity theorists and incremental theorists. These definitions are supported by a broad base of research on human personality and intelligence, and were initially proposed by Carol Dweck of Stanford University.

Entity theorists tend to believe that intelligence is fixed and based on underlying traits, and so they often draw conclusions even from having only limited information about others. Incremental theorists, by contrast, view intelligence as malleable and able to be developed through hard work.

Once divided, study participants – in this case a group of MBA students – were randomly split into buyers and sellers and guided through a multi-stage exercise called the Bullard Houses negotiation case. The exercise involved negotiating over a fictional property sale and was structured such that buyers had an incentive to deceive the sellers but were not allowed to reveal their deception. Research assistants, who were blind to the hypotheses, coded the negotiations. In almost all cases (94%), buyers did in fact engage in a deception of the seller.

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What Happened to the Political Price for Lying?

by Jeff Soplop

What Happened to the Political Price for Lying? (Part one of two)

James Comey’s recent interview on ABC has resurrected questions about the importance of honesty in public officials. One of the key themes of Comey’s interview, and apparently his soon-to-be-released book, is that Donald Trump is “morally unfit” to be president because, among other things, he lies constantly.

Certainly Comey’s statements reflect a broad public despair about how untrustworthy the institution of the presidency is, as shown in the following chart from the Pew Research Center.


Figure 1

 

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Thoughts on Capehart on Kagan

(Dan here…lifted from Robert’s Stochastic Thoughts)

Thoughts on Capehart on Kagan

I ì’m reading the Washington Post and note one very outstanding op-ed by Catharine Rampell which you should just read. She links to excellent summaries of social science research and notes that Republicans don’t listen to experts and aren’t reality based.But I want to write about a dumb op-ed by Jonathan Capehart. I’m picking on him partly to explain what is so extraordinary about Rampell. The op-ed is a summary and review of a speech by noted neoconserviative Robert Kagan. Writing it did not involve googling. Capehart is, more or less, reporting a speech. He didn’t check claims of fact with various competing published sources. Now I don’t work enough to complain about his work effort. I really just want to stress that it is amazing how much Rampell taught me.

I also want to discuss Kagan. Kagan notes that the post WWII liberal world order is an aberration. Such a period of near peace with so many once rival countries working together is extraordinary. His valid and important point is that we should not assume it is the natural order of things and assume it will last. He argues that US engagement is necessary to preserve the (relatively) peaceful order and that America first isolationism is unacceptable.

Oddly, the op-ed doesn’t identify him as a neoconservative. This is, I think, highly relevant context. As briefly summarised Kagan doesn’t explain how he thinks the US should engage. In practice he has advocated invading countries. Does his respect for the world order require the USA to submit to the rules imposed on other countries ? What does he think of foreign aid ? How about global warming ?

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