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Archive: September 2005

Economics -- The Musical

John DiNardo wearing a jacket and tie

I've said for a long time that Bruce Springsteen would have been a great economist. Springsteen started writing about the widening economic and social inequality that hit the United States at the end of the 1970s (and continues through today), long before the economics profession even noticed.

John DiNardo, however, is an actual, practicing economist in what I think of as the Springsteen tradition. He is one of the country's best economists, with important and creative papers on inequality and labor markets in top economic journals including Econometrica, the Quarterly Journal of Economics, and the Journal of Political Economy. DiNardo is also a musician who sings about economic issues.

His personal web page includes four downloadable songs in MP3 format (about halfway to a CD): "Monopsony in Motion"; "Non-Convex Desires"; "I Wish Life Could Be (Like in the JPE)"; and "(My Little) Regression Discontinuity". He has also posted a video (in mpg format) covering The Romantics' "What I Like About You".

The first DiNardo song I ever heard was "Monopsony in Motion" (lyrics), named after London-School-of-Economics professor Alan Manning's Princeton-University-Press book of the same name. "Dynamic monopsony", as it is known formally, is a theory about the way the labor market works. The basic idea is that relatively small imperfections in the functioning of labor markets, especially with respect to the flow of information (say about the number and location of job vacancies), can have a significant impact on labor-market outcomes.

The most famous example concerns the minimum wage. In a perfectly competitive labor market, imposing a binding minimum wage (one above the market wage) inevitably leads to job loss, since employers will choose not to hire workers whose productivity is below the new minimum. If workers have only imperfect information about the job vacancies, however, employers may actually exercise a form of monopsony power (like the old example of the town with only one large employer). If employers do have some monopsony power, then setting a minimum wage might have no negative impact on employment and could conceivably even raise employment. (For a lucid introduction to dynamic monopsony, see the first chapter of Alan Manning's book or, for a somewhat technical overview, see economist Madaline Zavadony's account here. Of course, for the best discussion, read Manning's book.)

As fond as I am of dynamic monopsony, Manning's book, and the idea of the song, "Monopsony in Motion" is probably DiNardo's weakest song. Have a listen or read the lyrics, and judge for yourself. I like the idea of trying to give dynamic monopsony some emotional content ("Monopsony can break your heart / and tear your world apart" or "We all know it's a tragedy / But capitalists will rue the day / When workers have their way"), but the song falls short. The first verse sets off on the right track, by discussing the specific cases of a woman whose job "don't pay well" and a man whose labor "don't sell". Springsteen, however, would have built on this initial instinct to personalize the market imperfection, rather than jump straight into the "anthem rock" lyrics in the chorus and second verse ("Capitalist Man has got me down").

The other three original DiNardo songs on the page are really outstanding. DiNardo's lyrics use economics the way Springsteen's early music used cars (think "Backstreets" or "Thunder Road" or "Racing in the Streets" or "Streets of Fire"). The difference is that for Springsteen cars promised self-realization and freedom, while for DiNardo, economics is dehumanizing and oppressive.

In "Non-Convex Desires" (lyrics), DiNardo finds a lover that doesn't fit any of the standard economic models (non-convex desires, local non-satiation, a discontinuous love function). But, of course, this is what makes her so attractive ("Come on baby won't you share your non-convex desires with me"). After things fall apart, he concludes: "Too much economics / can lead a man straight to hell".

"I Wish Life Could Be (Like in the JPE)" (lyrics) mocks the economic rationality that characterizes the University of Chicago's Journal of Political Economy (where DiNardo has published). If life were like it is supposed to be in the JPE, then DiNardo would be happy because everything would always be "optimal" and he would "Never give a god god damn for anyone but [him]self".

Musically, DiNardo is, of course, no Springsteen. "(My Little) Regression Discontinuity", written in homage to a 2003 academic conference on "The Regression Discontinuity Method in Economics", however, has some appealing guitar, better than passable vocals, and a nice hook built around "discontinuity" (surely a first in American, if not world music). Though, personally, I'd lose the synthesizer.

