WHO AND WHAT WE FUND… researchers affiliated with U.S. universities, including graduate students, post-doctoral researchers, and professors… [with] a university to act as a fiscal agent….
HOW TO APPLY: After reviewing WCEG’s grant program description and information on who and what we fund, researchers interested in applying for a WCEG grant should submit a letter of inquiry (LOI) no longer than three pages… includ[ing] the WCEG cover sheet with their application….
REVIEW PROCESS: Letters of inquiry will be reviewed by WCEG staff economists. Full proposals will be reviewed by WCEG staff economists, external reviewers when necessary, and the WCEG steering committee.
If you are interested in serving as an external reviewer for future solicitations, please email grants@equitablegrowth.org.
Category: Equitablog
John Cassidy: “There Are Already Enough Centers for Inequitable Growth in Washington: Time for a Center for Equitable Growth”
Morning Must Read: Insiders, Outsiders, and ObamaCare, from the Economist’s Democracy in America
The Economist’s Democracy in America has this morning’s policy must-read: Health care in America: An insider-outsider problem:
THE hopeless, hapless launch of Obamacare…. There is a lot that can be said (and is being said) about the president’s management skills, and how the administration did not see this coming…. Obamacare was always going to be a hard sell because it is an attempt to fix an insider-outsider problem. At root, its supporters do not think it right for a country as rich as America to be home to tens of millions of people who do not have health coverage, or who have such skimpy insurance that they risk financial ruin if they fall gravely ill….
Why We’re Launching the Washington Center for Equitable Growth
The United States economy has undergone dramatic changes in the last three decades. Arguably, none of these changes has been so well documented as the rise in income inequality.
From 1979 to 2007, the top 1 percent of households saw their incomes skyrocket by 275 percent, while incomes for the bottom fifth of earners increased by less than 20 percent. Last year, the top 10 percent of earners took home more than 50 percent of national income, a higher share than in the 1920s. And today, the wealthiest one percent of households possess more than a third of U.S. total net wealth; the average CEO makes $14 million a year, while the average worker makes $51,200.
Inequality in the United States has worsened to levels that more closely resemble a developing country than many other OECD nations. Yet economists don’t know yet what that means for economic growth and stability in a country as economically complex as ours. Just last month, after winning the Nobel Prize in economics, Robert Shiller singled out worsening income inequality as America’s biggest problem.
We agree. That’s why we are launching the Washington Center for Equitable Growth, a new research and grantmaking institution focused on accelerating our ability to discover evidence-based, policy-relevant answers to the many questions surrounding inequality’s effect on economic growth and stability. This year, WCEG will support independent academic research through a competitive, externally-reviewed grant program. Our goal is to construct a portfolio of policy-relevant research projects that furthers our understanding of why and how inequality has increased and illuminates the ways in which inequality may affect economic growth and stability.
Conventional wisdom among many policymakers and pundits says that, while we may not like inequality, while it may insult our sense of fairness, it’s an inevitable byproduct of a competitive market economy. And if we aren’t careful, trying to curb inequality might hurt growth.
This perspective sounds serious and pragmatic. It’s tough love. It works in support of a visionof the economy in which growth is driven by wealthy investors, who, if they have enough cash on hand, will build businesses and make investments that create jobs. To best support growth, policymakers should stay out of the way, acting mostly to remove so-called hurdles like high taxes or burdensome regulations.
It’s a tidy story, but one that we believe is far too narrow a way to understand how an economy like ours actually functions—and, moreover, it’s a story that is largely unsupported by available evidence. For example, a recent IMF study found that countries with more equitable income distributions have longer periods of stable economic growth. Other studies point to the importance of issues ranging from investing in human capital to encouraging political inclusion to support long-term economic growth and stability. But evidence remains thin on how worsening inequality affects these economic components: how it may alter demand for goods and services, or hinder entrepreneurialism, or undermine our political or economic systems.
To begin finding answers, we are enlisting some of the most brilliant minds from economics—ranging from Nobel Laureate Robert M. Solow to John Bates Clark medal winners Emmanuel Saez and Raj Chetty—to guide our effort. We’re also convening a diverse, interdisciplinary group of advisers whose members study inequality from social, political, financial, behavioral, and psychological perspectives. To help ensure new research finds its way into the policy debate, we will also work to strengthen the lines of communication between the academic experts who study the economy and the policymakers in Washington who work to shape it.
This will be a long-term effort. We won’t have answers tomorrow. But hopefully by the time we do, we’ll have a political debate in Washington that is rational enough to consider the evidence and to implement solutions that produce strong growth while addressing one of America’s biggest challenges.
