Report back from the IAES conference (part 5 of 5)

birdThis being my first year as a full-time professor of economics at Berklee, one thing on the to-do list was to attend an economics conference.  I’d attended conferences on other topics, such as a green campus conference this past summer, but this was my first “mainstream” economics conference ever!  So with that in mind, here are this young chick’s thoughts:



Overall, my impression of this conference wasn’t very good.  I was struck by two things.  One was that “economics” is an extremely broad topic, with enormous diversity on as many dimensions as you care to go.  What happened, then, was that even within the breakout sessions the presenters talks were at most extremely tangentially related to each others, and certainly nobody really had the ability to critique each other’s work.  Particularly when a presenter says essentially “I did years of work on this and here’ what I found.”  This perhaps is the direct cause of my next observation.

There was practically nobody there!


The one photo I took of a breakout session room. You only can see some half the room, but this was pretty typical of what things looked like.

The break-out sessions were in rooms that could hold up to about 25.  Every session I went to there would be four people presenting, a fifth person there as “moderator” and then between two and six people (usually 2 or 3), myself included, who were just there to listen.   0


Sadly no wide-angle shots or shots looking back, but it was pretty much the same deal all the way back.

The Saturday afternoon Plenary Session/ Sadly no wide-angle shots or shots looking back, but the ratio of chairs:people was pretty much the same throughout the room.

Even the much advertised keynote and plenary sessions, where we all came together, featured a large room with people in under 10% of the seats.  My best estimate was 35-40 people in the audience in a room meant for 500.











whats-going-onAnyway, all these people presenting to mostly empty rooms felt like an eposide of the Twilight Zone, and had me theorizing several things…

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Report back from the IAES Conference (part 4)

Sunday featured two break-out sessions, with no large plenary sessions.

First was a 2-hour session titled “Computable General Equililibrum Models from U.S. Tax Policy Analysis.”

If memory serves me right, one of the four presenters wasn’t there, which meant the others got more time.  Professor Bhattari of the University of Hull (U.K.) presented an analysis claiming that much of the problem with the economies of southern Europe is that many “intermediate goods” (e.g. electricity, which gets used by the private sector to make stuff) are supplied by state-owned companies whose wages are about a third higher than in the private sector, resulting in an oversize intermediate-goods sector.

My attitude toward large theoretical mathematical models that produce all-too-convenient results for the already-wealthy.

My attitude toward large theoretical mathematical models that produce all-too-convenient results for the already-wealthy.

Next was a pretty lame presentation which featured a very theoretical, mathematical model which claimed that, if the corporate income tax rate were reduced by 20% for the next 40ish years, GDP would be about 1% higher.  I asked the presenter why the corporate tax rate matters at all (assuming it’s under, say, 95%), since the goal of a corporation is to maximize profit so that you’ll try to hit the same number even if a fraction gets taxed away.  He replied that a lower corporate tax rate encourages investment in the corporate sector. I found his assumption highly questionable, especially in an economy that has a glut of unused savings, and in which so much corporate cash goes toward stock buybacks.

At the same time, at least the claim was that it would only affect things 1% over 40ish years, which is an effect you could never even notice.  Roughly 0.03%/year is virtually impossible to spot with all the ups and downs.  In addition, we have no clue what great new technologies will come along in the 2020s and 2030s…or how bad the environment will get, how badly resource depletion will bite, etc.  So I suppose the main takeaway from the model is “whatever…don’t bother.”

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Parti and her sister/littermate Rae joined the Block-Schwenk Collective in December 2013.  Unlike our other cats, they were adopted locally through a small no-kill cat rescue group called Whiskers of Hope, which we connnected with via Petfinder, an excellent site used to connect people with animals who need homes.  Also unlike our other cats, we got them as slightly older kittens, a bit over 5 months old rather than 8-11 weeks.

Parti is very much a “gamma”  Unlike other cats we have adopted, including her sister, she hid from me for a couple of months, and still spooks easily–when she’s not demanding attention!  She’s still sensitive, but has become generally happy and very talkative!   Parti particularly loves playing with a laser pointer’s red dot, and also plays with the young one, Sonnet (our sixth cat, who will be featured in the next cat post).

Parti also is very photogenic, especially on Halloween!

Parti with her favorite human.

Parti with her favorite person.

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Capital in the 21st Century Review: Chapter 3 (part 2 of 2)

Chapter 3, titled “The Metamorphoses of Capital,” examines how the nature of wealth has changed over the past couple of centuries.
I broke the chapter into two parts, where part 1 focuses on private wealth, while the part 2 focuses mainly on public wealth and debt.

Thomas Piketty starts off by defining public wealth as falling into two categories:  assets which are owned by the government and used by itself or the public (buildings, roads), and “financial” assets of the type that individuals also often own (for example, partial ownership in private corporations, or foreign assets).  The line between these categories is blurry, as government-owned firms can be privatized.  Similarly, it can be extremely difficult to precisely price a road or a park.

However, Thomas Piketty’s key point is that net public wealth (assets – debts) is very small compared with private wealth.  “At present, the total value of public assets (both financial and non-financial) is estimated to be almost one year’s national income in Britain and a little less than 1.5 times that amount in France.  Since the public debt of both countries amounts to about one year’s national income, net public wealth (or capital) is close to zero.” (page 124)

Table 3.1

Since as the table above shows, net private wealth is almost 6 years national income,  “Regardless of the imperfections of measurement, the crucial fact here is that private wealth in 2010 accounts for virtually all national wealth in both countries:  more than 99% in Britain and roughly 95% in France, according to the latest available estimates.  In any case, the true figure is greater than 90%.”

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Capital in the 21st Century Review: Chapter 3 (part 1 of 2)

Chapter 3, titled “The Metamorphoses of Capital,” examines how the nature of wealth has changed over the past couple of centuries.
I broke the chapter into two parts, where part 1 focuses on private wealth, while the second part focuses mainly on public wealth and debt.


When Horore de Balzac and Jane Austen wrote their novels at the beginning of the nineteenth century, the nature of wealth was relative clear to all readers.  Wealth seemed to exist in order to produce rents, that is, dependable, regular payments to the owners of certain assets, which usually took the form of land or government bonds. (page 113)

Of course, Thomas Piketty acknowledged that even at that time there were businesspeople, as well as owners of overseas plantations (yes, including the slaves there) .  But those were a definite minority.

Here’s the graph which really defines the chapter:

Figure 3.1

France follows a similar pattern.

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Report back from the IAES conference (part 3)

Saturday culminated with a plenary symposium:  “Perspectives on the Post-Crisis Financial Reform in the U.S. and Europe.”

The first speaker, Dr. Robert Eisenbeis, spoke about the three banking crises of the past century.  Two of them I was familiar with:  the recent one (epicenter 2008) and the one that unfolded during the Great Depression (1929-39).  He added a third crisis, the bank and Savings-and-Loan institutions failing during the 1980s, though noted that this crisis was a “slow-burner” that spread over many years and didn’t put the economy into recession.



Note above the large differences. Blue = unemployment rate  Green = Inflation, Red = GDP growth rate.

The recent crisis most resembled the Great Depression, hence its nickname, “The Little Depression.”

Each crisis had its own causes for failure:  in chronological order, overinvestment is risky assets (notably stocks), high inflation of the last 1970s reducing the real value of their outstanding loans, and the housing bubble combined with financial derivatives.  Crises played out in different ways, as did the federal response to each crisis.  He was less impressed with the partial-solutions (the Dodd-Frank bill) to the more recent crisis than with the more robust solutions to previous crises.

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