John Cochrane

It reminds me of things that are not superficial though, for example the homogenization of universities. Top schools all now mostly fall in line with "peer institutions", whereas you used to find schools that catered at least somewhat to different educational philosophies and personalities - which I think made for a richer academic discourse.

Places like Stanford and MIT slowly become more Harvard every year IMO, and it sucks for student life too. Driving forces may not be exactly the same, but I think there are cultural undertones pervasive across these changes and some of the more superficial ones. It reminded me of this article: https://johnhcochrane.blogspot.com/2022/12/stanford-hates-fun.html?m=1

Anecdotally, I think it affects science too. Grants become increasingly formulaic, and anything deviating even slightly intellectually only has a chance as a token "high risk" project. People are afraid of saying something wrong that also clashes with current scientific norms, so everything seems so damn homogenous despite the many questions we still have little answer for.

I think the "optimization" process that got us here is bad in part because it is optimizing for a single institution style that independently will do fine, and is thus a safe play for any decent university. However that is not the same as the set of institutions that would collectively do the best, not even close IMO. Homogenization can be efficient and should happen to some degree within an institution.…

> And the boosts we have seen are mostly due to the availability of open-source software, and widespread knowledge sharing on the internet.

Except the source of most productivity improvements is the dissemination of knowledge of improved techniques. A good analogy (https://johnhcochrane.blogspot.com/2019/05/free-solo-and-economic-growth.html) is with rock climbing. The rock climbers today are not much fitter or physically superior to climbers 100 years ago. At best there are minor improvements in shoes, but that's it. What allows someone to free solo El Capitan in 4 hours was standing on the shoulders of giants who had discovered and disseminated climbing techniques in the last century.

This effect is even more pronounced with software, because of how easy it is to reuse others' work. I don't need to learn from the collective experience of Linus Torvalds and other kernel developers, I just use Linux. I don't need to understand the intricacies of text rendering (https://gankra.github.io/blah/text-hates-you/) or compiling or the universe of hardware. I can still add economic value with my software while standing on the shoulders of these giants. I can gain knowledge from all the great documentation out there, as well as helpful Q&A websites. Imagine how many projects would have been abandoned and economic value lost without knowledge being disseminated on StackOverflow.

That is the productivity gain of the last few decades. If someone can't see that, or wants to condescend…

Here's the economic argument against, from conservative economist John Cochrane (try to check the tribalism and focus on the arguments), who used to be a proponent of carbon taxes.

The standard vision in policy discussions assumes infinite substitutability. As soon as the cost of clean energy is lower than the cost of carbon-emitting energy, everyone substitutes completely to the latter and the oil and coal stay in the ground. This is the key question. What the graphs make clear is that the majority of carbon must stay in the ground (or go back there) if we want to avoid a large temperature rise. (Again, I do not quibble with the climate side of the models here. Whether the large temperature rise actually hurts GDP is a separate issue, which I'll return to in the next post.) But as long as the elasticity of substitution is finite, as here, then the carbon comes out of the ground. As you use less and less, the remaining uses become more and more valuable, so it's worth it, privately and to society, to keep using it although at lower scale.

This follows from a model that implies that even extremely high carbon taxes will only post-pone 4 degrees temperature rise by 50 years or so.

So I learn from this that a key focus for R&D is not so much on lowering the cost of alternatives, but increasing their substitutability for fossil fuels. Just because the cost of solar cells is plummeting does us little good. We need to increase their substitutability. This consideration once…

I'm going to say the surveyed opinion is wrong and is furthermore asking the wrong question.

1) There is a welfare trap, and it is real. The more needy you are, the more your welfare programs are robbed with each wage increase. The marginal rate is very high and in some situations can exceed 100%.

Here's what the welfare trap looks like for low-wage families, in one graph: https://lh3.ggpht.com/-_-6Fsycanmw/ULO_5kk3fxI/AAAAAAAAAU4/y1PbUElDS34/s1600/marginal-tax_6.PNG

taken from: http://johnhcochrane.blogspot.com/2012/11/taxes-and-cliffs.html

If you follow economics there is an astonishing difference in the quality of discourse between the two sides--the pro minimum-wage crowd does not seem aware of the data working against them.

2) There is furthermore research suggesting employers respond to minimum wage by scaling back future employment plans and by causing workers to work harder. Part of the reason minimum wage jobs are so awful is if they weren't, they would not be worth the money.

3) People think of minimum wage as a redistribution of wealth from evil corporate employers and rich consumers to the poor and needy. Notwithstanding who is evil and who is good, that is basically the effect. You can accomplish the same thing in a much simpler, market-friendly fashion: pay the poor for working. A minor version of this program exists--the earned income tax credit. It does the same thing as minimum wage--redistribution of wealth--without the overhead, without reducing…

(1) Liquidity always dries up prior to the announcements. If you're a market maker, you don't want to get run over by someone moving the price on new information.

(2) It's a myth that raising rates will give the Fed more ammunition. That's like saying you should exercise less now so that if you gain weight in the future you'll be able to make a bigger change in the amount you exercise. (Not the perfect analogy, but I hope you get the idea.) The fallacy comes from thinking that the change in interest rates is what stimulates the economy, not the interest itself.

A second issue with raising rates to 'increase ammunition' is that if you choose a rate path that is too high, you'll depress economic growth, pushing rates down, counteracting your goal of higher rates. Monetary economist Scott Sumner writes: "Fed funds target rate increases tend to reduce the Wicksellian equilibrium interest rate, and hence give them less ammunition for the future. The ECB in 2011 is now the classic example, but you can cite Sweden, or Japan (2000 and 2006) or the US (1937) as well."

Here's a neutral-point-of-view blog post that discusses whether it makes sense to think about rate hikes as 'adding ammunition': http://johnhcochrane.blogspot.com/2015/05/small-shoes-and-headroom.html

And here's a blog post that argues that while rate hikes might not give you monetary ammunition, they still might give you reputational ammunition: http://www.themoneyillusion.com/?p=31361

https://johnhcochrane.blogspot.com/2021/08/covid-incompetence.html

Say many things worth reading, but of masks specifically:

> Masks do much more to stop you from giving it to someone else than to protect you. Cloth masks are close to useless. Well-fitting N95 masks work much better in both directions. Neither comes close to vaccination. Wearing cloth masks outdoors, far from other people, in the wind, as is the fashion in Palo Alto, is just part and parcel of the pointless virtue-signaling so prominent here. If you do go to that crowded all-night disco, wearing an N95 mask might be a good idea. Of course if you’re even thinking about wearing a mask, you’re not going in the first place, which is why the whole mask-mandate business is a bit silly.

Absolutely worth reading the whole thing for the full context.

If we're going to have a Ministry of Truth, shouldn't it at least be run by accountable, elected officials? Hasn't history proven pretty well that Ministries of Truth are damaging to society?