While it has nothing to do with economics, I also loved the short video of DiNardo and a little guy covering The Romantics' "What I Like About You", one of my favorite songs from the early 1980s.

Peace March

Mangueira Samba School performing at Carnival in Rio

Earlier today, I joined about 100,000 others (unofficial police estimate) in Washington to march against the war in Iraq. From what I could tell, the event went well, with no violence, and without any of the police heavy-handedness that has marred other demonstrations in Washington since 9-11.

The crowd seemed a bit more mainstream than the typical Washington march. I'd be tempted to dismiss this observation as wishful thinking, but even the Associated Press had the same impression: "In the crowd: young activists, nuns whose anti-war activism dates to Vietnam, parents mourning their children in uniform lost in Iraq, and uncountable families motivated for the first time to protest."

As usual, protestors showed tremendous human creativity. Two of my favorite slogans from t-shirts and placards were: "The Rapture is NOT an exit strategy"; and "What is the difference between Vietnam and Iraq? Bush had a plan to get out of Vietnam."

Nevertheless, one piece of constructive criticism: sometime before the next big protest, how about we all sit down and write up some new material? The vast majority of chants were dreadful to begin with; now they are tired and dreadful. ("What do we want? Peace! When do we want it? Now!" etc.)

To get the ball rolling, my friends and I came up with a few suggestions. First, why not adapt sports music? At one point, as we were stuck directly in front of the White House, a group of kids near us suddenly started singing (well, as best they could), the very brassy fight song that I associate with college basketball (Duh, Duh, Duh, Duh, DUHNT, Duh, Da Da Da DUHNT Da; Duh, Duh, Duh, Duh, DUHNT, Duh, Da Da Da DUHNT Da; HEY! Da Da Da DUHNT Da). The song lit the crowd up for a few minutes, before being replaced by a stultifying round of "Peace! Now!" Sports music, different from the standard lefty chants, resonates deeply with a broad section of America, from many of the protestors to (probably) most of the people who only catch a sliver of coverage on the news.

Second, as one friend suggested, what about adding a horn section to the ubiquitous drum brigades? A few trumpets and trombones would make all the difference in the world. At one point, for example, we walked passed a lone trumpet player standing on the sidewalk playing "This Land is Your Land", with a wonderful New-Orleans-jazz twist. The subconcious link to Katrina was powerful. Even more amazing, though, was the way he got us all singing along.

Third, another friend, recently back from a month in Brazil, suggested that we could learn a lot from the "Samba Schools" that perform each year at Mardi Gras. To me, this sounds like a helluva lot more fun than another rendition of the "People United Will Never Be Defeated!"

Opt Out of Pentagon Recruiting Database

I don't know very many people between the ages of 16 and 25, but if you do, make sure they know how they can opt out of a new Pentagon recruiting database targeted at people in that age range. According to information at the www.LeaveMyChildAlone.org web site, the Pentagon, working with private-sector marketers, is pulling together a database that will ultimately include information on 30 million 16-to-25 year olds.

Young people (or, in the case of minors, their parents) can "opt out" of the database (sort of, the Pentagon will keep your file, but says they won't use it), by following the instructions at www.LeaveMyChildAlone.org.

20th Anniversary of Mexico City Earthquake

Mexico City today marks the 20th anniversary of the horrific earthquake that killed tens of thousands of its inhabitants and left enormous swaths of its downtown in rubble. At exactly 7:19 this morning, the world's second largest city fell silent to remember the dead, disproportionately the poor in a remarkable city of vast poverty and inequality. The Mexico City daily, La Jornada, has an excellent special section today that looks back on the event and its far-reaching political aftermath.

I pause to remember the day for two reasons. First, I started almost a year's stay in Mexico City in June 1986. By then, all of the immediate recovery work was finished, but the physical and social impact of the earthquake was everywhere. While I don't think as much lately about my time there as I used to, I doubt any single experience --college, my first job after college, or graduate school-- was as important to my personal intellectual development as that period in Mexico City.

