American growth theorists buzzed about for Nobel

[xchrom]

http://hosted.ap.org/dynamic/stories/N/NOBEL_ECONOMICS?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2011-10-09-07-38-10

STOCKHOLM (AP) -- Researchers who study economic growth and how technology helps drive long-term development are among the top contenders for the Nobel prize for economics being awarded Monday, Swedish Nobel guessers say.

A day before the announcement of the prestigious 10 million kronor ($1.5 million) award, Americans Robert Barro and Paul Romer stand out as favorites for the prize for their research on growth, leading experts say.

The Nobel Committee maintains it doesn't pay attention to current events when picking a winner, but an award to growth theory would be closely watched as the world debates how to revive the economy in the face of large public spending cuts.

Romer, a former senior fellow at Stanford University now at New York University, has been hot "for a couple of decades," said Uppsala University economics professor Daniel Waldenstrom. That is one of the unspoken criteria to win the prize because it typically takes that much time to evaluate if results are sustainable.




Robert Barro
http://en.wikipedia.org/wiki/Robert_Barro

Barro graduated with a B.S. in physics from the California Institute of Technology in 1965, where he learned under Richard Feynman, but realized he "wouldn't be close to the top in those fields".<3> He turned to economics and earned a Ph.D. from Harvard University in 1970. He first reached wide notice with a 1974 paper entitled "Are Government Bonds Net Wealth?", a paper which argued that, under certain assumptions, present borrowing would be matched by increased bequest to future generations in order to pay future taxes expected to pay the debt on the government bonds. This paper was direct response to the Blinder-Solow results, which had implied that the long term implications of government borrowing would be compensated for by the wealth effect. This paper is among the most cited in macro-economics, and its implications of his Ricardian Equivalence are still being debated in the present.

In 1976, he authored a second influential paper, "Rational expectations and the role of monetary policy", in which he argued that information asymmetries would cause real effects as rational economic actors in response to uncertainty, but not in response to expected monetary policy changes. While he has revisited the topic since then, and critically appraised the paper, it was important in integrating the role of money into neo-classical economics, and in the synthesis of General Equilibrium and macroeconomic models.

In 1983 he applied this information asymmetry argument to the role of central banks, and concluded that central banks, in order to have credibility in inflation fighting, have to be locked into inflation targets that they cannot violate to reduce unemployment. (See also Monetarism, Phillips Effect, Inflation). During the 1970s economist Arthur Okun developed the concept of the Misery Index, which Jimmy Carter publicized during his 1976 presidential campaign, and Ronald Reagan in his 1980 presidential campaign. Numerous sources incorrectly credit Barro with this, due to the similarity of name with his own "Barro Misery Index". Barro's version first appeared in a 1999 BusinessWeek article.<4>

His 1984 Macroeconomics textbook remains a standard for explaining the subject, and his 1995 book, with Columbia University economist Xavier Sala-i-Martin, on Economic Growth is a widely cited and read graduate-level textbook on the theory and evidence concerning long-run economic growth. Barro's research in the 90s was mainly focused on the theoretical and empirical determinants of growth: he gave fundamental contributions to the theory of endogenous growth (with particular attention to the links between innovation and public investment on one side and growth on the other side), and was a pioneer in the econometric analysis of the main factors associated with growth in the modern era.<5> He was elected a Fellow of the American Academy of Arts and Sciences in 1988.<6>


Paul Romer
http://en.wikipedia.org/wiki/Paul_Romer

Paul Romer's most important work is in the field of economic growth. Economists studied long-run growth extensively during the 1950s and 1960s. The work of Robert Solow, for example, established the primacy of technological progress in accounting for sustained increases in output per worker. Romer's articles published in 1986 and 1990 amounted to constructing mathematical representations of economies in which technological change is the result of the intentional actions of people, such as research and development.

Romer is credited with the witty quote, "A crisis is a terrible thing to waste." This quote became a sounding horn by economists and consultants looking to make a positive take away from the economic downturn of 2007-2009.

