What Do Economists Believe?

I’ve just become aware that over the last several months the Initiative on Global Markets at the University of Chicago has engaged in what might be deemed an experiment in determining what, if any, consensus there is among economists. They’ve assembled a panel of economists who are geographically, politically, and demographically diverse and every so often they poll them on an economic issue—monetary policy, trade policy, and so on. The results are tabulated and graphed and you can see what the responses of individual panel members were.

So, for example, in response to the proposition “There are no consequential distortions created by the tax preference that favors obtaining health insurance through employers” 95% of the panel members disagreed or strongly disagreed.

Particularly interesting to me is that on most issues there’s substantial agreement, including across political lines.

Worth a glance.

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Indirect Production

In 1800 75% of the population of the United States was directly involved in farming. That number has declined steadily since then until today the percentage directly involved in farming is in single digits. U. S. per capita agricultural production continues to rise.

Over the course of the 19th century and into the 20th century the proportion of Americans involved directly in manufacturing increased until nearly 20% of American workers were employed directly in manufacturing. Over the last 30 years that proportion has declined. U. S. manufacturing continues to grow and today, in fact, produces more than ever, as I have noted several times before.

Although these transitions, first from agriculture to manufacturing, then from manufacturing to what is broadly referred to as “services” have caused some dislocation, in some instances lengthy, it has not resulted in massive unemployment. Actually, quite the reverse. Until the recent downturn unemployment had been tending downwards for decades, i.e. not just as a consequence of the successive bubbles. How is it possible to increase agricultural production, manufacturing production, and employment all at the same time?

The answer is indirect production. The guy who works in the truck assembly line producing a truck that is used by the farmer to haul things around a farm is engaged in the indirect production of food, indirect agricultural production. So is the copywriter who writes advertising copy for the truck, the web designer who works on GM’s web page, and whoever posts on GM’s Facebook pages. Not to mention all of the people who work for GM’s suppliers, the people who process their payrolls, and the banks where they put their money. An enormous number and proportion of people are now involved in indirect agricultural and manufacturing production.

That fact incorporates not only Adam Smith’s example of pin production, illustrating how specialization leads to efficiency but also Schumpeter’s idea of creative destruction.

I don’t mean to be hard-hearted but today’s unemployment is no worse than it was in the economic downturns of the early 1980s and merely a shadow of the unemployment, however measured, of the 1930s. Somehow things got better.

Is it possible that things are different this time? Sure. We had better hope they aren’t for reasons I’ll explain in a post I’ve been working on for some time.

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An Afternoon of Arias

Yesterday afternoon my wife and I attended a recital given by students of the Chicago Studio of Professional Singing, dubbed “An Afternoon of Arias&148;. Our dear friend, Janice Pantazelos, is the director and master voice teacher of the CSPS and we’ve been attending performances by the students of the CSPS for years in a number of different venues.

CSPS students vary in age, ability, and experience from 20 to their mid 50s and from more or less beginning students to highly accomplished professionals or the equals of most professionals. In some instances the performers were giving their first public performances of operatic arias but by this I do not mean they were hesitant, reluctant, or inept. Quite the contrary. Even the debut performances were executed at the very least with substantial accuracy (which in some cases is better than we’ve heard at Lyric Opera lately) and in at least one instance the debut performance by quite a young woman was in my estimate of professional caliber. Basically, there wasn’t a bum performance in the bunch and some of them were actually brilliant.

The program was a refreshing departure from the Verdi and Puccini works that have so dominated Lyric for the last few years. Many of the works performed were by bel canto composers (Bellini, Rossini, Donizetti) or by composers whose style lent itself well to bel canto (Handel, Mozart) or by composers whose style bridged the gap between the earlier musical style and bel canto (Meyerbeer). What there was of verismo was by and large Mascagni and Leoncavallo and what might be deemed the “pre-verismo” Bizet and Boito. If you’re not an opera buff, bel canto is a style of composition and singing characterized by grace, agility, and precision with a light attack on the upper registers compared with the later, darker, more ardent style of Verdi. Verismo, “realism”, usually sacrifices legato for passion.

I heard some old friends yesterday. For example, it’s been at least forty years (and possibly more than fifty—the memory begins to recede) since I’ve heard “Ombre légère” from Meyerbeer’s opera, Dinorah, performed live. What a delight!

One of things about hearing a group of students perform over a number of years is that you have the privilege of listening to them develop from hesitant to merely competent and, sometimes, to great musicianship, grace, and skill. How gratifying that must be to Janice. And what a tribute to her teaching! For example, last night we heard her student, Lela Philbrook, who always obviously had the chops, perform not only with ability but with tremendous subtlety, musicianship, even virtuosity. In another example Stuart Bard, a tenor, over the years has made the journey from mere competence to great musicianship, musicality, and authority. Listening to his performance of “Deserto in terra” from Donizetti’s Don Sebastiano was a real treat.

