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John Roemer talks about the challenges of becoming a researcher to the students of the Applied Economics Seminar at The Graduate Center

This is the second in a recurring series of interviews where the PhD students at The Graduate Center talk with economists and other social scientists about their work and research experience. With these interviews the students are exploring the challenges of formulating good research questions and establishing a research agenda. Hopefully, other early career researchers will find this series a helpful tool.

In this installment, Goncalo Costa, a PhD of economics at The Graduate Center interviews John Roemer, Professor of Political Science and Economics at Yale University who visited the department on February 3rd, speaking to a paper called “What is Socialism Today.”

The two discuss John’s recent work on a theoretical comparison of the efficiency and equity consequences of capitalism and socialism and look back to John’s experience as a PhD student and young scholar.

Read their conversation below.

 

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David Ricardo’s explanation of the case for free trade rests on some basic economic principles, but also has a big public policy blind spot

One survey of professional economists in the United States found that 93% would agree with the claim that restrictions on free trade through tariffs and import quotas would reduce economic welfare.

Yet, I’m certain those advocating for free trade are often accused of having a blind spot. Is there something in the economic method, which can legitimately lay claim to being scientific, that also blinds its practitioners to what others see so clearly?

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Scarcity and its implications

Scarcity defines the economic way of thinking

Scarcity is a simple idea, yet it has major implications.

If, as individuals or as a society, we have multiple objectives, and if our desires for these goals exceed the time and resources that can be used to attain them, then given that these resources can be used in different ways it matters how we allocate them. It matters because our goals differ in their significance.

Robbins

Lionel Robbins, who taught at the London School of Economics, defined economics as “the science which studies human behaviour as a relationship between ends and scarce means which have alternative use” in a book published in 1935.

We have to choose, we have to recognize the terms of the trade-offs between the choices available to us, and we have to do this in a way that gets us as much as we possibly can from the scarce resources available to us.

The economic way of thinking gives us guideposts for making these choices, most notably that we should pursue an objective up to the point that the additional benefit we get from taking an extra step toward it just equals the additional cost in all the things we have to give up in making that step.

Economics certainly should not inform all public policy discussions.

But when it should and doesn’t, the decisions made are usually done from an overly short-term perspective, are not mutually consistent, generally have hidden or unintended consequences, and are not sustainable in the long-term.

In the next two lectures of our course Economics for Everyone we detail the logic of scarcity, the rules it implies for maximizing our social benefit, and the pitfalls that sometimes confound policy makers. Scarcity also takes us toward a discussion of an important policy, “Free Trade,” and our discussion also helps us highlight some of the blind spots of simplistic economic reasoning.

Download the presentation for Lectures 2 and 3, but if you want to prepare in an entertaining way listen to Billy Bragg sing out his thoughts on Free Trade, a 2010 song from Britain foreshadowing many of the debates that have motivated recent American policies.

Here are the lyrics, but I’ve added a quote from another famous economist, David Ricardo, who has a very different view. Our goal is to understand these two competing perspectives on the benefits and costs of Free Trade.

Leah Boustan talks about the challenges of asking the right research questions to the students of the Applied Economics Seminar at The Graduate Center

This is the first of a recurring series of interviews where the PhD students at The Graduate Center talk with economists and other social scientists about their work and research experience. With these interviews the students are exploring the challenges of formulating good research questions and establishing a research agenda. Hopefully, other early career researchers will find this series a helpful tool.

In this first installment, Miles Corak, professor of economics at The Graduate Center and Stone Center Senior Scholar, kicks things off by interviewing Leah Platt Boustan, Professor of Economics at Princeton University who visited the department on January 28th, speaking to a paper called “Economic and cultural effects of living in an ethnic enclave: Early 20th century evidence from the Industrial Removal Office.”

The two discuss Leah’s recent work on the cultural effects of living in an ethnic enclave and look back to Leah’s experience as a PhD student and young scholar.

Read their conversation below.

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Poverty and equality of opportunity: three pictures to motivate policy for social mobility

Read my comments presented to the Public Economics Forum on “Intergenerationally Disadvantaged: Newest Evidence and What it Means for Policy,” organized by the Melbourne Institute for Applied Economic and Social Research, on November 26th, 2019 in Canberra, Australia.

Social mobility varies across countries, but it varies in a particular way, a way that I argue is relevant for the conduct of public policy.

Inequality begets inequality. Up to 50% of income inequality is passed on to the next generation in countries like the United Kingdom, Italy, and the United States, but only 20% or even less in countries like Norway, Denmark and Finland, where there is a much smaller gap between parent incomes.

Incomes are stickier across generations where inequality is higher

But different kinds of inequality matter in different ways for social mobility.

Research using the variation of social mobility within countries like the United States and Canada shows that intergenerational cycles of low income are more likely in communities that have more bottom half inequality, the correlation with overall inequality and with top end inequality being much weaker. Upward mobility is easier when the poorest incomes are not that far off from middle incomes.

The bottom line for public policy is don’t let inequality increase in the bottom half of the income distribution, indeed strive to reduce it in a way that encourages labour market and social engagement.

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Tax the rich! Tax the rich! Tax the rich? But why?

Jagmeet Singh’s promise in his election night speech that “we’re going to make sure the super wealthy start paying their fair share” was met with cheers, the decibel level rising as his fellow New Democrats chanted: “Tax the rich! Tax the rich! Tax the rich!”

The leader of the New Democratic Party addresses his supporters.

It is not entirely true that the federal election ignored big policy issues, but if it was issues-driven, how did a wealth tax fly under the radar?

At some point in the coming weeks Mr. Trudeau will meet Mr. Singh over coffee to talk tax policy. Sadly, the election left Canadians no wiser as to what divides progressives on the issue, but if you want the full picture look south to the Democratic leadership campaign.

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