Posted tagged ‘economics’

And In Other News…WASF

May 29, 2011

Just got round to Richard Wolff’s Friday column at, and he paints a macrocosmic view of why the US is in such deep trouble — and why it matters in a two party system when (a) both parties draw from essentially similar financial bases of support, and (b) one of those two parties decides to crash the ability of government to govern.

Here are a couple of excerpts:

…At the same time, the housing market remains deeply depressed as 1.5-2m home foreclosures are scheduled for 2011, separating more millions from their homes. After a short upturn, housing prices nationally have resumed their fall: one of those feared “double dips” downward is thus already under way in the economically vital housing market.

The combination of high unemployment and high home foreclosures assures a deeply depressed economy. The mass of US citizens cannot work more hours – the US already is No 1 in the world in the average number of hours of paid labour done per year per worker. The mass of US citizens cannot borrow much more because of debt levels already teetering on the edge of unsustainability for most consumers. Real wages are going nowhere because of high unemployment enabling employers everywhere to refuse significant wage increases. Job-related benefits (pensions, medical insurance, holidays, etc) are being pared back.

There is thus no discernible basis for a substantial recovery for the mass of Americans.

Wolff actually says nothing that will seem new to this blog’s readers.  But still, the juxtaposition of economic and political futility in one relatively brief essay makes the message potent:

Republicans are now celebrating “American exceptionalism”, the unique greatness of living conditions in the US. Yet again, their politics stress vanishing social conditions whose disappearance frightens Americans who counted on them. In reality, the US is fast becoming more and more like so many countries where a rich, cosmopolitan elite occupies major cities with a vast hinterland of people struggling to make ends meet. The vaunted US “middle class” – so celebrated after the second world war even as it slowly shrank – is now fast evaporating, as the economic crisis and the government’s “austerity” response both favour the top 10% of the population at the expense of everyone else….

I disagree with Wolff’s claim in the piece that Democrats are trying to deal with deficits in company with the GOPers by slamming Medicare and Social Security — that bit reads more to me like easy across-the-water equivalence-mongering.  More generally  Wolff’s politics seem to make it hard for him to distinguish any meaningful distance between the two parties…which, as we have bitter cause to know, is not actually true.

Still, go read the whole thing.  Wolff ends on a utopian note, but the hard core of the piece paints a picture of an economy in long term stasis that is unlikely to shift as long as our politics remain so bollixed by corporate influence and GOP delusions.

Oh…and have a great weekend!

Update: Paul Krugman takes a victory lap (bemusedly) on the fate of his year-ago fears of prolonged economic troubles.  Did I happen to mention WASF?

Image: Georges Emile Lebacq, Ruins at Reninghe (Flanders), 1917



Great Read: MacFarquahar on Krugman in the current New Yorker.

February 24, 2010

Larissa MacFarquahar’s profile of Paul Krugman is worth your attention.  It’s a substantial tome, full of good stuff, from a portrait of the economist as a young smart guy to the sequence of what I wouldn’t call radicalization, but his conversion to the assumption of a kind of moral duty to speak.

But while the meat of the piece in many ways lies with this latter end of Krugman’s career, the bits where he tries to speak truth to power whilst educating the rest of us, the parts of the profile I like best are those that give insight into the practice and competences of economics as an aspiring science.

Krugman acknowledges what his “fresh-water” former friends (go to the piece if the term isn’t already known to you) mostly don’t:  that much of what economics tells us is obvious, that  economists know less that is true than people realize, and conversely, that much of what they do know isn’t true — and that’s a feature, not a bug.  In discussing one of the key pieces of work that secures Krugman’s reputation as a top-flight economist, Macfarquahar write:

Again, as in his trade theory, it was not so much his idea that was significant as the translation of the idea into mathematical language. “I explained this basic idea”—of economic geography—“to a non-economist friend,” Krugman wrote, “who replied in some dismay, ‘Isn’t that pretty obvious?’ And of course it is.”

As an aside, I can affirm the more general truth of this anecdote.  I had the chance to sit in on some of the promotion and hiring reviews pending at MIT’s economics department (coincidentally, Krugman’s former intellectual home) and while there were certain appointments in which the mathematical sophistication and abstraction from recognizable real-world issues was beyond not only me, but just about everyone in the room too, there were others in which the key ideas were rigorous and meticulous demonstrations of pretty obvious ideas.

The reason such work was seen as good was not because it presented a fundamental new insight, but because it presented that insight with a particular body of data and methodological rigor. (To add — there are other ways of demonstrating some of these facts; historians and anthropologists, for example, can and do observe the same phenomena as economists might. There data may overlap, but not be identical, and their interpretative tools may — often do — yield similar conclusions by their different routes…but all this is a digression.)

To get back on track:  MacFarquahar then expands on why economists bother with formalizations of penetrating glimpses of the obvious — and or why other disciplines might know things that economists had forgotten.  She writes:

Krugman began to realize that in the previous few decades economic knowledge that had not been translated into models had been effectively lost, because economists didn’t know what to do with it. His friend Craig Murphy, a political scientist at Wellesley, had a collection of antique maps of Africa, and he told Krugman that a similar thing had happened in cartography. Sixteenth-century maps of Africa were misleading in all kinds of ways, but they contained quite a bit of information about the continent’s interior—the River Niger, Timbuktu. Two centuries later, mapmaking had become much more accurate, but the interior of Africa had become a blank. As standards for what counted as a mappable fact rose, knowledge that didn’t meet those standards—secondhand travellers’ reports, guesses hazarded without compasses or sextants—was discarded and lost. Eventually, the higher standards paid off—by the nineteenth century the maps were filled in again—but for a while the sharpening of technique caused loss as well as gain.