His latest contribution has been in trying to replicate the success of charter cities and make it an engine of economic growth.<4> Romer has argued that with better rules and institutions, undeveloped nations can be set on a different and better trajectory for growth.<5>
Dominant theme

“Economic growth occurs whenever people take resources and rearrange them in ways that are more valuable. A useful metaphor for production in an economy comes from the kitchen. To create valuable final products, we mix inexpensive ingredients together according to a recipe. The cooking one can do is limited by the supply of ingredients, and most cooking in the economy produces undesirable side effects. If economic growth could be achieved only by doing more and more of the same kind of cooking, we would eventually run out of raw materials and suffer from unacceptable levels of pollution and nuisance. History teaches us, however, that economic growth springs from better recipes, not just from more cooking. New recipes generally produce fewer unpleasant side effects and generate more economic value per unit of raw material.

[saras]

1. Useless bullshit. How about economists who explain why growth isn't good for the planet, or us?

Wow. Too many - not even fallacies but utterly silly premises - to wade through.

1 - The premise that "increases in output per worker" is always desirable. It isn't, and many times negative factors outweigh the increase in production rate of a particular subsystem, the quality of the worker's life being not the least among them.

2 - The premise that mathematics purporting to describe "the intentional actions of people" is anything more than Carrollian storytelling. Just look at all the other problems we could instantly solve, from crime to the heights of human happiness, if we could measure intention with numerical precision.

3 - The premise that "a crisis is a terrible thing to waste" is witty rather than sociopathic. Richard Nixon comes to mind, as does the whole PNAC/Bush/9-11/Patriot Act fiasco. A crisis is something that calls for all your efforts to be devoted to minimizing human suffering, not maximizing profit, whether economic or political.

4 - Charter cities have all the promise of charter schools, and so far a similar track record. "Success"? Trading away people's ability to rule themselves for economic advantage for the wealthy, and exploitation for the poor. Imperialism micromanaged. A way of siphoning the most competitive and least ethical people out of whole cultures and adding them to the global ruling class.

5 - "Economic growth occurs whenever people take resources and rearrange them in ways that are more valuable." No, it does not. Economic growth only happens when people put that created value into the economy instead of themselves, their vaults, their neighbors, their community, or any larger causes or organizations they contribute to.

6 - The premise that there is a single, monotonic criteria of desirability - "value" - and that the worth of something in a money economy is somehow interchangeable with its value to the person or people in charge of it. People in real life do "A is better than B, B is better than C, and C is better than A" all the time, and they're not wrong or illogical in doing it. We also do "A is better for this, but B is better for that. Whether I do this or that next year is not under my control. Substituting for either causes complex problems for others of unpredictable cost."

7 - The premise that the norm in cooking is to produce pollution as a byproduct. I'll set aside the heat source for the moment, as it isn't the point of the metaphor. A "normal" kitchen, like most humans through most of history have used, has produced no pollution beyond broken pottery. Everything is reused or recycled, and integrated back into the production system quite close to its destination. The major waste is that food is often used at a level lower than its quality i.e. human food is fed to animals, animal food is composted. The other major pollutant, the hardest to integrate safely, is human waste. Why modern urban and suburban kitchens produce more pollution than the norm is another interesting question.

It would be a more accurate, and useful, kitchen metaphor to point out that the kitchen has been taken over by mass production, and many of its problems come from that. The two-ton mountains of white flour and white sugar outside the door draw pests, but that's how much white bread is being pushed through the ovens that now fill all the bedrooms of the house. The bathroom has failed because of being used by twenty workers 24/7, none of whom have time for bathroom maintenance, and they wouldn't be allowed to by health regulations if they did have the time, though the health regulations have neglected to specify that anyone else maintain the toilet either. So everyone is wading in a couple of inches of sewage while working.

[xchrom]

2. i don't disagree w/ much of what you say -- but we don't spend enough time talking about who is

creating the economic theories we all wind up living w/ & what the universities are teaching our economic & business thinkers.

we've all heard of milton friedman by now -- more are catching on to hayek -- and we've all heard of the 'chicago school'.

i just think their names and where they come from should be out there in front of all of us.