Should-Read: Peter Leyden: California Is the Future

Should-Read: Peter Leyden: California Is the Future/span>: “Ground Zero: San Francisco…

…So keep an eye on California. In particular, closely watch the San Francisco Bay Area, the region that encompasses Silicon Valley, as our ground zero for 21st-century civilization building. This is the London of our time. Just like London was not the only place for Enlightenment innovation at that time (France, Germany, and even the fledgling United States had a role), the San Francisco Bay Area is not alone. There are other urban centers in American and throughput the world playing a role, but you can’t beat California for its singular importance right now…

Should-Read: Dan Costa: Fast Forward: Scientist, AI Expert, Entrepreneur Vivienne Ming

Should-Read: Dan Costa: Fast Forward: Scientist, AI Expert, Entrepreneur Vivienne Ming: “If you are doing the same job you were doing a year ago, Vivienne Ming is going to replace you with an AI… https://www.pcmag.com/article/351278/fast-forward-scientist-ai-expert-entrepreneur-vivienne-mi

…Vivienne Ming: “Alexa is not AI. Siri is not AI. They are just voice interfaces for database search. There’s some neat stuff behind the scenes, but it’s automation. It’s great automation, I’m not knocking it.

AI to me, the most basic and tangible would be the face recognition and images that Facebook and Google can do. AI is some aspects of self-driving cars. Not everyone, but a lot of them…. Andrew Ng who is the Chief Scientist at Baidu, put it really well. AI is anything that feels uniquely human, but we can do in maybe in a second to five seconds. Now we can build… deep neural networks that can do anything you and I can do that kind of cognitive scale. If I can, for example, look at a resumé and think after about five seconds ‘ah, maybe I won’t hire this person.’ I can build an AI to do that different and better. Real AI is made up of things like face recognition, self-driving cars….

Again, think about a complex judgment. Do I know this person? Are they happy, are they sad? Should I hire them? At least those snap judgments. We can really automate that sort of thing nowadays. There are some implications about that, but that’s what I’m getting at with AI. What’s interesting is just as hard as it can be for me to tell you why I recognize you, why I would hire this person, it turns out we needed these deep neural networks that are almost just as complicated to understand to solve those problems….

I don’t think people should be bent over in fields picking strawberries. I don’t think [miners] should have to go a mile under the ground to mine coal. We can build systems to do that. I don’t mean I can imagine. People are building those technologies right now. They can be deployed and they are better, more efficient, and less costly than a human solution. Then we got to think, what am I going to do with all of those people?…

I build it, I have built systems for diabetes and for bipolar disorder, for finding jobs, for education. I’m truly hooked, I am part of the problem. Did I believe in its potential, does it make the other problems go away? We tend to work under this very optimistic assumption that yes, people are going to lose jobs and they’re going to be financial analysts and farm workers and doctors and long-haul truckers…. We aren’t building people to be creative problem solvers, to be adaptive. We’re building them to pull levers, sometimes very complex, cognitive levers, but still it’s lever pulling. Those people are not going to be ready for an AI-enabled job….

We need craftsmen, we don’t need tools with just legs carrying them around. We need adaptive, creative problem solvers that can then take these amazing technologies and do something amazingly creative with them…. we need to do is move education away from the tool side of the equation. Tools being all the skills and knowledge that I can give you a test and say do you know how to do this…. We need to stop with the focus on tools and think how do we build people that have strong cognitive skills, strong problem solving, metacognition, social and emotional intelligence. These are the things that are actually valuable. Then it turns out once I have those, once I’ve got a bunch of craftsmen I can actually teach you all sorts of tools and then augment it by AIs that can quickly and adaptively change.

Should-Read: In-Koo Cho and Kenneth Kasa: Model Averaging and Persistent Disagreement

Should-Read: In-Koo Cho and Kenneth Kasa: Model Averaging and Persistent Disagreement: “Two agents construct models of an endogenous price process…

…One agent thinks the data are stationary, the other thinks the data are nonstationary. A policymaker combines forecasts from the two models using a recursive Bayesian model averaging procedure. The actual (but unknown) price process depends on the policymaker’s forecasts. The authors find that if the policymaker has complete faith in the stationary model, then beliefs and outcomes converge to the stationary rational expectations equilibrium. However, even a grain of doubt about stationarity will cause beliefs to settle on the nonstationary model, where prices experience large self-confirming deviations away from the stationary equilibrium. The authors show that it would take centuries of data before agents were able to detect their model misspecifications…

Should-Read: Bob Margo: The integration of economic history into economics

Should-Read: Bob Margo: The integration of economic history into economics: “Many have noticed this long-term integration of economic history into economics…