The point being that economists, for good reasons, often need to rebuild a structure of known facts and ideas — not because they could not know these things by other means (like a good cartographic historian would) but because for economists to talk to each other, they need to express the objects of their curiosity in a form that their colleagues can understand. So far so good — but such mutual comprehensibility can come, as MacFarquahar documents Krugman discovering, at the expense of insights available for the taking. This is what I mean when I say, as I have on occasion that economics is an aspiring, or simply a young discipline

That is:  economics as practiced in the academy is in possession, its practitioners believe (and I mostly do too, not that my opinion matters) of a body of methods and a growing number of results that suggest that it is a powerful way of analyzing certain kinds of human behavior, and for making useful predictions about some things.  But it is far from as comprehensive in its explanatory power as some of its practitioners — and many more in the economic pundit class — would have one believe.

What’s more, it’s important to remember that there is a difference between a valid result and an empirically valuable one.  More bluntly: it’s not just possible, but common to come up with something that is absolutely “right” within the framework of economic thinking that is simply false in the real world.  MacFarquar writes:

The most successful paper Krugman ever wrote was about target zones, and it was completely wrong. In the years before Europe adopted the euro, it was thought that establishing something between floating exchange rates and fixed ones—a “target zone” within which a currency would be allowed to float—might reap some of the advantages of each. He estimates that by the time the paper was officially published, in 1991, some hundred and fifty derivative papers had already appeared. “Empirically, it doesn’t work at all,” Krugman says. “People loved it as an academic thing, but it had some very strong predictions about interest rates inside target zones. Those predictions all turned out to be wrong. But nobody attacked me for that. I was showing that if target zones worked the way that people say they’re supposed to work, then this is how it would play out.”

Economics — academic economics — “knows” much more than it knows…and that’s perfectly alright for the development of a body of thought.  The problem only surfaces either when economics results are given more credence than they deserve in the making of public policy and/or opinion.  I’d blurt “supply side” here, except that this was explicitly controversial within the profession, and so the history of supply side policy is not simply a story of a consensus too confidently achieved, but rather of the catastrophic process by which bad ideas are transformed into political certainties…which leads directly to the second half of my diagnosis of pathologies…

…and that would be when economists  — or political/ideological allies — present as settled conclusions that are either uncertain or false.

You see that a lot these days with deficit hawks — those folks who know what ain’t so, which is that deficit spending in the context of below-capacity employment and production can’t spur growth.  It’s a view associated with the freshwater school, and disputed hotly by the saltwater crowd, and by reality…and it is discussed amongst much else by Krugman himself  within his now famous (or notorious) article “How Did Economists Get It So Wrong.

All of which is to say:  1) Read the profile,

.and 2) remember:  economists, especially those who tell that GOP tax and budget policies will get us out of a recession, match Martin Rees‘ definition of cosmologists:

Often (always?–ed.) in error … but never in doubt.

Image: Jan Vermeer, “The Geographer,” 1668-1669.

Why Friends Don’t Let Friends Read McArdle: Keep the Military Dumb edition, part one

December 28, 2009

Alright.  The title is, perhaps, a little hyperbolic.  But, channeling my inner McArdle, such is blogging.

This recent little gift from McArdle is not quite as disastrous as it could be, in fact…but I do want to pick up a little bit of the folly within because I think this post captures so much of what makes her such a bad and, in real ways, such a damaging participant in our public discourse. (You’ll find part two of this screed here.)

The short form, to enable those with day jobs to ignore the tome that follows, is that McArdle argues that “the obvious solution” to the problem that not all advanced degrees sought by serving members of the armed forces are as rigorous as they might be, is to end the practice of encouraging service members to seek such degrees.

That is, to this as to all other issues raised by interactions between the state and private institutions, McArdle already knows the answer:  government can’t do nuthin’ right.

But of course, her treatment of this issue is simplistic, second hand, ignorant of the actual complicated ground of real experience involved and largely wrong. But no matter:  Given the fundamental truth of government incapacity, there is no need, in the McArdle alternate universe, to test assumptions about the failures of public action and the necessary virtues of private endeavor.

I’ve been criticized before for dissing McArdle through arguments from authority, for suggesting that even in her area of supposed expertise, economics, McArdle has essentially no formal training.  Some may see the above as a reiteration of that argument.

But that’s not right.  It is true that McArdle doesn’t possess academic training in economics in any significant degree — but I and many others I know write about lots of things in which we were not professionally trained.  We do so, though, in the context of the practices of research and journalism: we report, we hit the library, we check facts, we call people.

My argument about McArdle is in fact one of negative authority:  given her unwillingness to expand her competence, it’s a pretty good default to assume that pretty much anything she says is false, unless it is corroborated three ways from zero.  In other words, it’s not that her qualifications are not sufficient to evoke trust in what she says; it is that she refuses to do that without which no amount of qualifications could justify such trust.

More broadly:  McArdle is not the real problem. She certainly commands an audience, but I don’t know that she’s genuinely influential.  She preaches to a choir, and for all her efforts to engage folks who actually do know what they’re talking about on policy, political economy, and so on, it doesn’t seem — to me at least — that she’s risen above the background pop poli-culture noise.

But even if I’m right in seeing her more as a court jester than a privy councilor, she’s a symptom.  (Very mixed metaphor alert — ed.)

So take the mountain of verbiage that follows as an attempt to illustrate what has happened to, say, the health care debate, in which the endlessly repeated lie that a publicly-run insurance plan is “socialism” had such impact.  In that debate, this claim did not need to be “proved” by anything remotely resembling actual evidence.  Rather, it was presented as an axiom that government action in the face of social problems is both illegitimate and ineffective.

So even though McArdle is not in fact worth the mountains of effort her errors evoke in those who would correct the record, it still seems to me important to point out that the way she and others achieve whatever influence they possess is both driven to error and is disastrous.  Constant vigilance and all that.

So here goes, much too much gnashing of teeth at her post on the problems in the system by which the Department of Defense attempts to educate in-service enlisted members and officers.

McArdle’s post was prompted by a piece by James Joyner in which he discusses whether or not military-funded higher education for its soldiers and officers is delivering on its various promises.

