Good Economics

By James Kwak

On my way to and from New Haven, I listen to podcasts, including a lot of TED Talks. Today I listened to a talk by Esther Duflo, the recent winner of the Clark Medal (top economist under forty), from earlier this year. The topic was using randomized experiments to test alternative social policies and determine what measures of fighting poverty are more effective than others. It was probably the best and most inspiring economics talk I’ve heard in a long time.

16 responses to “Good Economics

  1. geaugailluminati

    catherine campbell posted a good one too:

    If There Is Interest, Children Will Learn

    http://economix.blogs.nytimes.com/2010/09/07/if-there-is-interest-children-will-learn/

  2. Seems what I just skimmed online superfast, she’s for helping the poor and also for bank taxes, sounds like a great person so far. I am well aware some people will view me as “racist” for saying this, but my first inclination when I read about super intelligent women like this is to check and see if she is J.e.w.ish or one of her parents is. So far after 4 minutes of quick search nothing. But there is a New Yorker profile of hers last May, that is usually a good sign and I imagine it says in there somewhere. I would put it at like 60%. (Esther is also a very common chosen name for J.e.w.ish parents to give their girls).

    Anyway, I just skimmed the New Yorker article just now, I didn’t see anything about J.e.w.ish background. Something about a Protestant school affecting her views on poverty as a child, but nothing definitive.

    If you have a subscription to the New Yorker you can still view the New Yorker profile of Miss Duflo from last May 17 issue. I highly recommend it to Mr. Kwak or others who have digital subscription to the New Yorker. I found the New Yorker link at Catherine Rampell’s (not Campbell’s) Economix post
    http://www.newyorker.com/reporting/2010/05/17/100517fa_fact_parker

  3. Bayard Waterbury

    It has always amazed me that we simply listen to the political solutions to problems like poverty and disease, and don’t actually search to find and publish effect ways to address the problems. Maybe now that we have found that few politicians actually know what they are talking about, we can get on with effectively addressing these problems. Ms. Duflo is obviously onto something that is long past due, however, I can’t believe that the sociologists and anthropologists haven’t figured this out, and that ignorance is simply something promoted by those who control the flow of money. After all, most of what passes for aid is siphoned off by the leadership of countries to which it is provided, and so it rarely, if ever, truly reaches those whom it intends to help. Perhaps that should be her next study. How to create incentives for politicians to listen to researchers and follow the advice of those who have conducted the experiments and studies and who best understand how to solve these largely social issues without having them corrupted by politicians with antihumanitarian inclinations.

  4. I know I take too may liberties on Simon and James’ site. One of these days they’ll boot me out and the site will improve. BUt I really LOVE this video. I am a strong strong Democrat. I believe we should help the poor. I love FDR, Clinton, AND I will love President Obama after he announces Elizabeth Warren as head of CFPB (and not one minute before Elizabeth Warren becomes head of CFPB) But I do believe with proper controls capitalism is still the BEST system. Of course the next question is “who chooses the proper controls?” I like this old video of Professor Friedman and I do believe in the proper weight, explains it as best as it has ever been seen, along with the 4 choices Friedman expresses in another video.

  5. Another video from Teacher Milton Friedman, expressed a little different way, but still AMAZINGLY instructive. Good teachers get great ideas across without insulting the star student in front near the podium, and clearly to those little rabble-rousers in the back of the classroom.

    (Actually I should submit I spent my own money on student resources when I was overseas, but that’s for some sad sob-story yet told)

  6. This is the video I meant to show above of Teacher Friedman

  7. Micro economics 101 – that’s why Obama was in Indonesia as a kid – his Mom was “studying” poverty, right?

    I remember reading about the plan put in place to rebuild the major population areas wiped out by the Christmas Tsunami, as it was referred to for a while on our media…the plan worked because there was enough devastation to put the corrupt out of business long enough to make it permanent.

    “Randomized trials” are used to seek a definitive answer to a SINGLE question/unknown. “Poverty” has no unknowns – in the final analysis, the mechanics of distribution either never existed, were allowed to fail, or were set up to fail.

