#scott sumner

[arcticdementor]

Scott Sumner on his visit to Japan.

[daverossisbored]

Epistemic humility

Decision-making under uncertainty

"Let’s review where we are so far on the epistemic humility question. You are advocating a policy that is strongly opposed by almost all of the top experts in the field. Many trillions of dollars of wealth has already been destroyed in the asset markets, and asset prices are sending out very strong signals that we are facing economic difficulties that could materially damage the well-being of billions of people. In the developing world, that could mean enormous hardship for many, but even in developed countries there could be a significant amount of pain."

Meanwhile, Trump supporters tell us to "trust in Trump." At some point, I'd like risk consideration questions posed to proponents of the current administration's trade strategy, At least some acknowledgement that so much is at stake, that maybe these types of massive shifts in economic policy ought to require congressional approval, can we get some more questions on this theme to our current congresspeople?

[eccentric-opinion]

The Atlantic has an article decrying the fact that economists are refusing to give behavioral economics a bigger role in introductory economics courses. I'm going to argue that this oversight is actually appropriate, even if behavioral economics provides many true observations about behavior.

Most people find the key ideas of behavioral economics to be more accessible than classical economic theory. If you tell students that some people have addictive personalities and buy things that are bad for them, they'll nod their heads. And it's certainly not difficult to explain procrastination to college students. Ditto for the claim that investors might be driven by emotion, and that asset prices might soar on waves of "irrational exuberance". Thus my first objection to the Atlantic piece is that it focuses too much on the number of pages in a principles textbook that are devoted to behavioral economics. That's a misleading metric. One should spend more time on subjects that need more time, not things that people already believe...

Whenever I speak with non-economists, they almost always seem more enthusiastic when the discussion comes around to behavioral economics. "That’s what economists should focus on!" They all seem to think that economists assume too much rationality, and that we should switch to a more behavioral approach. But here's the problem. Non-economists also tend to reject the central ideas of basic economics, and for reasons that are not well justified. For the economics profession, our "value added" comes not from spoon feeding behavioral theories that the public is already inclined to accept, rather it is in teaching well-established basic principles of which the public is highly skeptical...

Teaching behavioral economics is not a good way to get people to "think like an economist", indeed it gets in the way.

- Scott Sumner

[mellowfestbanana]

CHINA and AMERICA: A Much Bigger Shock

CHINA and AMERICA: A Much Bigger Shock

Is China ready for what America could unleash in trade war. Tariffs and blocking trade are just parts of the arsenal Washington could deploy – citing ‘national security interests’ – to monitor, control and stop commercial activities © Getty Images

bY SCOTT SUMNER//By now many of us are familiar with the basic arguments for and against President Trump’s trade war with China. Over the…

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[fear-not-beloved]

This is the way we should see Christ— He is our friend, our brother. He is whatever is good and beautiful. He is everything. Yet, He is still a friend and He shouts it out, “You’re my friends, don’t you understand that? We’re brothers. I’m not threatening you. I don’t hold hell in my hands. I love you. I want you to enjoy life together with me.” Christ is Everything. He is joy, He is life, He is light. He is the true light who makes man joyful, makes him soar with happiness; makes him see everything, everybody; makes him feel for everyone, to want everyone with him, everyone with Christ || Saint Porphyrios 📷 Scott Sumner

[mamomvpy]

Why the US labour market is softening - the one graph version

Why the US labour market is softening – the one graph version

Friday’s US labour market report was a huge disappointment. This graph explains why. This is of course Scott Sumner’s Musical Chairs model of the US labour markets. Simply said the model predicts unemployment to rise if demand growth (nominal GDP) slows relative to the growth of labour costs (average hourly earnings). With monetary conditions tightening (NGDP growth slowing) and minimum wage…

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[a-path-beyond84]

Many economists have argued that 1934 to 1940 was a period of rapid recovery from the Depression.  The growth rates were high when compared with the long-term trend in U.S. output, but on closer inspection the recovery looks much less impressive.  Unemployment rates remained extremely high as late as mid-1940, more than seven years after the recovery had begun.  And high frequency fluctuations in output continued to be quite pronounced throughout the recovery.  During periods when growth was not being held back by the hoarding of gold, or perverse labor market policies, industrial production grew at a blistering pace, suggesting that there were no structural barriers preventing a much more rapid recovery from the Depression.

Scott Sumner, The Midas Paradox, pg. 275

[a-path-beyond84]

One morning (it was Friday, November 3), when Morgenthau came to the bedside tense with worry over some pressing problem and suggested that the [gold] price change that day be considerably greater than the 10 to 15 cents of immediately preceding days.  Roosevelt promptly announced that the increase would be 21 cents.  Why that figure?  Because 'three times seven' is a lucky number, said Roosevelt, his face straight but his blue eyes twinkling at Morgenthau's recoil from such frivolous dealing with a serious matter.

Quoted by Scott Sumner in The Midas Paradox, pg. 268

Scott introduces this section by saying Monetary policy doesn’t get much more exogenous than this.