There is in fact something of a real story there: the Department of Defense has a significant pool of money to spend on tuition support for higher education for its uniformed personnel, and as Joyner says, incentives exist for soldiers and officers to seek such education.  Field grade officers need advanced degrees to enhance their chances for promotion to the upper ranks; senior NCOs and Warrant Officers need at least some post-high school education for their advancement; and many recruits, even those not planning extended military careers, seek useful education/training to give them a leg up on civilian life.

There are certainly flaws in Joyner’s post, however, mostly due to his selective reading from the main source of his post.  But at least he read that source and engaged it.  The divine Ms. M. M., commits the greater sin when she takes that misreading at face value, however, declining to interrogate the underlying story…and the results are not pretty.

She writes,

I get the impression that the primary market for diploma mill degrees is in various branches of the government.  The civil service system, the army, and various local departments like teachers, all automatically reward you with higher pay if you get a degree.  Since they don’t distinguish between the caliber of the schools, the obvious solution is to find the easiest course you can.  Undoubtedly this happens in private organizations too, but since the purpose of a degree in the private sector is signalling rather than box-checking, there is some incentive for gravitating towards higher-quality degrees.

Well, there is a carload of sly in there, so let’s break it down just a little.

I’m going to save the first for later — that “I get the impression” business — because that line is the key to so much of McArdle.

Instead, let’s pick up the thread at “diploma mill degrees.”  Here she picks up a phase Joyner also uses, and it is one that is designed to maximize the onus against the kinds of distance learning programs the uniformed military might undertake.  It is a tricky phrase.

For example:  there is no doubt that plenty in higher education would argue that the term covers an operation like one cited the article that evoked Joyner’s pice — the University of Phoenix, with its horde of students and array of programs and degrees/certificates and what not to sell them, all owned by a publicly traded corporation with a keen eye for the bottom line.

But the University of Phoenix, like all institutions that meet the US military’s requirements for general higher education service providers, is an accredited institution.*  Degree or diploma mills conventionally understood are unaccredited purveyors of meaningless credentials.  A diploma mill degree from any of these institutions would not provide any advantage to a military career, while accredited institutions, even ones you may not think terribly highly of, must provide some kind of instruction to go along with the credential.

In other words, you’ve already got a bit of a common McArdle trope here, that rhetorical sleight of hand deftly used to make a bad day worse.

That said, McArdle might argue, pointing to Joyner’s post and its examples, that this is a distinction without much of a difference, because students at places like the University of Phoenix and other, worse actors, aren’t getting any worthwhile education despite the fact of accreditation.

But either McArdle did not actually read the Bloomberg article by Daniel Golden that Joyner used, selectively, to underpin his personal take on military education — or she did and chose not to pay attention to those parts of the piece that contradict preconceived certainties.

There, she might have found that the issue Golden documents is the damage the profit motive does to the delivery of useful education to the military — and not, as she goes on to criticize, the notion of in-service higher education at all.

For as Golden documents, but McArdle does not appear to have grasped or even noticed, not-for-profit, government-funded educational institutions do a much better job.  But that’s a story that violates McArdle’s essential understanding (expressed in the quoted paragraph above) that nothing the public sector may set out to accomplish is as wonderful as what the private sector does without trying.

The moral:  If you don’t want to know, you won’t try to find out; and if you don’t, the likliest outcome is that what you write will be wrong.

Or to flip the point:  if you already know that profit maximization is the one true road to any desired end, then heaven forfend that you actually come to grips with the facts presented on the specific questions to whose answers your faith has already guided you.

And with that…on to part two!

*See, e.g.,this statement of the requirement from Army Regulation 621-5, most recently revised in September, 2009:  “Institutions offering ACES postsecondary programs will be accredited by national or regional accrediting agencies recognized by U.S. Department of Education (ED).”

Image:  Dosso Dossi, “Portrait of a Court Jester,” 16c.

Must Read From David Leonhardt: Why Health Care Reform Matters, or How the GOP/Lieberman hate America Edition.

December 16, 2009

In today’s NYT, Leonhardt — one of the few really good economics reporters out there right now — writes about the “innovation gap” induced by the catastrophic failure that is the American health care “system” as it stands.  In doing so, he documents, once again, how the modern Republican party is, in essence, a traitor to the American dream.

In essence, Leonhardt is reporting about the largely unmentioned elephant in the room:  absent comprehensive reform of health care, the terror of losing or of failing to secure adequate insurance makes the US labor market increasingly rigid.  As Leonhardt reports:

It is impossible to know how much economic damage these distortions are causing, but they clearly aren’t good. Economic research suggests that more than 1.5 million workers who would otherwise have switched jobs fail to do so every year because of fears about health insurance. Some of them would have moved to companies where they could have contributed more, and others would have started their own businesses.

…Eric Schmidt, Google’s chief executive, told me, “There clearly are people who choose to stay in their jobs due to the fact that they don’t have insurance portability.” Just consider the economic research showing that people married to someone with health insurance are more likely to work at small companies than people who aren’t so lucky.

Leonhardt does a good job of mapping in cartoon fashion what we could aim for at this point in the health care debate, quoting my MIT colleague John Gruber saying “Take the Senate on cost control and the House on affordability …and you’ve the best possible bill.”

Certainly, the central moral and social rationale for health care reform is the fact that too many Americans sicken, go bankrupt, and die for lack of access to care.

But what makes this article at once so obvious and so necessary is the light it shed on this fact:  the reason we need to get going on the health care bill now, and then defy the “once every twenty years” meme for improving what we get, is that the wealth and hence power of the America our children will inhabit depends on real, ultimately transformative changes in how Americans get covered and cared for.

So the next time you read statements like this, ask yourself why the Republicans in Congress (and too many outside it) hate America so.

In any event. read the article.  It’s worth your time.

Image:  “A Proper Family Re-Union.” This immediate post-Civil War cartoon shows Satan welcoming Benedict Arnold and Jefferson Davis to Hell. Artist unknown, 1865.