    May I be allowed to borrow the turn of phrase “antihumanitarian inclinations”? It’s wonderfully specific and PC at the same time :-)

  8. This is why Yves Smith (rightly) always argues that these Chinese threats on selling U.S.A Treasuries are absolute bullS.H.I.T. !!!! Exactly who will the Chinese sell these USA obligations to???? Arabs who want to exchange out oil notes????? The Arabs or Saudis will pay back the interest on USA obligations??? The Chinese will exchange the USA debt obligations for Russian Gold??? About as fast as they will exchange it for North Korean agriculture commodities…. But you keep listening to Glenn Beck selling you collectable coins over-priced at ZZZ percent…..Glenn “Diotrephes” Beck has all the answers for illiterate Americans

  9. Amazing contrast in humanity. Both respected highly tauted, lauded, and awarded economists. Both kind and balanced in their deliveries, – but where Ms Duflo imagines a world, economies, an idea of humanity that seeks to help those less fortunate to enhance the greater world, economies, and humanity in general, – Friedman brutes the standard gop Keneysian Chicagoschool exceptionalism, supremist, greedisgood perversions that have plagued American economic policy for 30 years, and ushered our once more perfect union to the sorry state most Americans hazard and endure today.

    This last link with Charlie Rose, where Friedman admits that the world may begin to question the economic safety of the US dollar, Treasuries, the financial stability of America in general if the powers that be, “engage in inflation’, or that “…our monetary authorities lost their good behavior, and started to print too much money” should send chills down the spines of the entire global financial system.

    Is that horrorshow not exactly the policy of our socalled ‘monetary authorities” in response to the worst economic catastrophe since the Great Depression?

    And is there not now a concerted effort globally to seek out and establish some new safehaven for funds exactly because of that horrorshow reality, away from the dollar, Treasuries, and goodfaith in America.

    America and our financial titans have forever tarnished our standing in the world. People can brute this or that on TV, but the rest of the world recognizes that Amerika today is run by a predatorclass den of vipers and thieves, criminals, and vicious tyrants seeking dominance, control, and imponderable wealth.

    Greed is NOT good. Greed is very bad. We are all, as human beings obligated to care for, and provide for those less fortunate. We have the technologies and resources to eradicate poverty globally. It is a distribution question. The numbers Ms Duflo offers to alleviate or at least begin to reverse global poverty efforts are a paltry pittance in comparison to the US government largess funneled into the offshore accounts of the predatorclass den of vipers and thieves who conjured, and profited wantonly from both the bubble and the bust in the recent crisis.

    Toofew have and continue taking fartoomuch, from waytoomany. Healthy societies prosper when the people are well fed, educated, and industrious, (ie – they have jobs or some meaningful work to do during the day).

    Unhealthy societies are doomed to violent collapse, and any cursory examination of history proves this fact. Whenever the predatorclass or sociopathic tyrants commandeer governments, control mechanisms, and the wealth and resources of society, – the inevitable end is violent upheaval and ruin.

    The original talk by Esther Duflo is indeed inspiring and uplifting, and there are others: (www.smallisbeautiful.org
    http://richardheinberg.com http://www.capitalinstitute.org) who are beginning the arduous process of re-evaluating the old failed flawed idea’s and socalled truths, and developing new more practical solutions to the worlds many manifest ills and systemic unhealthy behavior.

    Sadly, – it is the greedisgood brood that has commandeered power and economies, and owns governments and nations, and that insidious brood is sociopathic and criminal. They do not care about the rest of society or society in general or any specific nation per se. Their ends are pathologically narcissistic, and brutally selfish.

    These insatiable monsters have piloted the world to a moment of epic crisis.

    Yeah, the collapse of the financial system has been delayed for a while, – but the math is incontrovertible, and there is no way to reconcile this math without real radical CHANGE! And that change will demand a real radical redistribution of wealth globally from the sociopathic greedmongers and criminals in the predatorclass, to the rest of humanity.