Things to Read on the Evening of November 14, 2013
Must-Reads:
- Neil Irwin: This is what Janet Yellen
will say tomorrowsaid today at her confirmation hearing - Sarah Kliff and Ezra Klein: Nine key facts about Obamacare’s enrollment numbers
Should-Reads:
- Ezra Klein: Obamacare is in much more trouble than it was one week ago
- John Holbo: The Overton Straitjacket
- Richard Mayhew: Looking at Landrieu’s plan
- John Quiggin: National Accounting and the Digital Economy
Things to Be Aware of:
- George A. Akerlof (1972): The Market for “Lemons”: Quality Uncertainty and the Market Mechanism
- Gabe Chodorow-Reich and Loukas Karabarbounis: The Cyclicality of the Opportunity Cost of Employment
- Rick Perlstein: Ted Cruz, Joe McCarthy, and the Grand Old Tea Party
- Cosma Shalizi: Review of Cognition in the Wild
- Kenneth Arrow: The Organization of Economic Activity: Issues Pertinent to the Choice of Market versus Non-market Allocation
- Josiah Ober: Democracy and Knowledge: Innovation and Learning in Classical Athens
- Mancur Olson: The Logic of Collective Action
- James Buchanan and Gordon Tullock: The Calculus of Consent
- Friedrich von Hayek: Individualism and Economic Order
Uwe Reinhardt Is Unhappy with the Idea That What Health-Care Financing Needs Is More Cost Sharing
Austin Frakt sends us to Uwe Reinhardt on health-insurance cost-sharing:
[T]he often advanced idea that American patients should have “more skin in the game” through higher cost sharing, inducing them to shop around for cost-effective health care, so far has been about as sensible as blindfolding shoppers entering a department store in the hope that inside they can and will then shop smartly for the merchandise they seek. So far the application of this idea in practice has been as silly as it has been cruel.
Judge Denny Chin Approves of Google Books as It Is Currently Constituted…
Good to see. The plaintiffs here have done, I think, a bad thing by delaying and trying to further delay the evolution of the Universal Online Library of Humanity. It would be better if the Library of Congress had done it rather than Google, but the Bush Administration and the Congress dropped the ball. It would have been much better had the plaintiffs settled with Google–they would be better off, and all of us reader would be much better off, than they are now:
Judge Denny Chin: Google Summary Judgment:
In my view, Google Books provides significant public benefits. It advances the progress of the arts and sciences, while maintaining respectful consideration for the rights of authors and other creative individuals, and without adversely impacting the rights of copyright holders. It has become an invaluable research tool that permits students, teachers,librarians, and others to more efficiently identify and locate books. It has given scholars the ability, for the first time, to conduct full-text searches of tens of millions of books. It preserves books, in particular out-of-print and old books that have been forgotten in the bowels of libraries, and it gives them new life. It facilitates access to books for print-disabled and remote or underserved populations. It generates new audiences and creates new sources of income for authors and publishers. Indeed, all society benefits.
Continue reading “Judge Denny Chin Approves of Google Books as It Is Currently Constituted…”
Market, State, Bureaucracy: What We Need to Learn: Thursday Focus
As I like to say, we are moving into a twenty-first century in which we are highly likely to spend a greater share of our collective income on:
- pensions (for our societies are aging);
- education (for the technological world in which we maneuver as adults is only getting more complicated);
- health care (what else are we going to be spending money on? Taylor Swift videos? Car elevators?); and
- information and information-like goods (for the share of things we value that are produced under conditions of roughly constant returns to scale and that are both rival and excludible looks like it is dropping).
Historical experience teaches us that whenever we try to supply any of these four needs via an un- or a lightly-regulated market, it does not go so well. This suggests that we are likely to be happy in the twenty-first century only if we shift our collective economic cognition and organization to place somewhat less emphasis on the market and more on… something.
The problem is that we have–or, at least, from where I sit I think we have–very good ideas about the success and failure modes of markets (i.e., Friedrich Hayek (1947), Individualism and Economic Order; Kenneth Arrow (1969), “The Organization of Economic Activity: Issues Pertinent to the Choice of Market versus Non-market Allocation”). We know rather less about the success and failure modes of politics (i.e., James Buchanan and Gordon Tullock, The Calculus of Consent; Mancur Olson, The Logic of Collective Action; Josiah Ober, Democracy and Knowledge: Innovation and Learning in Classical Athens).
And, IMHO at least, we know very little about the success and failure modes of bureaucracy.
So I would like to call for people to think, and think hard, so that a generation hence we know as much about the success and failure modes of bureaucracy and politics as we do about markets–and, I hope at least, have evolved some more tweaks to make all three modes of social organization and cognition less subject to failure.