…The integration of economic history into economics can be seen as an interesting example of the historical evolution of scholarly identity. Fields like macroeconomics, or labour economics, exist entirely within economics. Economic history is different, however, in that the boundaries cut across history and economics. As cliometrics became more important in the 1950s and 1960s, the question of identity became more important too. One argument was that cliometricians should meet certain professional norms in history as well as in economics. Robert Fogel was the most notable advocate, but this was widely accepted by the early cliometricians, not just Fogel. Others argued that economic historians should be gadflies, documenting crucial factors in growth and development that economic theory failed to appreciate. This argument is usually associated with Douglass North but it, too, had many adherents. Taken together, the two impulses created an intellectual space apart from the rest of the economics profession in which the early cliometricians, and their students, could function….

Obviously, the past has useful economics (McCloskey 1976), and it’s a good thing that economists of all persuasions embrace historical evidence more readily than just a few decades ago. As integration continues, however, economic history could become subsumed entirely into other fields. If this were to happen, the demand for specialists in economic history might dry up, to the point where obscure but critical knowledge becomes difficult to access or is even lost. In this case, it becomes harder to ‘get the history right’…

Equitable Growth’s Jobs Day Graphs: September 2017 Report Edition

Earlier this morning, the U.S. Bureau of Labor Statistics released new data on the U.S. labor market during the month of September. Below are five graphs compiled by Equitable Growth staff highlighting important trends in the data.

1.

The prime employment rate hit a new high for this expansion, rising to 78.9 percent in September.

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2.

The black unemployment rate is still far higher than the unemployment rates for whites, but it hit its all time low in September: 7 percent.

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3.

Wage growth picked up in September, but it’s not clear how much of the increase was due to low-wage workers losing work during hurricanes.

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4.

Leisure and hospitality — industries that have been growing strongly during the recovery — lost 111,000 jobs in September. This drop is likely hurricane related.

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5.

While the labor force participation rate picked up in September, the vast majority of workers flowing into employment were previously out of the labor force.

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Should-Read: Peter Leyden et al.: Future of Work

Should-Read: Peter Leyden et al.: Future of Work http://reinvent.net/events/event/future-of-work-kickoff-event/ | http://reinvent.net/events/event/future-of-work-kickoff-event-23-panel/ | http://reinvent.net/events/event/future-of-work-kickoff-event-33-panel-2-qa/ | http://reinvent.net/events/event/future-of-work-kickoff-event-44-breakout-sessions-conclusion/: “I’m Pete Leydon, and I am the founder of Reinvent…

…We try to bring together top innovators in deep conversations to solve complex problems. Our theory of change is that real fundamental innovation—reinvention—comes from a lot of smart innovative folks from different backgrounds in a room in a conversation that goes deep. That is what we have organized.

We also create media. We think if these kinds of conversations happen behind closed doors—which is a lot of strategy consulting—so much gets lost and doesn’t get absorbed. We always capture everything in long-form. You’re all going be on video. It’s a four camera shoot. You’re on as much of the video as people speaking up here. That’s part of the idea. This room is filled with some really amazing folks. And as Kevin Kelly in the early Wired magazine said: nobody’s as smart as everybody. We are going to tap into many many people in the Bay Area here to think through this problem of the future of work…

Must- and Should-Reads: October 5, 2017


Interesting Reads:

Politics in the Way of Progress: Live Over at Project Syndicate

Live at Project Syndicate: Politics in the Way of Progress https://www.project-syndicate.org/commentary/populist-politics-block-development-goals-by-j–bradford-delong-2017-10: BERKELEY – There are 17 United Nations Sustainable Development Goals (SDGs), which aim to tackle problems including poverty, hunger, disease, inequality, climate change, ecological degradation, and many others in between. Clearly, 17 is too many. As Frederick the Great supposedly said, “He who defends everything defends nothing.” Similarly, those who emphasize everything emphasize nothing.

This points to the problem of forging goals through consensus: they can end up being a wish list for everything short of heaven on Earth. But, to be effective, goals should operate like turnpikes, which allow you to make progress toward a specific destination much faster than if you had taken the scenic route. The purpose of consensus building, then, should be to get us to the on-ramp, after which it becomes harder to make a wrong turn or reverse course… Read MOAR at Project Syndicate

Brink Lindsey and the Road to Utopia

Let me put a spotlight on the very sharp Brink Lindsey here…

Brink Lindsey believes utopia is in our grasp. Our problems today are, he thinks, at their root problems about the creation of truly human identities that people can embrace.

This is a remarkable shift.

Previous human societies have had very different problems:

  • how to keep famine and plague from the door;
  • how to maintain the peace;
  • how to somehow scrape up the resources to make the investments to raise average productivity to a level that would support even a half-human standard of living; and
  • how to avoid gross maldistribution.

