Redesigning Microeconomics – Part 1

~700 words, ~4 min reading time

Because I, apparently, don’t actually believe in breaks, I’ve decided to do a major redesign of the main course I teach: Principles of Microeconomics. This has been inspired by a few things – some of it being the research which I’ve linked and summarized here.

Thus far, I have redesigned my syllabi for both my online and face to face courses – including the “Honors addendum” for my face-to-face honors students. I’ll summarize a bit of what I’m doing here:

Assessment

Both face-to-face and online sections are now basically 40% engagement and 60% mastery.

In my online course, I’m using a point system. Students accumulate points in 3 ways: Knewton Homework assignments (100 points, based on successful completion), Short Papers (300 points total), and Engagement Activities (100 points).

Knewton is an adaptive online homework system designed to help students achieve mastery of the course material. The system tries to teach through trial and error. So, if a student answers questions in a topic correct consistently, they won’t see as many questions on that topic. If a student answers them incorrectly, then Knewton tries to adjust the difficulty level to where students can start seeing what a correct answer should look like, and builds them up to the point of mastery. I’m counting this as “engagement” because their grade, in the end, comes from their willingness to keep participating until they “get it” rather than from a summative assessment.

The Short Papers are three papers, each of which is designed to evaluate one of the main course learning objectives in an “authentic” setting. For example: the first paper asks students to choose a good and to make a forecast for the price of that good 1 year from now, and explain that forecast in terms of supply and demand elasticities and supply and demand shifts. In the Spring, I am modifying this assignment a bit by requiring a rough draft and self and peer assessments before the final copy is submitted.

The Engagement Activities give students an ability to customize the course to their own interests. These are generally completion based assignments. Right now, I offer three different options: Excel projects (which teach some basic Excel skills), Economics in the News, and Book Reviews. Students are also free to make their own, if I approve them. These are all completion based, and really just have the goal of convincing students to think a little bit about economics as a field.

My face to face course uses a weighted system, which explicitly separates “Mastery” and “Engagement”. “Mastery” is evaluated based on their performance on the multiple-choice final exam, which can be modified by an optional Grade Proposal – in which they provide evidence that they should get a specific grade for their mastery of course material. This idea was taken from “Rethinking Exams and Letter Grades…” by Kitchen et al. So students aren’t in the dark about the final, I will also have them participate in a “Midterm Diagnostic” which will look a lot like the final, but won’t count toward the course grade.

The Engagement portion is evaluated based on 4 things: (1) Class attendance, (2) Class Preparation Questions, (3) Short Papers (like I use in my online course – but, here graded more on participating in the process than for mastery), and (4) Engagement Choice Activities (which mirror the Engagement Activities from the online course).

For my Honors students, half of their Engagement Choice Activities points come from their Honors Project.

Weekly Rhythm

I’ve established a “Weekly Rhythm”.

For the online courses, the Weekly Rhythm is: Reading, Lecture Videos, Knewton Assignments, Short Paper Step.

For the face-to-face courses, the Weekly Rhythm is: Reading, Lecture Videos, Class Preparation Questions, Short Paper Step, Class Activities.

Next Step

Now that I have my overarching design set up (sequence of course topics, etc), and an assessment plan in place, the next step is to set up my assessments – so I need to write the final and the rubrics/checklists for the papers for my online class – this should help me align everything during the semester with how students will ultimately be evaluated. (YAY for backward design!)

Fall Commencement Address 2018

~2400 words, ~12 min read time

What follows is the text of the Commencement Address that I gave today, December 16, 2018, to the graduates of Kent State University’s Stark Campus.

Congratulations, graduates! This afternoon we are here to celebrate your accomplishments with you. You have worked hard to master the skills and the content that we have thrown at you, and today you receive the evidence of what you have achieved. So, on the behalf of the faculty, let me say “well done.”

When I was asked to give this talk, I naturally thought back to my own college commencement. Do you know what my commencement speaker spoke about? Well, neither do I. So, it is with a certain sense of what I will call “humble realism” that I approach this talk today. It seemed appropriate, then, to talk about the value of humility.

To demonstrate the value of humility, I hope to make three points – first, arrogance is destructive. Second, humility leads us to a realistic view of ourselves. Finally, in humility, we change the world by serving others.