It’s not that McArdle can’t read…it’s that she can’t (won’t) think: part four (and last, thank FSM).

October 7, 2009

Update: Hello and thanks to everyone coming over from Balloon Juice (and elsewhere.)  It took me a while to acknowledge y’all as I’ve been enjoying the strangely liberating experience of being on Amtrak and without intertubes for the last several hours.

Also, picking up on the comment below by Joel, let me emphasize that I don’t want to suggest that Acemoglu et al.’s later work contradicts the earlier paper discussed below; rather, as good research/ers does/do pursuing a question in detail leads to a more complex understanding of the problem.  The point is that if you are trying to argue from someone else’s work, you can’t just pick and choose the bits you like.


OK, by now it’s clear that this is overkill.  One post by Megan McArdle does not need this kind of rant; it’s like using a howitzer to plink a tin can off a fence.  [For grotesque demonstration of my logorrhea problem, check out parts one, two, and three of this series]

But in some sense, all I’m doing is channelling my inner John Foster Dulles:  McArdle, and her ilk are not going away.  Sadly, no amount of day-by-day debunking seems able to evoke the kind of respect for their claimed craft that would produce even a smidgeon more care and honor in their ongoing attempt to write into reality their unexamined assumptions.  So, after Dulles, consider this a kind of blogospheric massive retaliation, an attempt to shock and awe the recalcitrant into the virtues of intellectual honesty.

Which brings us to one more thing that McArdle did not do in her attempt to recruit what she claims as the gold-standard of authority, the academic literature, to bolster her assertion that any attempt to control drug expenditures in the US medical system is tantamount to a pact to kill nice old people.

I’ve used two posts so far to ridicule McArdle’s attempt to demonstrate her intellectual chops by basing this argument on a paper by the Rand Corporation, paid for by Pfizer (the world’s largest drug company) that relies on a secret-sauce “model” to produce the conclusion that free market negotiation by large customers (the US government, e.g.) and/or price controls would reduce the pace of innovation in the drug business, resulting in a loss of months of life expectancy.

In other words:  I don’t think much of a study paid for by the man that comes to the shocking conclusion that we must pay that man or he’ll shoot grandma.

But having disposed of the follies inherent in taking advocacy research too seriously, I want to point out one last and deeper flaw in McArdle’s dishonest brandishing of the sword and buckler of academic authority.

Recall that her core argument is that she is a truth teller, while her critics are ideologically driven bullies.  She writes

Or we could go to the academic literature.  Not the literature from advocacy groups which too often fills the pages of political magazines on the left and right, but something from someplace like Rand….

She says, in other words, that we should believe her because she performs research through the academic literature, and not mere advocacy.  (She actually contradicts herself below, by saying that we should believe her because she talks to Big Pharma, and thus is willing to dirty her hands in pursuit of truth that those who insist on relying on (presumptively) disinterested research by those “who have never run  or even studied businesses”…but never mind.)

But in fact, leaving aside that Rand is in fact a producer of advocacy literature, the Rand paper and McArdle cite a genuine academic source for a crucial part of the argument, a study that they claim demonstrates that changes in pharma revenue produce outsize shifts in the rate of pharmaceutical innovation.

And yet:  McArdle did not in fact “go to the academic literature,” for all of her properly provided hyperlink to the paper in question.

How do I know?

Because I checked.

Here’s the deal:  in science journalism — in any attempt to write about technical material for the public — it’s not enough simply to read an abstract or even the whole piece and call it done.

You can’t just read the paper and assume –unless you are genuinely expert in that subdiscipline of the field you wish to cover, and often not even then — that you know what its authors’ actually have done and what it means.

That’s why scientists go to conferences, for one thing — because there is more to grasping the meaning of important work than just reading the stylized and usually telegraphically compressed report of a piece of research in the professional press.

And if you are a reporter, then, by gum, you have to report on the piece, which is a much more involved and difficult task than many give it credit for being, at least if you do it right.

I’m not claiming that I did enough of that complicated work to write an independent piece on the very interesting research McArdle pointed to.  But I did do enough to confirm a suspicion formed on reading both McArdle and Rand:  Acemoglu and Linn’s paper, does not say what they thought or perhaps simply asserted it did.

This is the ultimate point I’ve been laboring towards all this long while.  Science writing is hard because of two related issues.  The first is that science — and aspiring sciences like economics — is/are hard.  Such work involves complicated ideas, intricate, often mathematically complex methods, jargons that can take quite a while to penetrate and so on.

And the second hurdle for good writing about hard stuff for the public is that the goal of science writing requires that you learn not just how to understand what’s being said in the terms of a discipline itself, but also how to identify, and then convey the core ideas in any given bit of science to an audience that doesn’t have the time you’ve taken to figure it all out.

So what you do if you are a properly trained and ethical science journalist/popular writer is read first, of course, with care and attention to all the places you either or both don’t understand and/or get the sense of an important subtlety…and then you call.

You talk to someone, lots of someones if necessary.

You get people in the field to explain what they are doing; you allow yourself to appear dumb to yourself; (you won’t seem stupid to just about any good faith expert source — only the assholes expect you to have mastered every paper in every journal tangentially bearing on their crucial work before calling, and there really aren’t as many of those as legends suggest); you ask simple questions, and then more complicated ones, until you and your interlocutor agree you’ve got what you need.

You have to persist — and if someone says check out this or that, you do, looking up the papers if necessary and then calling back…and so on.  You do what a good reporter does:  you cover the story.

This McArdle did not do.  If she read the Acemoglu and Linn paper with care, and especially if she had talked with someone who was familiar with the work, she would have realized the subtle distinction those authors made.  They looked at the role of market size on innovation for each particular market segment — a disease or group of diseases addressed by a set of competing drugs.  The Rand authors, with McArdle trailing happily along, conflated that to an argument about the effect of total market size on innovation across all drugs.