If you have any interest in opera at all or just in really good singing, I can heartily recommend attending the CSPS’s galas. The Chicago Studio of Professional Singing’s web site is here and I believe there’s a “cabaret” scheduled for December 17th.

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So What?

Due to the paywall I generally avoid linking to op-eds, columns, or articles in the New York Times. However, since Business Insider has linked to a NYT op-ed on intelligence, I’m going to comment on it. Here’s the meat of the op-ed:

Research has shown that intellectual ability matters for success in many fields — and not just up to a point.

Exhibit A is a landmark study of intellectually precocious youths directed by the Vanderbilt University researchers David Lubinski and Camilla Benbow. They and their colleagues tracked the educational and occupational accomplishments of more than 2,000 people who as part of a youth talent search scored in the top 1 percent on the SAT by the age of 13. (Scores on the SAT correlate so highly with I.Q. that the psychologist Howard Gardner described it as a “thinly disguised” intelligence test.) The remarkable finding of their study is that, compared with the participants who were “only” in the 99.1 percentile for intellectual ability at age 12, those who were in the 99.9 percentile — the profoundly gifted — were between three and five times more likely to go on to earn a doctorate, secure a patent, publish an article in a scientific journal or publish a literary work. A high level of intellectual ability gives you an enormous real-world advantage.

My reaction to that is so what? I don’t think there’s any doubt that highly intelligent people are better able to connect things mentally and do it faster than those who are less intelligent. However, any number of studies have found only a weak correlation between very high intelligence and income.

Furthermore, we’re talking about a rather small number of people. The 99th percentile is around two standard deviations above normal. The 99.99th percentile is around four standard deviations above normal. That’s roughly one in every 4,000 people or 75,000 people in the entire United States. Most of the people you went to school with, have met, or deal with on an everyday basis don’t make the cut.

Most of those who are in the top 1% (or even the top .1%) of income earners don’t make the cut, either.

To my mind there are several key points to remember: there’s a difference between accomplishment and the ease of accomplishment and incomes are, as I said, only weakly correlated with IQ. The highest paid nuclear physicist, whose IQ is almost undoubtedly four standard deviations above normal, probably earns less than the median cardiac surgeon who almost certainly isn’t even above the second standard deviation above normal. The supply of nuclear physicists may be low but the demand is pretty low, too.

Another factor that should be kept in mind. Cognitive development isn’t the only kind. Physical, cognitive, emotional, and social development are all important and, guess what? Individuals with high levels of social development are more likely to succeed physically, cognitively, and emotionally than those with the highest levels of cognitive development and lower levels of physical, emotional, etc.

For me the bottom line is that for the foreseeable future we’re going to be building a society and economy in which half of the people are normal (i. e. within one standard deviation of median) while a quarter are below normal and a quarter are above normal. Allowing our society to transmogrify into one in which the only people who can prosper are those in that top quarter or, worse, in the top .01% is a society doomed to failure.

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Strauss’s Ariadne auf Naxos at Lyric Opera, 2011-2012

On average Chicago Lyric Opera produces Richard Strauss and Hugo von Hoffmannsthal’s delightful 1912 opera, Ariadne auf Naxos, their third collaboration, once every 15 years. The last time was in 1998-1999. IMO that’s not nearly frequently enough.

I think that its scarcity in Lyric’s schedule is understandable. It’s musically and dramatically difficult and its post-Wagnerian “continuous melody” style does not exactly have you leaving the theater humming the tunes. Importantly in an Italian opera town in which “opera” is largely defined as Verdi and Puccini, it’s a 20th century German opera.

However, it also has much to recommend it. Relatively small orchestra (36 pieces), no chorus, just two sets, two and a half hours long. That’s the sort of opera that could (rather like La Boheme) be tossed into an ambitious schedule.

I first heard Ariadne auf Naxos when Lyric produced it as part of the 1998-1999 season. Although I had a subscription then for some reason or other I did not hear the 1981 production. I fell in love with it when I first heard it. The music is beautiful and, at least in my opinion, it is dramatically and thematically profound.

The work is an opera buffa enclosed in an opera seria enclosed in a satire of opera. It both lampoons and exalts opera, a difficult accomplishment and one in which the work only partially succeeds. It has, I think, larger themes as well.