Keeping the peace remains a problem.

Avoiding gross maldistribution remains a problem—but the consequences of maldistribution in creating dire and life-threatening poverty are now much much less.

But famine, plague, and low productivity are now very far from our doors. And while productivity could be higher (and it would be nice if it were higher), an absence or an insufficiency of calories or of simply stuff is no longer a huge problem.

Instead, the problem seems, at least in Brink Lindsey’s conceptualization, to be “the progressive unraveling of the human connections that give life structure and meaning…”

That is a statement I find needs unpacking. But how to unpack this? Let’s let him try to unpack it. I don’t think he gets all the way there, but he makes a lot of progress:

Brink Lindsey: The End of the Working Class: “Outside a well-educated and comfortable elite comprising 20-25 percent of Americans, we see unmistakable signs of social collapse… https://www.the-american-interest.com/2017/08/30/end-working-class/

…the progressive unraveling of the human connections that give life structure and meaning: declining attachment to work; declining participation in community life; declining rates of marriage and two-parent childrearing…. Its roots are spiritual, not material, deprivation…. Anne Case and Angus Deaton have alerted us to a shocking rise in mortality among middle-aged whites, fueled by suicide, substance abuse—opioids make headlines these days but they hardly exhaust the list—and other “deaths of despair.” And this past November, whites in Rust Belt states made the difference in putting the incompetent demagogue Donald Trump into the White House. What we are witnessing is the human wreckage of a great historical turning point, a profound change in the social requirements of economic life. We have come to the end of the working class….

The working class was a distinctive historical phenomenon with real internal coherence. Its members shared a whole set of binding institutions (most prominently, labor unions), an ethos of solidarity and resistance to corporate exploitation, and a genuine pride about their place and role in society. Their successors, by contrast, are just an aggregation of loose, unconnected individuals… [who] failed to… enter the meritocracy…. That failure puts them on the outside looking in, with no place of their own to give them a sense of belonging, status, and, above all, dignity. Here then is the social reality that the narrowly economic perspective cannot apprehend….

From the first stirrings of the Industrial Revolution in the 18th century until relatively recently, the miraculous technological progress and wealth creation of modern economic growth depended on large inputs of unskilled, physically demanding labor…. In the skill-neutral transition from an agrarian to an industrial economy… workers displaced from farm jobs by mechanization could find factory work without first having to acquire any new specialized expertise. By contrast, former steel and autoworkers in the Rust Belt did not have the skills needed to take advantage of the new job opportunities created by the information technology revolution….

The best part of working-class life, solidarity, was… inextricably tied up with all the worst parts. As work softened, moving out of hot, clanging factories and into air-conditioned offices, the fellow-feeling born of shared pain and struggle inevitably dissipated…. The postwar ascendancy of the working class was… due… not just [to] favorable labor laws, not just inspired collective action, but the combination of the two in conjunction with the heavy dependence on manual labor by technologically progressive industries of critical importance…. The truly essential element was the dependence of industry on manual labor. For it was that dependence, and the conflicts between companies and workers that it produced, which led to the labor movement that was responsible both for passage of the Wagner Act and the solidarity that translated law into mass unionization….

We must remember that, even in the halcyon postwar decades, blue-collar existence was a kind of bondage…. The creation of the working class was capitalism’s original sin. The economic revolution that would ultimately liberate humanity from mass poverty was made possible by a new and brutal form of domination. Yes, employment relations were voluntary: a worker was always free to quit his job and seek a better position elsewhere. And yes, over time the institution of wage labor became the primary mechanism for translating capitalism’s miraculous productivity into higher living standards for ordinary people…. Meager pay and appalling working conditions during the earlier stages of industrialization reflected not capitalist perfidy but objective reality. The abysmal poverty of the agrarian societies out of which industrialization emerged meant that nothing much better was affordable, or on offer to the great majority of families. But that is not the end of the inquiry…. Workers routinely rebelled against the factory system…. The recurrent want and physical hardships of rural life had existed since time immemorial, and thus seemed part of the natural order…. By contrast, the new energy-intensive, mechanized methods of production were jarringly novel and profoundly unnatural. And the new hierarchy of bourgeois master and proletarian servant had been erected intentionally by capitalists for their own private gain….

At the heart of the matter, though, was the nature of the work…. Humans are most productive in filling in the gaps of mechanization when they perform likewise. The problem, of course, is that people are not machines, and they don’t like being treated as such…. The nightmare of the industrial age was that the dependence of technological civilization on brute labor was never-ending….