Again — this is subtle, and I had to talk at some length with an economist colleague to get why it mattered.*  But the essence of the idea is that the shifts in pharma innovation Acemoglu and Linn identified tracked the relative value of the market for individual areas of interest.  It does not follow that gross revenue changes produce the differences in innovation overall that both McArdle and Rand cite.  Rather, the two MIT economists simply demonstrated that more market share by drug category produced more new drugs within that category.

Or, more simply:  when the Rand/Pfizer authors claimed, and what McArdle (deliberately?) uncritically parroted — that a respected academic body of research confirmed that cuts in gross pharma revenue = cuts in innovation overall — they were, to phrase it most kindly, in error.

It actually gets worse, of course.

There is this thing called the internet.  It contains things like the homepages of scholars, which often include lists of their publications…which will often reveal ongoing lines of research or areas of interest.

As it happened, Acemoglu and Linn followed up their 2003/4 paper with a subsequent study, published in 2006 with David Cutler and Amy Finkelstein joining the original pair as co-authors.  This second paper looked at the impact of Medicare funding on innovation.

McArdle and the Rand folks do not mention this study, and it’s pretty clear why they might have wanted to ignore it.  For what did its authors find?


More formally, they wrote, “Our reading of the evidence is that there is no compelling case that Medicare induced significant pharmaceutical innovation.”

That’s not conclusive either, as one of the economists with whom I spoke explained to me.  What is clear — and those I asked agreed — is that connection between drug producer prices, market size and innovation is at best a mess (my word).  There is no basis on which to assert, as McArdle does, that

The upshot is that the overwhelming weight of the available evidence indicates that the effect of price controls in the US would be real, significant, and bad….The idea that any significant change in the profit margins on drugs sold here [in the US] will have enormous impact on the future of pharmaceuticals, is as close to a fact as we can get in this vale of uncertainty.

That is unproven in the sources she cites, and it is unproven in the real world.  On the basis of the academic literature she so proudly proclaims as her guide, she cannot know what she thinks (or wishes) were true.

To cover up this and prior errors, she is reduced to insulting her critics who have pointed out her ignorance, sloppiness and general lack of understanding of what real work looks like in the field in which her competence is supposed to lie. (Economics Editor of America’s Oldest Serious Magazine™!)

It’s time I finished this off, and by now the message, I think, must be obvious.  This is one tired horse I’m beating.

But here is a last thought, to try and generalize from one rather minor example of shoddy work on the internet.  It is a sign of both ignorance and bad faith to treat the real world and attempts to understand it as cavalierly as McArdle does here, and the right-punditocracy has done so often of late.

But this is  where the right is just now.  You can see bad faith and sloth too in  George Will’s embarrassing attempts to weigh in on climate change.**  You can see an almost comical (were it not so willed) misreading of the research in almost any attempt to produce a scientific justification for failing to credit the fact of evolution.  You can sure find the attempt to claim unearned authority running through McArdle’s work.

In each case, whatever the variations of motive, method and intent, all of this rests on the writer’s determination to ignore how science actually works — and hence how human beings actually find out useful knowledge about the world.  In each case — the root intellectual activity is to cherry pick what ever serves to bolster conclusions reached long before the notorious liberal bias of reality has had any chance to sully their perfect thoughts.

And as for McArdle herself?  Her sins are typical, but for that very reason, I guess, hardly worth the bludgeon I’ve tried to wield over the last several thousand words.  Except for this:  a failure to think clearly about how to repair a deeply flawed health care system kills people.  There are significant studies that explore those excess deaths.  Here’s one.***  And if you take that work seriously, then you have to see the Panglossian mission of McArdle and her herd of thundering ilk to present chunks of the status quo as best of all possible outcomes as implicated in those deaths.

More broadly: writing about the things that matter in real people’s lives — that may end some of those lives — is not a game.

That McArdle writes as if it were is the true measure of her work.

*I’m not naming by source, because that person dislikes the hurly burly of the blogosphere…and while I know that unnamed sources are more or less worth what you know about them, you have to decide here whether I’m a reliable enough interlocutor to believe what follows.

** Click that link to see why Chris Mooney gets around in public more than I do:  he gets done in 800 words what I’ve just spent in excess of 4,000 spouting about.  Still, someone at MIT has to take on the Henry Jenkins mantle of ridiculously overextended blogorrhea.

*** For a quick guide to skepticism in the face of research, here are a couple of guide points on this study:  It’s funded under a NRSA (NIH) grant — not by an advocacy group.  It draws on a history of similar studies engaged with the same question:  whether or not uninsured status correlates with excess deaths.  The paper contains some detail on their methodology, and crucially, includes a section on limitations and potential sources of error in the work.  To gain confidence in its quite commanding conclusion — that lack of insurance is associated with more than 44,000 deaths per year — you (I) would need to do quite a bit more reporting than a simple read of the paper.  But my point here is that this piece of work passes several of the smell tests that the Rand study, and McArdle’s writing, did not.  You have something to go on here.  And with this, the sermon endeth.

Images:  Adolf Friedrich Erdmann von Menzel, “Eisenwalzwerk (Moderne Cyklopen)” Iron Mill Work (Modern Cyclops) 1872 1875.

Deutsche Bundespost, designed by Steiner, stamp in honor of the history of post and telecom, 1990.

It’s not that McArdle can’t read…it’s that she can’t (won’t) think: part three

October 7, 2009

This is the third part of a ridiculously oversized tome on one example of what I see as a systematic failure on the right to engage science in any meaningful way. [Part one is here; part two, here]

In part two, I noted that serial offender Megan McArdle was trying to defend a claim about how health care reform will kill grandpa by asserting that the scientific literature supported that view.

The literature she cited began and mostly ended with a long paragraph quoted from a study by the Rand corporation…and in the previous post I noted that one of the problems in making the claim that McArdle’s argument was based on a rigorous review of the literature was that this paper was essentially research for hire, where the client was the world’s largest drug company.

