Art Carden: Heavy traffic is a problem every economist in the world knows how to solve: price road access, and charge high prices during rush hour. With technologies like E-ZPass and mobile apps, it’s easier than ever. That we don’t pick this low-hanging fruit is a pretty serious indictment of public policy. If we can’t address what is literally a principles-level textbook example of a negative spillover with a fairly easy fix, what hope do we have for effective public policy on other margins? (
The reason this is not correct is because of negative externalities, i.e. negative effects that your decision to drive has on other people. When you drive during rush hour, you naturally take into account the waiting-costs this imposes on you. But what you probably do not take into account is the increased waiting time for other drivers by there now being one more car on the road. The other drivers similarly fail to take into account the waiting-costs they impose on others. The result is an over-utilization of roads during peak hours.
Let's assume economists do arrive at a consensus on a topic. Once this occurs, the path to status within economics is to create a contrary view which is plausible. People wanting to hear this view will both pay for it and broadcast it. You will be on the cover of magazines, and possibly even invited to dinner by the current or future president.
This is one of the major problems with the social sciences. The subject of the science can read what is written and respond to it with social incentives, unfortunately degrading the objectivity of the science in the process.
Suburbanites don't care much about what intellectuals think. They do care about the possibility of actually having to pay for their easy and cheap driving habits.
Would it be smart for intellectuals to challenge the road building industry, the automotive industry, and the tract-house building industry? You won't win. But you know that. It's more about looking cool talking about an urban issue, that really is smart and makes a lot of sense, rather than going any further knowing it would be dead in the water politically. "Taking away people's cars" looks really bad. Talking about congestion pricing is about status signalling among urban dwellers. No one else cares.
Ireland doesn't have a lot of public transportation compared to Europe and East-Asia, who, with their high population density and high level of development, set the standard for what can be achieved.
There really isn't any dispute that public transportation can achieve a much higher traffic troughput than cars (which often have only one person in them). Of course the layout of the urban area has to support public transportation, that's a problem in some American cities. Places like London and New York couldn't function without their subway networks.
It was Stephen Diamond who talked about corporate masters, not me. In any case I believe that many economists are not as aware as they should be about the difference between the average and the individual, but I also believe many other economists are aware but people misrepresent their advice to suit their own needs. After all, soundbites are a lot more popular than intricate policy recommendation reports.
I think it's more that Economics appeals to economists' corporate sponsors than that economists shill for the corporations. It really isn't like employers needed economists to supply the argument that an enforced rise in wages increases unemployment. The argument was used by employers against unions before the advent of minimum-wage laws.
Why does Economics appeal to capitalists? Because the rational-choice analysis underlying neoclassical economics denies--as applied to matters of institutions and broad policies--the centrality of coalitions. It can be more important that a policy decision is a victory for this or that coalition than that it has a certain direct effect on markets. It is in the interests of dominant coalitions to deny the coalitional character of their dominance.
Are you really confident that abolishing the minimum wage would improve the welfare of unemployed workers or even decrease their numbers? I think it more likely that the victory of a coalition opposed to minimum wage will also favor austerity and their victory in one arena will the same in others. A right to a decent living when unemployed is a natural accompaniment of a right to a reasonable wage when employed.
I don't know what unemployed workers actually think about minimum wage today, but I'd bet they're for it. Traditionally they have been. Unemployed and employed workers are common coalition partners.
"So what about the economists who advocate getting rid of minimum wage laws to increase employment?"
The devil is in the details which such proposals. If no other laws were changed at the same time it could for example mean that you can lose $700 of unemployment benefits or food stamps because you turned down a $400 job, in that case you wouldn't exactly be helping the unemployed. If you increase the number of jobs by lowering/removing the minimum wage then those new jobs will pay less than minimum wage and you're really close to having jobs that don't pay enough to pay the rent of even the crappiest apartment.
"When they advocate free trade to make everyone better off? Again, that's just lip service on behalf of the coalition?"
Free trade doesn't make everyone better off. People in effectively "protected" employment positions would lose out and only in the long term would the population be better off on average (but they still have to eat in the meantime, so again you would have to change many other things at the same time). Of course you can view this as an acceptable cost, to help people in poor countries and future generations, but then you should be honest and admit that there is a cost, instead of falsely promising that everyone alive today would be better off.
You can't just take abstract concepts that deal with large averages and the long term and apply them to individuals in the short term.