Somehow, not long after I arrived, I ended up meeting members of a garment-workers union, "Las Costureras del 19 de Septiembre", named for the day the union was born from the rubble of the earthquake. They told me about the appalling conditions at the sweatshops where they were working before the earthquake hit. They told me about their bosses, who paid people to recover safes, equipment, and clothing inventories while co-workers were still trapped under tons of collapsed roofs, floors, and walls. They told me about how their bosses refused to pay them the pay owed for the work in the days and weeks before the earthquake.

I once spent the night sleeping with a large group of workers and their families under a tarp pitched on the sidewalk in front of an abandonded factory. We were there to make sure that the owner did not take away the equipment, which a court had recently awarded to the workers as part of their compensation for labor abuses before and after the earthquake. I can certainly say that it was the only night in my life that I spent with a real and reasonable fear of violence against me. I am also fairly certain that this was not the only such night that the others I was with had passed before or since.

I spent another night with some friends sleeping on the cold dirt floor of a subsistence farm with no electricity and no running water, just a couple of hours bus ride outside Mexico City. The farm was the family home of our friend, Lupe, a young costurera, who lost her job in the earthquake. I knew that dirt floors and a lack of running water and electricity were a common experience for many in Mexico and around the world, but suddenly this was my friend's house. Hello, Lupe! I hope all is well.

But, probably the most important personal experience for me was the time I spent with the members of "Ojos de Lucha." They were three young painters revolutionizing the Mexican muralist tradition, replacing walls with giant canvasses that they called "moveable murals". The three --David Gallegos, Daniel Suárez, and Cassandra Smithies (born in the United States, she called herself a "reverse chicana")-- insisted that their work should always reflect the three c's: conciencia, compromiso, y calidad (awareness or consciousness, commitment, and quality). So much of what I've done with my own work has fallen short of that mark, but not for lack of trying. And when I do feel I come close, I always think of "Ojos de Lucha." Thank you, David, Daniel, and Cassandra!

The second reason I pause to remember the earthquake is that it is hard not to think about the parallels with the ongoing disaster in the Gulf Coast. Both the earthquake and the hurricane exposed poverty and inequality and widespread corruption (that is what you call it in other countries when political supporters and business cronies of elected officials get jobs that they aren't qualified to hold). In Mexico City, the earthquake gave birth to a burst of political activity that contributed in an important way to the democratization process that led, over a decade later, to the electoral overthrow of the PRI. Maybe we will be so lucky here.

Take a hint from Bill Maher

On last Friday's "Real Time" (HBO, Fridays at 11pm), Bill Maher unleashed one of the most scathing attacks I've ever seen against President Bush. Just in case you missed it, I've reprinted the best stretch below. You can find the whole rant here.

... Mr. President, this job can't be fun for you anymore. There's no more money to spend. You used up all of that. You can't start another war because you also used up the army. And now, darn the luck, the rest of your term has become the Bush family nightmare: helping poor people.

Yeah, listen to your mom. The cupboard's bare, the credit card's maxed out, and no one is speaking to you: mission accomplished! Now it's time to do what you've always done best: lose interest and walk away. Like you did with your military service. And the oil company. And the baseball team. It's time. Time to move on and try the next fantasy job. How about cowboy or spaceman?!

Now, I know what you're saying. You're saying that there's so many other things that you, as president, could involve yourself in...Please don't. I know, I know, there's a lot left to do. There's a war with Venezuela, and eliminating the sales tax on yachts. Turning the space program over to the church. And Social Security to Fannie Mae. Giving embryos the vote. But, sir, none of that is going to happen now. Why? Because you govern like Billy Joel drives. You've performed so poorly I'm surprised you haven't given yourself a medal. You're a catastrophe that walks like a man.

Herbert Hoover was a shitty president, but even he never conceded an entire metropolis to rising water and snakes.

On your watch, we've lost almost all of our allies, the surplus, four airliners, two Trade Centers, a piece of the Pentagon and the City of New Orleans...Maybe you're just not lucky!

I'm not saying you don't love this country. I'm just wondering how much worse it could be if you were on the other side. So, yes, God does speak to you, and what he's saying is, "Take a hint."