While it is not true that just because Pfizer paid for a study that showed cutting Big Pharma revenues would result in a decline in pharma innovation that would lead to a loss in life expectancy*…it does mean that you can’t just do what McArdle did here: say “look — some folks with initials after their names confirm my unexamined conclusions.  Therefore I win!  Yippee.”

Rather, what you have to do with any piece of research, and especially one that is both making a major claim and is doing so from a clear position of interest in the outcome of the research, is to check.  You gotta interrogate the paper, its methods, its claims, its interpretations, its conclusions, the lot.

You know — basic reporting, the basic lesson we make sure each science journalism student we encounter at my shop (and every other good science writing/journalism program too) learns in the first weeks of study.

This McArdle clearly did not do.  How do I know?  I’m not (I promise) going to fisk the Rand paper top to bottom, but there are several issues with it that don’t pass the smell test right off.

The first is that the authors present their results as the output of a complicated model, itself derived from several other models for the behavior of the large variety of inputs needed to understand whether or not a cut in drug company revenue will have an impact on innovation.

A first plausible question is how the model actually works, and to what extent it has been tested.  Not to get too wonky — and not to claim expertise I certainly don’t have — but if this were a serious paper for the professional literature, you’d expect at least some discussion about the underlying logical and mathematical structure and strategy of the model.  It’s not there, at least in the publicly released form of the paper.

Next: check out the authors’ rhetoric .  It doesn’t read like scientific writing…and there’s a good reason for that.

To see what I mean, look to the paper both the Rand folks and McArdle cite as supportive of their arguments, Acemoglu and Linn, written by two MIT economists.  There you can scroll down to the final section and you see a set of graphics supplied to support the discussion above.

Some are labelled “tables” and they contain accounts of the data collected to support the model, complete with explanatory captions to allow a reader to follow the reasoning that led the authors to gather that particular slice of reality and not some other.

Some are called “figures,” and they come in the form of graphs which show what happens to that data when run through a model calculation.

Now go look at the Rand document.  It presents six graphics.  Each presents some feature of the argument they seek to make — how a given approach to pharmaceutical cost control affects innovation and or longevity.  They are easy to read, striking, even, with graphs or bar charts to show the devastating consequence of reducing producer payments to big drug companies.  They should scare anyone who wants to live their fully alloted span — as they appear to have terrified the young and impressionable McArdle.

But if you want to figure out if the graphs represent much of anything beyond conclusions expressing the assumptions with which their creators began, you can’t.  Each has the identical caption:

Source:  Authors’ calculations based on the Global Pharmaceutical Policy Model [the authors’ rather modest signfiier for their black box of an analytical engine].

Just in case you were wondering — that’s the language of advocacy, not research.

The authors are saying “Trust me,” and anyone with even a passing knowledge of the movie business knows that this is the punch line to the old joke:

How does a Hollywood executive say “F*ck you?

And if you needed a yet more obvious clue, check out the label put on each graphic.  It’s not “Figure,” or “Table,” or even “Results.”  Oh no.  This is no mere milque-toast publication of data and the logic that lies behind the authors’ inferences.  That kind of thing is for the intellectually conservative, or those committed to an attempt at disinterested investigation.

The Rand team, hired by Pfizer, knows what it is doing.  It is making a case for a particular policy outcome, and hence its graphics are labeled — and I’m not kidding — “Exhibits.”

Not to belabor this — I’m after McArdle and the approach to argument she embodies, not the well-known habits of the bespoke policy research game — but one of the first and most basic lessons we try to teach our students in the Graduate Program in Science Writing in MIT is that  just because some document looks like a real scientific paper, or that  some result gets published somewhere that looks impressive, you cannot then safely conclude that what it says is true.

Rather, we tell our students, you have to read it not just for the results, but for the degree to which the paper itself does what a serious piece of research should.  Does it at a minimum provide you with enough information to ask intelligent questions about what it purports to show.  If, as here, you see such a broad tell as the word “exhibit,” then you have to know that this demands a lot more digging before you can accept its claims.  The say-so of the paper and its authors isn’t enough; they’ve told you so themselves.

It is tempting simply to ignore any paper like this one — anytime someone tells you that they’ve come up with some complicated model that gives a magic answer, a long life in science writing tells you that they are blowing smoke.  Remember: big claims require big justification.

Over time, with experience in the business (either that of science or science writing) you learn when to get revved up about something, and when to sit back and let shoddy work slide by without close examination.  Life is too short to spend one’s time doing what xkcd so famously documented.

But let’s give the Rand paper, and McArdle yet more benefit of the doubt.  All that I’ve said above suggests that the Rand paper itself is telling you that you need to dig deeper before you rely on it.  Who knows?   Maybe its conclusions are true, even if it is impossible to determine that from the evidence presented.

Well, I haven’t done anything like a proper job of reporting to that depth.  But what I got in a morning’s reading and calling is strong hint that the Rand paper is, as expected,  propaganda, nicely garbed in Rand blue.

For the details….look to part four.

Images:  Rube Goldberg cartoon.

xkcd “Duty Calls

It’s not that McArdle can’t read…it’s that she can’t (won’t) think: part two.

October 7, 2009

So:  on to the bill of particulars on McArdle’s recent attempt to claim the intellectual high ground in her ongoing attempt to convince us that we live in the best of all possible drug markets. [Part one is here]

I’m not going to fisk the entire piece in question.  Instead, I’m going to focus on one passage in which she invokes the research community to defend her assertion that artificially high US drug prices for big pharma are essential to the future of drug innovation.  You can read in the way she treats this literature that she either doesn’t or willfully won’t engage her subject up to the level that would allow her to make believable arguments.

She introduces her bravura display of rigor this way:

…we could go to the academic literature.  Not the literature from advocacy groups which too often fills the pages of political magazines on the left and right, but something from someplace like Rand.  And fortuitously, Rand happens to have published a paper on this very topic!

McArdle goes on to quote at length a passage about what would happen to longevity if the US imposed price controls on pharmaceuticals to bring US costs down to those paid by Europeans (about 20% less than current prices, according to the paper).