Ireland barely has public transportation, so that's a terrible example. Public transportation is profitable in places like Germany, Japan and the Netherlands and it could be in many American urban areas. It's really much more efficient than cars in urban areas. Combined with more flexible working hours, meaning that some people will work from 10 to 6 for example you could really make transportation a lot more efficient. I don't know if it means anything to you but I'm pretty sure Robin would agree with me on this (given his recent piece about automated urban transportation).
I suppose we all have our egocentric biases, but doesn't seem just a wee bit more likely that economists will tend to be part of coalitions including financial and corporate power-holders than of ones consisting of, say, unemployed workers?
I was thinking along the lines of Bernanke, Yellen, Summers, etc.--the Federal Reserve, WTO, and World Bank levels. Of course, they're atypical of economists, but their enormous power should bring status to the whole profession.
Does it? It strikes me that the status aspirations of economists are hampered by the unfortunate choice of their profession's name. Having to "economize" is not a high-status signal.
That would be bad for the environment and you force the poorer workers to give up more of their spare time. What you want is to force politicians to put more money into public transportation (which would be exempt from the toll) and force employers to start thinking about less rigid working hours because most people on the road during rush hour really have to be somewhere and therefore won't just stop going on the road if there was a toll.
Yes, but a road toll would greatly increase that incentive. Plus it's an institutional thing, lots of people would want to start working at 10 am, because then they're better rested, they can do more at night and it also makes the roads less congested if half the employee start working an hour later. A road toll could be the nudge that lawmakers and employers need to finally start thinking about more flexible working hours (the current system where everyone starts working at the same time and as early is possible is still based on medieval agricultural society).
Agree with Curt. Celebrity pundits are high-status, and some economists happen to be celebrity pundits.
The modal NYC hedge fund manager or i-banker reads 0 economics journal articles per year, and knows what appeared in AER or Econometrica last year as well as he knows what appeared in the New England Journal of Medicine. In 0 meetings per year does he suggest that the firm should take a certain trading position because an academic economist recently said so. The modal Tennessee legislator can name 0 economists on the faculty of Vanderbilt. The idea that any decisionmaker is being bullied into submission by the high "status" of economists' expertise seems farfetched.
The reason this is not correct is because of negative externalities, i.e. negative effects that your decision to drive has on other people. When you drive during rush hour, you naturally take into account the waiting-costs this imposes on you. But what you probably do not take into account is the increased waiting time for other drivers by there now being one more car on the road. The other drivers similarly fail to take into account the waiting-costs they impose on others. The result is an over-utilization of roads during peak hours.
Let's assume economists do arrive at a consensus on a topic. Once this occurs, the path to status within economics is to create a contrary view which is plausible. People wanting to hear this view will both pay for it and broadcast it. You will be on the cover of magazines, and possibly even invited to dinner by the current or future president.
This is one of the major problems with the social sciences. The subject of the science can read what is written and respond to it with social incentives, unfortunately degrading the objectivity of the science in the process.
Suburbanites don't care much about what intellectuals think. They do care about the possibility of actually having to pay for their easy and cheap driving habits.
Would it be smart for intellectuals to challenge the road building industry, the automotive industry, and the tract-house building industry? You won't win. But you know that. It's more about looking cool talking about an urban issue, that really is smart and makes a lot of sense, rather than going any further knowing it would be dead in the water politically. "Taking away people's cars" looks really bad. Talking about congestion pricing is about status signalling among urban dwellers. No one else cares.
I said sponsors, not masters.
Ireland doesn't have a lot of public transportation compared to Europe and East-Asia, who, with their high population density and high level of development, set the standard for what can be achieved.
There really isn't any dispute that public transportation can achieve a much higher traffic troughput than cars (which often have only one person in them). Of course the layout of the urban area has to support public transportation, that's a problem in some American cities. Places like London and New York couldn't function without their subway networks.
It was Stephen Diamond who talked about corporate masters, not me. In any case I believe that many economists are not as aware as they should be about the difference between the average and the individual, but I also believe many other economists are aware but people misrepresent their advice to suit their own needs. After all, soundbites are a lot more popular than intricate policy recommendation reports.
Tell it to this guy.
http://www.mirm.pitt.edu/pe...
Seriously, have you read Slate Star Codex (the blog)?