Those old nightmares are gone—and for that we owe a prayer of thanks. Never has there been a source of human conflict more incendiary than the reliance of mass progress on mass misery…. But the old nightmare, alas, has been replaced…. Before, the problem was the immense usefulness of dehumanizing work; now, it is feelings of uselessness that threaten to leach away people’s humanity. Anchored in their unquestioned usefulness, industrial workers could struggle personally to endure their lot for the sake of their families, and they could struggle collectively to better their lot. The working class’s struggle was the source of working-class identity and pride. For today’s post-working-class “precariat,” though, the anchor is gone, and people drift aimlessly from one dead-end job to the next. Being ill-used gave industrial workers the opportunity to find dignity in fighting back. But how does one fight back against being discarded and ignored? Where is the dignity in obsolescence?…

There is at least one reason for hope. We can hope for something better because, for the first time in history, we are free to choose something better. The low productivity of traditional agriculture meant that mass oppression was unavoidable…. Once the possibilities of a productivity revolution through energy-intensive mass production were glimpsed, the creation of urban proletariats in one country after another was likewise driven by historical necessity…. The political incentives were truly decisive. When military might hinged on industrial success, geopolitical competition ensured that mass mobilizations of working classes would ensue. No equivalent dynamics operate today. There is no iron law of history impelling us to treat the majority of our fellow citizens as superfluous afterthoughts…. There is a land of milk and honey beyond this wilderness, if we have the vision and resolve to reach it.

Should-Read: Karl Smith: Just Say No To Kevin Warsh

Should-Read: Karl Smith: Just Say No To Kevin Warsh: “Apparently Kevin Warsh is in a dead heat with Janet Yellen for Fed Chair.  I tried to articulate just how bad this is but the whole thing has me shrill… https://niskanencenter.org/blog/notes/just-say-no-kevin-warsh/

…Thankfully there are many other folks you can read while I gather my bearings.  For my part, I’ll leave you with this: back during the crisis some of us used to say “shut-up Warsh” to indicate that the previous speaker had just made a case so incoherent it wasn’t worth addressing…

…Sam Bell….

“Kevin Warsh is not a good idea,” said former Fed Vice Chairman Preston Martin, who was appointed by Republican President Ronald Reagan in 1982. “If I were on the Senate Banking Committee,” which must approve Fed nominees, “I would vote against him.”

Pedro Nicolaci da Costa at Business Insider:

Being wrong with conviction is a trademark of President Donald Trump. Perhaps that makes Kevin Warsh, his new perceived favorite to replace Janet Yellen as Federal Reserve chair, an ideal candidate…. Warsh’s mistaken policy views are especially egregious since he was brought into the Fed specifically for his purported expertise in financial markets, which were still sending panic signals even as Warsh tried to strike a more inflation-hawkish, sanguine tone.

Scott Sumner:

Can we now be sure that Warsh was wrong about monetary policy during the Great Recession?  I think so, but I’d also like to briefly discuss the implications of the other view, that we can’t be sure he was wrong.  If that were true, then monetary economics would be useless. There would be no core of knowledge worth teaching to our students.

Tim Duy:

Former Federal Reserve Governor Kevin Warsh’s column in Tuesday’s Wall Street Journal was so riddled with errors and misperceptions that it is hard to believe he was actually a governor.

Joe Gagnon:

In this week’s Wall Street Journal, Michael Spence and Kevin Warsh say the Federal Reserve’s policy of bond buys, or quantitative easing(link is external) (QE), is responsible for sluggish business investment in recent years.
There is no logical or factual basis for their claim. Indeed, logic and facts point strongly in the opposite direction. It is the reluctance of businesses and consumers to spend in the wake of a historic recession that is forcing the Fed and other central banks around the world to keep interest rates unusually low—not the other way around.

Narayana Kocherlakota….

Taylor and Warsh argued publicly against additional monetary stimulus in November 2010, when the unemployment rate was almost 10 percent and the inflation rate had fallen nearly to 1 percent. Their concerns about excessive inflation proved to be completely unjustified. Yellen, by contrast, supported stimulus.

Larry Summers:

My friends Mike Spence and Kevin Warsh, writing in yesterday’s Wall Street Journal, have produced what seems to me the single most confused analysis of US monetary policy that I have read this year (Brad DeLong has expressed related views).  Unless I am missing something — which is certainly possible — they make a variety of assertions that are usually exposed as fallacy in introductory economics classes.

[Editors Note: No Larry you are not missing a thing]

Paul Krugman

Warsh is indeed someone who has been wrong about everything; a bubble denier who spoke of strong capital markets before the crash, a hawk who has been warning about the risk of inflation for three years, an invoker of invisible bond vigilantes who somehow managed to describe the supposed threat from these vigilantes as somehow both a certainty and unknowable…