Ariadne is just full of frustrated plans. The Composer has his plan. The Music Master and Dance Master have their plans. The opera performers and the commedia dell’arte troop have their plans. All of these plans are frustrated by the only plan that matters, the plan of Der Gnädige Herr, the Gracious Master, the sponsor of the work.

His guests will have their dinners, be entertained after dinner, and witness a concluding fireworks display. The plans of Composer, Music and Dance Masters, and performers notwithstanding, following the Prologue in which we are introduced to these characters and the situation and the Opera in which opera seria and opera buffa are performed simultaneously, the fireworks display goes off right on schedule, concluding the evening. Not coincidentally I am sure, this all takes place within the Three Unities of French classical drama—unity of plot, unity of place, and unity of time.

I have no idea what von Hoffmannsthal’s beliefs were but to my mind this is life. The opera seria and opera buffa, tragedy and comedy, are performed at the same time, they conclude on schedule with a fireworks display, and the only plan that matters is that of Der Gnädige Herr.

I think the work itself is flawed. The first act, The Prologue, is much more successful than the second, The Opera. In the Prologue The Composer is both mocked and honored and last night’s Composer, sung and acted flawlessly by Alice Coote, successfully moved us both to laughter and tears.

I thought the performers in The Opera, like the second act itself, were somewhat less successful. I thought that all were competent but the flighty Zerbinetta (Anna Christy) cheated on her high notes, the Prima Donna/Ariadne (Amber Wagner) was not quite up to the grandness of her roles, and I thought the Tenor/Bacchus was shouting at least part of the time. Little wonder that by the end of opera, in which he dominates, he certainly appeared to begin to flag.

Our Bacchus last night, Brandon Jovanovich, certainly possesses a strong Wagnerian tenor voice and presents a striking figure on stage.

The season so far: The Tales of Hoffman, Ariadne aux Naxos, and, a distant third, Lucia di Lammermoor.

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Nice

Just received what I took as a nice compliment from a client. He said “The idea of not having you as part of the team has never occurred to me.”

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Room-Temperature Superconductor?

The good news: German physicists may have produced a room-temperature superconductor.

The bad news: the conditions they’ve used may not be a great improvement.

The details:

Chemists Mikhail Eremets and Ivan Troyan [Ed.: of the Max Planck Institute] sandwiched hydrogen between two diamonds and compressed it while carefully monitoring the atoms with a set of lasers and electrodes. To apply the pressure, they used a diamond anvil, which is similar to the machines that crush coal with so much force that it turns into artificial diamonds.

[…]

The hydrogen atoms become electrically conductive when they are under about 220 gigapascals of pressure, explained Mikhail Eremets and Ivan Troyan in a report to the journal Nature Materials. That’s very similar to the pressure that you would experience within the inner layers of Saturn or the mantle of Jupiter, and ten times higher pressure than what’s found at the bottom of the Mariana trench.

That hydrogen has a non-gaseous state that is a metal is no surprise. We’ve known that for a century (look at its position in the periodic table). Producing the metal is quite an achievement, however, particularly at room temperature. Previous experiments along these lines have utilized extremely low temperatures.

To fill in some of the blanks here it is known that certain materials conduct electricity at some temperature with zero electrical resistance. Electrical resistance can be thought of as being like friction in mechanics.

The very cold or even ultra-cold temperatures required for the demonstrated superconductors is expensive to maintain. If a superconductor could be produced that functioned at what’s blithely referred to as “room temperature” which, oddly, in this field actually means a temperature of 0°C which is a mite cold for an actual room, all kinds of things become practical that aren’t practical now. It would be revolutionary for power transmission, for example. Other applications would be in computing and efficient MRIs just to name two.

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Loss Leader

Well, this is interesting. You know Amazon’s new Kindle Fire reader they’ve been advertising so heavily lately? Turns out that it costs a couple of bucks more to make it than they’re selling it for:

Research firm IHS say Amazon.com Inc.’s Kindle Fire tablet, which started shipping this week, costs $201.70 to make, $2.70 more than Amazon charges for it.

I doubt that they plan to make it up in volume. More likely they plan to make it up from the sales of books and movies. To be honest I can’t see how this is not predatory pricing and, considering Amazon’s position in the book business, they may be skating on thin ice.

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AHDL

I object!

Nigel Farage once again blasts Eurocrats in front of European Parliament, emphatically stating “By Any Objective Measure, The Euro is a Failure”

[…]

Farage also called various unelected EMU officials a “pack of hyenas”.

On the grounds that it is defamatory of hyenas.

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The U. S. Olympic Can-Kicking Team

It looks very much as though the U. S. Olympic Can-Kicking Team is poised to kick the can down the road. Again. It’s worked for them so far.

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