Alas, I have no special insight into how to start thinking about these matters. But Cosma Shalizi has the best diving board I have found:
Review of Edwin Hutchins, Cognition in the Wild: Human beings coordinate their actions to do things which would be hard or impossible for them individually. This is not a particularly recondite fact, and the recognition of it is ancient; it is in the fifth book of Lucretius’s De Rerum Natura, for instance…. The nineteenth century, and to a lesser degree this one, have witnessed a dramatic expansion in the numbers of us engaged in administration, bureaucracy, management, oversight–that is to say, in formally-organized tasks of collective cognition and control. We did not invent bureaucracy, the mainstay of the ancient empires, but we’re much, much better at it… corrupt, inefficient institutions which work poorly; every election, Piffleburg [WI]’s citizens mutter something like “what do we pay taxes for anyway?” Yet to run any one of these institutions at the level of honesty, efficiency and efficacy which makes Piffleburg grumble would have demanded the full powers and attention of even the ablest Roman propraetor or Tang magistrate. That all of those institutions, plus the ones not restricted to a single city, could be run at once, and while governed by a very ordinary slice of common humanity, would have seemed to such officials flatly impossible.
The immediate question this raises, of why we are so much better at collective endeavors than the ancients, can be answered fairly simply. To a first approximation, the answer is: brute force and massive literacy. We teach nearly everyone to read and write, and to do it, by historical standards, at a high level. This lets us staff large bureaucracies (by some estimates, over 40% of the US workforce does data-handling), which lets us run an industrial economy (the trains run on time), which makes us rich enough to afford to educate everyone and keep them in bureaucratic employment, with some surplus left over to expand the system.
This would do us no good if our ideas of administration were as shabby as those of our ancestors in the dark ages, but they’re not: we inherited those of the ancient empires, and have had quite a while to improve upon them (and improvements are made easier and faster by the large number of administrators and the high standard of literacy). Among the improvements are many techniques (standardized procedures, standardized parts, standardized credentials and jobs, explicit qualifications for jobs and goods, files, standardized categories) and devices (forms, punch cards, punch card tabulators, adding machines, card catalogs, and, recently, computers) for making the administration of people and things easier. (We’ve been over parts of this before, looking at James Beniger’s book on The Control Revolution and Ernest Gellner’s Nations and Nationalism.)
All this is in the realm of technique; when it comes to theory, we are quite at a loss. We can see, in a rough, common-sensical way, what makes us better at running things than the Romans were, but we don’t understand how either they or us pull off the trick at all. That is to say, we don’t really have a good theory about how collective action and cognition work, when and why they do, how they can be made to work better, why they fail, what they can and cannot accomplish, and so forth.
Intellectually, these are large, tempting problems; technologically, they have obvious relevance to the design of parallel and distributed computers; economically, they could mean real money, not just billions; and, in general, it’d be nice to know what it is we’ve gotten ourselves into.
Now, in a sense, this problem has been approached by many of the social sciences…. Much of the most interesting research on these problems has been done by economists. The great Friedrich Hayek (that is, Friedrich Hayek the profound social scientist, not to be confused with his evil twin, Friedrich Hayek the right-wing ideologue) was apparently the first to point out that markets perform a kind of collective cognition or calculation which would be beyond the scope of the individual actors in the markets. Since his time, the economists have devoted considerable thought to how the way a group is put together–its procedures, the distribution of power, resources, beliefs and preferences within it–effects the decisions it arrives at, the courses of action open to it. Some of this work, like Arrow’s Social Choice and Individual Values and Olson’s Logic of Collective Action–is now classical, and, under various names, it’s an active, thriving area of inquiry….
[But still] we know next to nothing about how collective cognition works, or when it works, or how to make it work better; we have some ideas about it, but at best they’ve the status of artisanal rules of thumb…
1113 words…
Things to Read at Morning Coffee on November 14, 2013
- Neil Irwin: This is what Janet Yellen will say at her confirmation hearing
- Sarah Kliff and Ezra Klein: Nine key facts about Obamacare’s enrollment numbers
- Ezra Klein: Obamacare is in much more trouble than it was one week ago
- John Holbo: The Overton Straitjacket
When Markets Attack!: Kevin Drum Snags One on Lawyers’ Starting Salaries
When 15 large law firms each believe that the stakes are very high in their hiring “the best” first-year associates–and also believe that they and their peers can successfully identify “the best” first-year associates, this is what happens:
A very nice and impressive demonstration of market failure–the kind of thing to make George Akerlof’s heart go pit-a-pat. Not a situation in which the competitive market is doing very well as a societal computation and allocation mechanism, is it?
Continue reading “When Markets Attack!: Kevin Drum Snags One on Lawyers’ Starting Salaries”