Before we get too far, let us consider what humility is and, first, what it isn’t.

The following list clarifying what humility is not comes from Dr Larry Osborne.

Humility is not low self-esteem. We have another name for that. Low self-esteem. In the words of the Dalai Lama “there is clearly a distinction to be made between valid confidence or self-esteem, and conceit – which we can describe as an inflated sense of importance, grounded in a false image of self.” So, humility does ask us not to have an unrealistically high opinion of ourselves. But, it certainly does not require that we have an unrealistically low opinion of ourselves, either.

Humility is also not a lack of ambition. One can seek to accomplish great things – and still do so with a sense of humility. UCLA basketball coach John Wooden is quoted as saying “It is amazing what you can accomplish when you do not care who gets the credit.”

Humility is, thirdly, not downplaying our own accomplishments. There is nothing humble in claiming to be bad at something that you actually do well. There are only two possibilities here. Either you are delusional, and don’t realize your own strengths. Or you are dishonest, and simply want to cover them up. Neither delusion nor dishonesty are part of humility.

So, humility is not low self-esteem, a lack of ambition, or downplaying our own accomplishments. But, what is it?

The best definition I could find comes from a very scholarly source. Urbandictionary.com. No, I’m serious. Urbandictionary.com offers this definition: True humility is to recognize your value and others value while looking up. It is to see there is far greater than ourself into who we can become, who others can become, and how much more we can do and be. To be humble is to serve others and be for their good as well as your own. To be humble is to have a realistic appreciation of your great strengths, but also of your weaknesses. We’ll come back to these – but let’s first look at the opposite of humility: arrogance.

How easy it is for confidence – which is not a bad thing – to be twisted into arrogance. The arrogant, then, demand credit for all the wonderful things they do – and somehow find a way to shift blame away from themselves whenever their plans go awry. Once arrogance takes this turn, it, in turn has morphed into something else – fear. As the wise Jedi Master Yoda reminds us – Fear is the path to the dark side. Fear leads to anger, anger leads to hate, hate leads to suffering. And this is true – the arrogant person becomes afraid that, if people don’t know their accomplishments – or if people discover their failings – then their value as people will be diminished. Then, all it takes is not receiving credit for something, and the arrogant person lashes out in anger – is overcome by resentment, and begins plotting revenge.

Imagine with me, if you will, a hypothetical city filled with arrogant people – people who are continuously seeking credit for themselves, and seeking to shift blame to others. Let’s call this hypothetical city… say, Washington. What can we expect Washington to accomplish? I suggest that the best answer is “little to nothing”. So, why is that?

I’m an economist – and my wife can assure you that I’m an economist 24 hours a day, whether she likes it or not – so I can’t help but fit a little of that into this address. One of the most basic principles of economics is the division of labor. That is, we can accomplish more if we divide up tasks according to people’s relative abilities to do them. But, when each person is consumed with a desire for credit and fear of blame, cooperation – which is really just the common word for the division of labor – becomes impossible. And, without that cooperation – that division of labor – it is remarkably difficult to accomplish any complicated task – even the making of something as simple as a pencil cannot be done without an astounding amount of cooperation. I dare say that a society filled with such arrogant people will find itself paralyzed by continuous conflict and a lack of productivity. Such a society will destroy itself – unless it can live parasitically off of another group of people – a group of people that is more interested in accomplishing a goal than in receiving recognition for doing it – and, as such, is willing to cooperate to get the job done.

Arrogance – and the dangers that accompany it – is nothing new. There’s a reason that so many religious and philosophical systems – spanning time and civilizations – warn of the dangers of arrogance.

Solomon – one of the Kings of ancient Israel – is reported to have said that “When pride comes, then comes disgrace.”

Jesus warned his disciples that those who exalt themselves would be humbled.

Aesop shares a number of fables about the dangers of arrogance. I’ll share three:

Roaming by the mountainside at sundown, a Wolf saw his own shadow become greatly extended and magnified, and he said to himself, “Why should I, being of such an immense size and extending nearly an acre in length, be afraid of the Lion? Ought I not to be acknowledged as King of all the collected beasts?’ While he was indulging in these proud thoughts, a Lion fell upon him and killed him. He exclaimed with a too late repentance, “Wretched me! this overestimation of myself is the cause of my destruction.”