I think it's more that Economics appeals to economists' corporate sponsors than that economists shill for the corporations. It really isn't like employers needed economists to supply the argument that an enforced rise in wages increases unemployment. The argument was used by employers against unions before the advent of minimum-wage laws.
Why does Economics appeal to capitalists? Because the rational-choice analysis underlying neoclassical economics denies--as applied to matters of institutions and broad policies--the centrality of coalitions. It can be more important that a policy decision is a victory for this or that coalition than that it has a certain direct effect on markets. It is in the interests of dominant coalitions to deny the coalitional character of their dominance.
Are you really confident that abolishing the minimum wage would improve the welfare of unemployed workers or even decrease their numbers? I think it more likely that the victory of a coalition opposed to minimum wage will also favor austerity and their victory in one arena will the same in others. A right to a decent living when unemployed is a natural accompaniment of a right to a reasonable wage when employed.
I don't know what unemployed workers actually think about minimum wage today, but I'd bet they're for it. Traditionally they have been. Unemployed and employed workers are common coalition partners.
"So what about the economists who advocate getting rid of minimum wage laws to increase employment?"
The devil is in the details which such proposals. If no other laws were changed at the same time it could for example mean that you can lose $700 of unemployment benefits or food stamps because you turned down a $400 job, in that case you wouldn't exactly be helping the unemployed. If you increase the number of jobs by lowering/removing the minimum wage then those new jobs will pay less than minimum wage and you're really close to having jobs that don't pay enough to pay the rent of even the crappiest apartment.
"When they advocate free trade to make everyone better off? Again, that's just lip service on behalf of the coalition?"
Free trade doesn't make everyone better off. People in effectively "protected" employment positions would lose out and only in the long term would the population be better off on average (but they still have to eat in the meantime, so again you would have to change many other things at the same time). Of course you can view this as an acceptable cost, to help people in poor countries and future generations, but then you should be honest and admit that there is a cost, instead of falsely promising that everyone alive today would be better off.
You can't just take abstract concepts that deal with large averages and the long term and apply them to individuals in the short term.
Ireland barely has public transportation, so that's a terrible example. Public transportation is profitable in places like Germany, Japan and the Netherlands and it could be in many American urban areas. It's really much more efficient than cars in urban areas. Combined with more flexible working hours, meaning that some people will work from 10 to 6 for example you could really make transportation a lot more efficient. I don't know if it means anything to you but I'm pretty sure Robin would agree with me on this (given his recent piece about automated urban transportation).
I suppose we all have our egocentric biases, but doesn't seem just a wee bit more likely that economists will tend to be part of coalitions including financial and corporate power-holders than of ones consisting of, say, unemployed workers?
I was thinking along the lines of Bernanke, Yellen, Summers, etc.--the Federal Reserve, WTO, and World Bank levels. Of course, they're atypical of economists, but their enormous power should bring status to the whole profession.
Does it? It strikes me that the status aspirations of economists are hampered by the unfortunate choice of their profession's name. Having to "economize" is not a high-status signal.
That would be bad for the environment and you force the poorer workers to give up more of their spare time. What you want is to force politicians to put more money into public transportation (which would be exempt from the toll) and force employers to start thinking about less rigid working hours because most people on the road during rush hour really have to be somewhere and therefore won't just stop going on the road if there was a toll.
Yes, but a road toll would greatly increase that incentive. Plus it's an institutional thing, lots of people would want to start working at 10 am, because then they're better rested, they can do more at night and it also makes the roads less congested if half the employee start working an hour later. A road toll could be the nudge that lawmakers and employers need to finally start thinking about more flexible working hours (the current system where everyone starts working at the same time and as early is possible is still based on medieval agricultural society).
Don't people already have a large incentive not to drive during rush hour? *mumble mumble revealed preferences mumble mumble*
(This is probably incorrect but I'd love to be educated by having someone explain to me why.)
Agree with Curt. Celebrity pundits are high-status, and some economists happen to be celebrity pundits.
The modal NYC hedge fund manager or i-banker reads 0 economics journal articles per year, and knows what appeared in AER or Econometrica last year as well as he knows what appeared in the New England Journal of Medicine. In 0 meetings per year does he suggest that the firm should take a certain trading position because an academic economist recently said so. The modal Tennessee legislator can name 0 economists on the faculty of Vanderbilt. The idea that any decisionmaker is being bullied into submission by the high "status" of economists' expertise seems farfetched.