McArdle then seeks to emphasize the urgency, even the moral quality of her concern for maintaining the status quo in pricing by citing this conclusion from the Rand group:

…. the introduction of price controls would reduce life expectancy by two-tenths of a year for Americans ages 55-59 alive in 2010 and by one-tenth for Europeans ages 55-59 alive in the same year. In percentage terms, these correspond to 0.8 percent and 0.7 percent declines from the status quo.

And, just to finish laying the groundwork, she adds one more cite from the professional literature to affirm the authority of the quite striking claim above:

If you’re wondering how much levels of spending matter, you could go to Acemoglu and Linn, who estimate that a 1% increase in market size (aka revenue) for pharmaceuticals results in a 3-4% increase in the number of drugs being approved.

Sounds pretty devastating, right?

Well, yes…and that ought to be the clue.  In science, and in common experience too, of course, the rule of thumb is that the more striking the claim the greater the appropriate level of skepticism.   So before you endorse or adopt such positions, you need to test the inference.

There are a number of ways to do so, of course.  Step one is to consider the source.

Did McArdle?  Not really.  A first reality check comes from an inquiry into the background of the Rand study.

Go to what the Rand paper actually says:  It analyzes two cases:   either reduce payments to drug companies, or increase subsidies to consumers to get an effect on consumer pocketbooks (absent the tax consquences of the latter policy) that would be the same.  Reducing drug expenditures though it saves consumers money but, according to this analysis, costs them life expectancy.  Subsidies leave consumer finances unchanged, but do not impose the cost in months of life lost.  As the value of life in the model exceeds that of the saving on drug costs, the conclusion is obvious:  No attempt to reduce drug company receipts should be made, with policy makers concerned about the effects of the cost of health care instead told to focus on further subsidizing the purchase of drugs.

That is:  pay the man, or we will kill grandpa before his time.*

But then, if you go on to read to the end of the study, you find something interesting.  The study was not a piece of social science research undertaken by a body of disinterested researchers. Rather, you are reminded that Rand is a private, nonprofit research shop, available to perform academic-level, but not academic-housed studies for those willing to pay.  The lead funder for this study?


Which, if you’re interested, is, by a wide margin, the largest pharmaceutical company in the world.

McArdle does not point this out.  I’m not sure if she noticed it in her first reading of the piece.  She does respond in the comment thread to a reader who pointed this out, writing”If you can find articles on the subject that are not funded by an institution with a clear dog in this fight, please send them. Rand is a widely respected institution.”

This is…how to put it…seriously weak sauce.

Juxtapose it with her snark about “the literature from advocacy groups which too often fills the pages of political magazines on the left and right.”

In other words, she’s relying on the argument from authority, again:  Rand is respectable…a member of the village.  The fact that it is an intellectual gun-for-hire does not seem to matter to her, and of course her defense — that everybody does it —  is wrong, a false statement.

You don’t have to go far to find the confounding counter-example.  The other paper she cites, (on which more later), was written by two economists both then at MIT.  The work, published in the Quarterly Journal of Economics, lists its outside funders:  first the National Science Foundation, and then the Russell Sage Foundation, a one hundred year old philanthropic institution with a focus on “the improvement of social and living conditions in the United States.”

Oh well…

Now of course, the fact that Rand was hired by the world’s largest drug company, and then produced a paper which argued that the pharmaceutical industry’s revenue should under no circumstances be cut unless you are willing to accept death and lamentations, is not in itself prima facie evidence that this paper is a put-up job, astroturf research with Rand serving as the cut-out for big Pharma.

But it does, or it should, compel you to interrogate the paper with great care.

And for that:  look to part three of this series.

*Or perhaps, if  you follow the learned doctor M. Python, pay the man and we’ll kill grandpa before his time…;)

It’s not that McArdle can’t read…it’s that she can’t (won’t) think: part one.

October 7, 2009

There is a lot of writing, especially in the self-declared higher reaches of what passes for public intellectual life on the right, about the need to use the rigor of this or that body of knowledge to see through to the truth of policy choices in areas like health care, climate science and so on.

Much of the actual stuff put out into the intertubes on such technically-infused subjects displays, to my eyes at least, systematic errors, an inability to grasp how science works.

So, even though I swear  I’m not going to make The Atlantic’s Economics Editor (sic!) a permanent obsession, here’s a ridiculously overkill series of posts about what happens when someone uses the scientific literature as a toy.  (And yes, I know this is a post about something that happened aeons ago in blog-years, but my aim is not so much the specific matter under dispute as the habits of mind that lie behind the writing of a piece like the one I’m targetting.)

Via Susan of Texas, I learned of Megan McArdle’s attempt to justify (a) her own prior, much ridiculed argument over the role of big pharma in drug development and (b) her quaint commitment to the idea that the American citizenry should subsidize the rest of the world’s  pharmaceuticals [see especially  pp. 348-349 of the PDF at that link].

Susan points to McArdle’s attempt to pass off as a mere rhetorical device her false claim that the US accounts for more than 4/5ths of drug company profit.  McArdle asserts that her use of this number was merely a “hypothetical” and not repeated justification to preserve artificial barriers to price negotiation within the US health care market, to the detriment of individual consumers and the great profit of the purveyors of pharmeceutical).

And for Susan, I think, the key point is that McArdle makes a lot of stuff up, and hence is untrustworthy across the board:  why should you believe any argument from someone whom, everytime you check closely, gets even the little stuff wrong — and I agree with that.

The argument from authority is always fraught; but the argument from negative authority is much stronger:  if someone has a history of screwing up, it makes sense to anticipate future screw-ups and pay less and less attention to the offending party.  That’s what makes McArdle’s admission that her numbers were in fact pulled out of the ether so damaging.  It is now (some would say (me!) it has long been…) simple prudence to assume that any fact she presents is, as she puts it, “a hypothetical” unless footnoted and checked.  That’s the beginning of the end (or ought to be) for any claim to a seat at the grown-ups table.