A gnat settled on the horn of a Bull, and sat there a long time. Just as he was about to fly off, he made a buzzing noise, and inquired of the Bull if he would like him to go. The Bull replied, “I did not know you had come, and I shall not miss you when you go away.”

A deer was drinking from a river and began to admire his antlers. He then began to think about his hooves, and he wished his hooves were as big and majestic as his antlers were. To the deer’s surprise, a hunter appeared and fired an arrow, barely missing him. The deer took off into the trees and realized that he was able to get away only because of his small, nimble hooves. He realized how truly great they were, but as he was looking at his hooves, his antlers got caught in some tree branches. The hunter caught up to the deer and just before he met his fate, he lamented his love for his antlers and wished he should have realized how great his hooves were sooner.

Having seen that arrogance is personally and socially destructive, let’s turn then to consider humility. First, the fact that humility requires that we have a realistic sense of our own strengths and weaknesses.

The philosopher Socrates showed the virtue of humble realism in this story, which I paraphrase from Plato: The story goes that Socrates went to the Oracle at Delphi to ask who was wisest – as, knowing his own ignorance, Socrates wanted to learn. The Oracle declares that Socrates was the wisest person in Greece. Not believing this – after all, Socrates knew that he knew nothing – Socrates visited people of various occupations – politicians, poets, craftsmen – but he found that everyone else lived under a pretense of knowledge – that is, they believed they knew things that they did not actually know. Socrates – and he alone – recognized what he did NOT know. And, so Socrates was forced to conclude that the Oracle was right. For, while Socrates knew nothing, he was at least aware of that fact.

True humility requires that we recognize both our strengths and our weaknesses. In this facet, humility is a form of clarity of perception reflected in the Delphic maxim “gnothi sauton” – “know thyself”. If we truly know ourselves, we will recognize that we have often been wrong – or at least I have. This should lead us to a more tolerant view of those we disagree with. This does not mean that I have no confidence in my beliefs – if that were the case, I would change them. Rather, it simply means that we recognize that we may not be 100% right on all of them – and we’re not quite sure which ones we got wrong.

True humility requires a recognition that – regardless how good we are, we can always be better. One of my college friends recently told me that he had come to two realizations in life. First, he would never be good enough. Second, that doesn’t mean that he isn’t better than everyone else. I think if we reverse the order, we discover humility. Humility asks us to recognize that, even when we are better than everyone else, there is still room to be better still.

Can you look at yourself and your accomplishments objectively? Can you see the things you have done the way that other people would see them – with all of their flaws and glories? If so, you are on the path to a humble realism.

Finally, in humility, we change the world by serving others.

True humility requires that we take on the role of a servant. I’m guessing this story is fictional, but it, none-the-less, is a good illustration. In the early days after the United States was born, a rider came across a group of soldiers trying to remove a tree that had fallen across the country road that the rider was traveling. The rider noticed that one soldier was standing aside, doing nothing, and asked the man about this. This person clarified that he was the corporal – so it was his job to give the orders. The rider accepted this fact, got down off of his horse, and helped the soldiers. With his help, the tree could be removed and the road cleared. After this, the rider walked up to the corporal and said to him “The next time this happens, just ask the Commander-in-Chief for help” – for the rider was none other than President Washington, himself. True humility asks us to serve others – regardless our relative positions. Of course, this doesn’t mean that being a leader is a bad thing. On the contrary, leadership often places you into a position where you are able to serve more broadly – as long as you have the strength of character not to let the position go to your head.

Many of the ancients – from Laozi to Jesus to Muhammad – suggest that humility is rewarded with exaltation – and often leadership.

Humility is so central to Islam that even the term “Islam” can be translated approximately as “humility” or “submission”. And the Qu’Ran declared that “Success comes to believers who humble themselves.”

Jesus tells his disciples not only that those who exalt themselves will be humbled, but that the reverse is also true: those who humble themselves will be exalted.

Laozi says “I have three precious things, which I hold fast and prize. The first is gentleness; the second is frugality; the third is humility, which keeps me from putting myself before others. Be gentle, and you can be bold; be frugal, and you can be generous; avoid putting yourself before others, and you can become a leader among men.”