    The superrich will always be superrich, and there will always be economic stratification. But this trajectory of wildly expanding and entrenched divides between thehaves and thehavenots cannot sustain.

    Perhaps the superrich, the predatorclass can willingly choose to give back to those they have ruthlessly robbed and pillaged over the last few decades, and decide to erect a more fair and equitable financial system that would work in ways Ms Duflo suggests to benefit the great society and economic good health.

    I wouldn’t hold your breath. In the meantime, gold, canned food, water, and guns and ammo are the best hedge against the real horrorshow CHANGE that is inevitable.

  10. “America and our financial titans have forever tarnished our standing in the world.” = FALSE

    “… but the rest of the world recognizes that Amerika today is run by a predatorclass den of vipers and thieves, criminals, and vicious tyrants seeking dominance, control, and imponderable wealth.” = TRUE

  11. The Sphere, the Bell Curve and
    the Infinite Curve
    by Brick de Bois

    The Basic Economic Problem
    by Liam Blee

    http://www.thezeitgeistmovement.com/English%20NL%20Aug-Sep-2010.pdf

    “Critical thinkers abound within our movement, which is why I became attracted to it in the first place. Not everyone agrees with every action that takes place, but dedicated activist volunteers remain supportive for a unified direction without sweating trivial details that cause rifts and bruised egos.”

  12. Well, first of all, the Chinese don’t have to sell their present US Treasury portfolio to anyone. They can simply stop buying more and manage their duration to limit the exposure they have to a more conservative (read: less exposed) position in the U.S.

    Ah, but what of the alternatives, since they continue to accumulate foreign reserves? The US have the Chinese over a barrel, don’t they? Where can the Chinese find a market with the size and liquidity that they must want for their surpluses?

    Well, they’ve already found it and it is direct investment in agriculture, minerals, and developing world manufacturing. Now those, of course, have their own risks, but if you are a long term investor (and the Chinese are) and liquidity is less of a concern than Tim Geithner, et al, think then it is all perfectly rational.

    An aside: I was intrigued by your admission that you are a “strong strong Democrat”. What brought you out at this particular point?

    I’m kind of an Eisenhower/T. R. republican who was drummed out of the republican party corps a long time ago and now content myself with the label of RINO.

    I’m only an occasional reader and commenter here, but it’s nice to have a forum where people of goodwill and some intellectual honesty can still talk to each other in this blog bite world.

    Enjoyed your Milton Friedman links, I’ll follow them up.

    My latest favorite link for rational governance is this:

    I think it echoes Friedman’s point of dealing with humans as we find them, not as we would wish them to be.

  13. Wow…this group is away above my pay scale but make extremely cogent arguments. What I do not understand is why the elite do not appreciate that a balanced budget is in their own long term interests. They may save taxes now(if the tax cuts are extended) but the wealth and stability of the US will be inevitable diminished as long as we are running these huge deficits. What are they looking for ..a bankrupt US? Where are the self sacrificing patricians who will stand up for America and get us back to decent values of social justice(ANATHEMA TO BECK AND HIS PARDS) and equity.

  14. Iraq, Iran, Hattie, Guatamala ….all would be better off had the US not invaded or made war on those countries. So, a start in ending global poverty would be for the US to stop invading countries. End the Empire.

  15. Re: @ Douglas M.___Ref: http://www.bigeye.com/griffin.htm “The Creature from Jekyll Island, The Federal Reserve, talk by Edward Griffin” pdf…pgs.12-13/33; pgs.24-27/33 note: Gold and Silver are the arch enemy of America’s Oligarchy.

  16. Ellen Campbell

    I have been following (okay, hero-worshipping) her work for the last 5 years or so, and she is phenomenal. You should additionally check out her papers on the difference between giving pension checks to the grandmother or grandfather and her work on ways to slow the spread of HIV/AIDS in subsaharan Africa. Truly outside-the-box innovative thinking. I was so pleased when I heard she won the Clark Medal. Can’t imagine anyone could have deserved it more.

    And as you say, phenomenal and inspiring public speaker.