But I’m going to focus here on what I see as McArdle’s intellectual sleight of hand at a deeper level.

No surprise, given the provenance of this blog, I diagnose the root cause of this pathology as a fundamental antipathy to and misunderstanding/deliberate misuse of the tools of science.

And what I’m really trying to say — just to give you an out before the tome to come — is that writing for the public about technically complicated ideas is hard.  If you want to do it, you have to understand a few things:  how the discipline(s) you are covering actually advance; how to distinguish between — or when you need to check — good work and bullshit; what any given result might actually mean, in the context of the field and in its application to the real world.  To take a recent example far from the one I’m going to hammer McArdle on, it does no good to report the fact that an HIV/AIDS vaccine trial achieved a 30 percent efficacy if you don’t know why such inadequate protection is so exciting, nor why it remains so tantalizing.

And more:  not only is science writing — or writing about health care, or economics — hard, it’s damned important to do it right.  People talk a lot about scientific illiteracy, about the problem for a democratic society if large chunks of the population don’t know either the facts or the habits of mind of science (I care more about the latter).  But it’s not that folks are dumb, or unwilling to learn — after 25 years in the science writing game, I’ve had ample evidence of the willingness of just about anyone to be interested in important stuff if you give them a reason to read on.

Rather, its crap like the sort purveyed by McArdle here, and many others like her,that do enormous damage, for it makes science and its results into pawns in a game of the sort high school debate teams play.  It’s not the quality of the evidence or the argument that matters in such contests, just the quantity, and the ability to baffle a casual onlooker long enough to achieve the end desired.  This is fine if you are trying to make it to State or Nationals.  It’s not so good — disastrous, I would say, when the success of this strategy kills people, as it does in the current state of American health care.

That’s the opening argument.  Go on to part two to read the details of my bill of indictment against the divine Miss McA.

Image:  Pieter Bruegel the Elder, “Peasant Wedding Feast,”  1568

One More Link: Paul Krugman Explains It All Edition

October 2, 2009

Once again I missed the Ig Nobels — bozo, me, given the proximity to that glorious milestone in the academic year.

But Paul Krugman was there, delivering a 24/7 lecture:  twenty four words of hopeless jargon from within one’s discpline followed by a Hillel-like* seven word account of that field.

Here’s the transcript, in full.

*Hillel explained the essence of Judaism to an impatient inquirer in an aphorism some 26 words long.  Not quite seven, but not bad.  (The shortest form of Hillel’s reply to the demand that he teach the meaning of Torah in the time his interlocutor could stand on one leg in a mere twelve words, which is getting close to Ig Nobel glory, saying,  “That which is hateful to you, do not do to your fellow”

Image:   “A dark and dismal valley,” illustration to the Icelandic legend of Gold-brow.  Published in celandic Legends : Collected by Jón Arnason : Translated by George E. J. Powell and Eiríkur Magnússon, Richard Bentley, London, 1864. This illustration facing page 19. Digitized version from Google Books,

What I Said — but from someone who knows what he’s talking about: Isaac Newton and Money Manias edition

June 18, 2009

Readers of this blog may have noticed that I recently published a book (ya’ think? –ed.).  Titled Newton and the Counterfeiter (AmazonPowellsBarnes and Noble,Indiebound), it tells a story from Isaac Newton’s second career as boss of the Royal Mint — how he chased down the notorious currency crook William Chaloner in a battle that ranged across London and took two years.

Through that story I get to look at lots of other stuff — the way the scientific revolution worked itself out at street level, connections between ideas of faith, science, and what with the benefit/arrogance of hindsight we call magic (alchemy), and how England for a variety of reasons undertook a financial revolution in parallel to and in part propelled by the same ideas and people who led the scientific one.

In that context I look at some of the stuff that Chaloner counterfeited — truly weird new bits of paper that still represented enormous value — and I trace the evolution of Newton’s thinking about whether or not money is just a thing — a chunk of gold or silver with a pretty design — or something more abstract, more elusive…a promise.  (See this post from last year for more on that subject.)*

And in telling all this I give my readers a glimpse of a true economic and financial wild-west, one in which there is not only a dearth of anything resembling regulation, but in which the meaning and import and dangers inherent in the newborn tricks of financial engineering eluded even the brightest of thinkers, up to and including the great Isaac Newton — who in fact lost one of his shirts, at least, in the infamous South Sea Bubble.

And there I conclude, gently, by implication, that the reason financial regulation with teeth is an essential part of a modern capitalist economy is that none of us, not even the one man in history best placed to see through the fraudulent math behind bubbles, are immune to the derangement of reason that money manias educe.  (I made the same point in this post , in which I discussed both some of Newton’s ideas about money (again) and his troubles in the summer of 1720.)

All this by way of preamble that while all the above is true and, I believe, a strong argument, I can’t suggest that your humble blogger could hold a candle to lighthouse beacon of economic chops in the person of the man who just said this in an interview with The Atlantic‘s Conor Clarke:

Self regulation never worked as far as macroeconomic events — whether we’re talking about post-Napoleonic War business cycles or the big south sea bubble back in Isaac Newton’s time, up to today’s time. The pendulum just swings back in the other direction.

The speaker there would be none other than Paul Samuelson, Nobel(ish) laureate, for years America’s leading Keynsian (or at least, popularizer of Keynes’ work) and author of the single most influential introductory economics textbook since the satraps of Ur first put stylus to clay.

Maybe if Tom Levenson says it, you can consider the source and ignore it.  But Samuelson?  Might as well try to bargain the ten commandments ten down to six.**

*Or, of course, just buy the damn book. 😉

**Old, old joke:  Moses comes down from the mountain the second time and says, “Well, I’ve got good news and bad news.  The good news?  I got Him down to ten.”


“The bad news?…”

“…Adultery stays.”

Rimshot, please

Image:  Rembrandt Harmensz. van Rijn, “Moses smashing the tablets of the law,” 1659.