Why do so many – across time and civilizations – see a connection between humility and being exalted to a position of leadership? For the answer to that, I turn to a more modern source.

This past October, the Wall Street Journal ran an article entitled “The Best Bosses Are Humble Bosses”. Why is that? Because humble leaders are more successful at inspiring teamwork, rapid learning, and high performance in their teams. Humble people are more aware of their own weaknesses – sound familiar? – are more eager to improve themselves, and – here is a key – are appreciative of others’ strengths.

Putting these pieces together, a leader that displays humility recognizes the value of working as a team – so that each person can show their own strengths, and that each person – including the leader – can minimize the effects of their own weaknesses. It is no wonder then, that those who are humble would find themselves lifted up into positions of leadership.

I am convinced that each of us can change our own little corner of the world – and for the better – if we follow three rules. Let us do justly, love mercy, and walk humbly.

I will close by asking you to do some self-assessment. I’m going to ask each of us to consider these questions:

Are you overly sure of yourself? Do you find it difficult to admit when you are wrong or make a mistake? Do you find it difficult to respect people who disagree with you? Are you upset when you don’t get credit for things you do? Do you look for others to blame when things don’t go as they should?

Are you realistically aware of your own strengths and weaknesses? Can you look at your accomplishments objectively – as if they were accomplished by someone else? Do you recognize when others are better than you are in certain tasks or traits, and try to learn from them?

How do you serve those around you? Do you seek to build teams, helping each person you come into contact with discover their own strengths?

Do you do justly? Do you love mercy? Do you walk humbly?

Again, congratulations, and all the best as you walk the path that lies before you.

Thank you.

Results Update 2018

~1200 words, ~6 min reading time

Introduction

So, I’ve tracked biometric data for a while, and have started tracking strength about a year ago. So, I decided it would be good to do some yearly testing – and, though it feels weird to report this, I figured I would for those that want to know.

Because I’m an American, everything is in pounds and inches.

Strength Results:

Dumbbell squat (combined, estimated 1RM): 149lb -> 180lb (+31lb)

Dumbbell Romanian Deadlifts (combined, est 1RM): 144lb -> 173 lb (+29 lb)

Dumbbell Floor Press (combined, est 1RM): 116.1lb -> 140 lb (+23.9 lb)

Combined: 409.1 -> 493 (+83.9 lb)

Bodyweight Dips: 10 -> 6

Bodyweight Pullups: 6 -> 8

Bodyweight Pushups: 17 -> 21

So, lifts all went up decently – not “wow” levels, and I’m still not “strong” by any reasonable measure – but stronger than before. Dips dropping wasn’t a big shock – last year, my routine included dips, what I’ve been doing this year really doesn’t.

These also probably understate my true maxes – I didn’t really warm up, and just lifted 90% of last year’s estimated 1RM. To be more accurate, I should get an estimate, and test at 90% of that estimate to double-check. But, I don’t care that much.

Biometrics Results:

Overall:

Weight: 166.6 lb => 162.2 lb (still in goal range)
BF%: 15.3% => 16.3% by the Navy method, 14.5 => 14.6 by bf% scale (a bit on the high side of my goal 10-15% range)
Lean weight: 141.1 lb => 135.7 lb (using Navy method estimation) (surprised it fell, given other measurements)

By body part:

Maintained in Goal Range:

Neck: 16 -> 16
Hips: 36.75 -> 37
Calves: 14.75 -> 15.5

All of these were in my goal range in 2017, and stayed there in 2018 – though hips and calves showed some growth in that range.

Moved up into Goal Range:

Chest: 39.5 -> 41

My chest just hit my goal range.

Still Below Goal Range:

Biceps: 13.5 -> 14
Forearms: 11.25 -> 11.25
Thigh: 20.75 -> 21.5
Shoulders: 46.75 -> 47.5

While none of these are in my goal range yet, they’re moving the right direction. Biceps, Forearms, and Thighs are all about 1 inch from the goal range (though, honestly, I don’t care much about my legs…) – I feel like this is going to be excruciatingly slow going. Shoulders are within spitting distance, and moving there pretty quick.

