This 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

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.

Anyway, 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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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.

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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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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The conference in general seems very slow-paced.  There were 15-minute breaks between sessions, despite the fact that all events were on one floor of a moderate-sized hotel–a definite contrast to Berklee giving us all 10 minutes to, in some cases, walk several blocks!  We also got a 105-minute lunch!

After the first sessions was the Distinguished Address:  :Brazil in Transition:  Beliefs, Leadership, and Critical Transitions” by professor Lee Alston of Indiana University.

The talk brought back echoes of the excellent book Why Nations Fail.  He spoke of the importance of institutions in a country, that the elite always wants to set things up in their interest and preserve a dysfunctional status quo, but that every now and then you can get a “virtuous cycle” in which reforms beget other, stronger reforms.  The speaker gave a lot of credit to Cardoso (1994-2002) for starting real economic reforms and Lula (2002 – 2010) for continuing them–extra important as they were from different political parties.  He was a bit more skeptical of Dilma (Lula’s successor), but was very much “wait and see.”

(Note that “GINI coefficient” is a measure of inequality.)

Overall, Brazil has been getting a lot better over the last couple of decades, with inequality, instability, and poverty both falling and economic activity rising.  The speaker also pointed out that under president Lula the limited budget went mostly toward education (“human capital”) rather than infrastructure (“physical capital”).  In the speaker’s view, this will pay off down the road.  I hope he’s right!  I personally wonder if more could have been done through higher taxation, but in any case gradual improvement beats stagnation or decline.

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The International Atlantic Economic Society held its 80th biannual conference October 10 and 11 in Boston.  One thing on my oh-right-now-I’m-full-time to-do list was to go to a professional conference, and this one was close by, so it seemed like a good idea as any despite the high price ($300 or so–ouch!).  The conference actually started up on Friday the 9th, but my teaching schedule made that a non-starter.

Outside a room for one of the breakout sessions.

Saturday there were two “concurrent sessions” where we’d choose one of 8+ rooms to hear a group of speakers.  Plus there was a “Distinguished Address” on Brazil’s deveopment in the late morning and a Plenary Symposium on the Financial Crisis in the late afternoon.  Sunday theere were two more concurrent sessions.

Close to half of attendees at the conference were international.  Mostly from Europe, but I spotted people from China, Japan, and countries in Africa.

The first concurrent session I went to was on “Cultural Economics”  Probably my favorite session, the first two speakers were awesome.  The first speaker, professor Marial Khawar of Emira College (NY), had used a huge cultural database developed by anthropologists to look at growth rates as they related to culture.  Her findings were that growth was helped by higher institutional quality, but by lower cultural complexity.  The theory there was that higher cultural complexity meant more stratification and rigidity of social roles, leading to it being harder for people to improve their lot in life, hence less entrepreneurship and growth.  It also reminded me to Why Nations Fail, and its thesis that the elite in any society will try to freeze progress, fearing loss of position.

Next up was professor Julia Puaschunder from the New School (NY), looking at trust and reciprocity and how it affects inter-generational equity, defining the latter as the commonly-held belief that future generations should live lives at least as high quality as our own.  This is a belief shared by all but the most dysfunctional, collapsing societies.  She tried playing a “trust game,” a variant of the Prisoners Dilemma (which I teach in class). In her version people could keep money they were given, or give it to their partner who would get double what they gave.   So collectively folks were best off giving everything to the partner, while individually they were better off giving nothing.  She found a statisticaly significant, though  not particularly high, correlations (between 0.3 and 0.4) between how trusting someone was and how much they supported contributing toward future generations.  Interestingly, similar correlations were seen by people who were trusted and their willingness to support future generations, suggesting that mantra “Be the change you want to see.”

The other two presentations were pretty forgettable, but two out of 4 ain’t bad!