Ask AriThe President

Dan Froomkin, whose White House Briefing provides the best coverage of the White House period, offers four questions for President Bush's next press conference.

* Sir, what were your personal feelings when you first grasped the enormity of what had happened along the Gulf Coast? And about when was that?

* Sir, apparently many African Americans believe that the federal government was slow in rescuing people stranded in New Orleans because many of those people were black and poor. I know you've denied that was the case, but do you understand why they might feel that way?


* Sir, you've said countless times that you don't govern based on the polls. But can you explain the polls? You are not a popular president anymore. How do you think that happened?

* Sir, it is increasingly said that you operate in a bubble, sealing yourself away from dissenting voices, and on those rare occasions that people tell you bad news, you yell at them. Doesn't that make it harder for you to make intelligent decisions?


Ask AriScott

Former White House Press Secretary Ari Fleischer

Reporter: Given the recruitment shortfalls facing much of the Armed Forces, and given the President's own positive experience with the National Guard during the Vietnam War, has the President encouraged his two adult children to enroll in the Armed Forces or the National Guard?


Teaching economics

The September 1, 2005, edition of the New York Times carries a strong critique by economist Robert H. Frank of the way economics is taught at our nation's colleges. The piece will only be available without subscription through September 8, 2005, but here is the link.

Frank, who has taught introductory economics at Cornell since 1972, writes that: "most students seem to emerge from introductory economics courses without having learned even the most important basic principles. According to one recent study, their ability to answer simple economic questions several months after leaving the course is not measurably different from that of people who never took a principles course."

Frank blames several factors. First, "the encyclopedic range" of typical introductory economics courses, which cover too much material too superficially. Second, and probably related to the first, intro econ courses are "increasingly tailored ...[to] the negligible fraction [of students] who will go on to become professional economists." This means focusing on mathematical models that most students have trouble digesting, rather than spending time communicating "how basic economic principles help explain everyday behavior."

Frank also makes much of the incompetence of the economists teaching undergraduate (and presumably graduate) economics courses. He reports the results of recent research by Paul J. Ferraro and Laura O. Taylor of Georgia State University, who asked about 200 PhD economists what Ferraro and Taylor view as a straightforward multiple-choice-format question about the economic concept of "opportunity cost". Almost 80 percent of the respondents --economists with PhDs, a large majority of which had taught undergraduate introductory courses-- answered the question incorrectly. In fact, about one-fourth of the economists chose each of the four possible answers, suggesting that having a PhD in economics was no more useful than taking a random guess.

The results certainly leave the economics profession with some egg on its face. You can read all about the question and the correct answer either in Frank's piece in the New York Times or in Ferraro and Taylor's paper. But, I am just as interested in the discovery that the economic understanding of intro econ students "several months after leaving the course is not measurably different from that of people who never took a principles course."

What is missing from Frank's argument is an explanation for why this is happening, and why it persists. Frank never explains why thousands of economists at thousands of post-secondary institutions have decided over decades to teach the wrong material the wrong way to hundreds of thousands, probably millions, of students.

Maybe the purpose of teaching introductory economics to "non-majors" and others who will not go on to be professional economists is not to convey "how basic economic principles help explain everyday behavior". Maybe, instead, the purpose of exposing future non-economists to the conceptual breadth and mathematical depth of formal economics is to intimidate these future voters into deferring to economists when it comes to "free trade" or labor-market deregulation or our archaic software copyright system or Third-World debt repayment or a host of other class-biased policies that most middle-class people would otherwise find objectionable. Later in life, these non-economist veterans of economics principles courses will think twice before disagreeing with the professional judgments of economists, whose scientific knowledge obviously exceeds the poor former students' capacities even to comprehend.

One neat feature of this alternative explanation is that it can explain why the economics profession can tolerate the kind of fundamental incompetence unearthed by Ferraro and Taylor. Intro econ professors with a poor grasp of "economic fundamentals" --but usually no lack of professional self-confidence, at least when it comes to their undergraduate students-- only ensure greater confusion on the part of unlucky students. And personal confusion in the face of professional certainty simply amplifies the intended intimidation.