Still Above Goal Range:

Waist: 33.5 -> 34

Also, moving the wrong direction. Ideally, we’d be looking at something closer to 31. But, this is very affected by diet. It’s winter, so it’s a reasonable time to focus on gaining rather than losing weight, and for being in that phase 34 isn’t worrisome, especially since I measured at the end of the day after a big day of eating.

What I did this Year

This year, I went through a few distinct phases – combinations of various routines and diets. Diets were generally fairly simple bulking or cutting diets, depending on my bodyfat %. Not very interesting.

Workouts, though – I tried 4 fairly distinct workout routines this year. First, I finished using HST (Hypertrophy-Specific Training). It’s not a bad program, but I had gotten to where some of the exercises were getting cumbersome (especially leg exercises).

Second, I moved into a self-designed full-body program using some linear progression principles I picked up from Stronger by Science. Basically, you do 3×8, progressing linearly. Once you fail to make a step, you switch to 5×5 and proceed from there. Once you fail again, you switch to 5×3 and keep going. Once you fail again, you go through the same cycle, but with one more set – so 4×8, 6×5, and 6×3. Then, add another set if you cycle through again. The problem: the workouts pretty quickly got much too long. Why? Because I do arm exercises, not just big compound lifts. That means that the “steps” in linear progression are actually very big. While I actually made some good progress under this routine, it just got terrible to keep up with.

So, I switched to RippedBody.com’s Intermediate Bodybuilding Routine. This wasn’t too bad, except that I found that I just hated leg days. A lot of this is because a lot of leg exercises require machines to do comfortably. Yes, I can lay on the floor, stick a dumbbell between my feet, and do leg curls. But it’s awful. Same with leg extensions. Since I don’t have a machine, and they would be kind of stupid for me to buy right now, these were awkward and I hated them.

So, I switched to Lvysaur’s Intermediate Aesthetic routine – it avoids the more awkward leg exercises, and doesn’t have a leg day at all. Instead, deadlifts, squats, and calf raises are integrated in with other days. The results on Lvysaur have been weird, if I’m going to be honest. I switched to it during a bulking phase. But I gained basically no weight at all in the first 7 weeks (though this may have just been a failed VERY lean buld). Then, I switched to cutting for about 6 weeks – lost 4 lb of fat, but also 3 lb of lean. Not a great ratio, but okay. Since then, I’ve been doing a very slow transition back to a bulk – which means I’ve still been losing weight – about 0.5 lb of lean, but no fat. Not great there, either.

Focusing just on the “good” bulking phases, I gained more lean mass each week under Lvysaur’s first bulk (the one that wasn’t a transition period) than I did under either of the others.

So, I think I’m going to stick with Lvysaur for now. The most important thing is finding a routine that you can stick to. For me, that means figuring out what to do when I miss days, since working out is A priority – not my #1 priority. (Done!) There should also be a reasonable plan for failure (Lvysaur is very good with that) and progression (also pretty good), and the routines shouldn’t be outrageously long (yep).

I’ve also been experimenting more this year with putting my own twists on routines. For example – even though Lvysaur’s leg stuff isn’t as bad as some others’ I found myself hating it again. So, I switched up those particular exercises to something reminiscent of 5/3/1, which isn’t as awful. I also added in more arm work, since I know that’s a lagging body part for me. Also, I hate doing “as many reps as possible” sets – and am awful at feeling out what weight will hit a certain target on any particular day, so I changed how Lvysaur’s accessories work.  Might be a good idea to add some wrist curls as well – so I might modify that, next time around.

My plan for next year:

Diet- I just switched to a higher calorie bulk – I figure I can always scale back, if needed. But, I’ve been wasting time on too much transitioning. Anyway, I’m going to continue doing this until late April. Then, I’ll switch to cut – and I’ll maintain the cut until after our beach trips OR until I get down to 10% bodyfat, according to my body fat scale (I’m predicting the beach trips will come first…). Though I have debated whether I should just devote an entire year to bulking at some point….

Routine – I’m a bit unpredictable on this. I tend to do things until I hate them, and then switch to something else. So, I’m still thinking about that. Right now, I don’t have a good reason to ditch Lvysaur, as it seems to be doing alright. I’ll probably just make some more tweaks (adding wrist curls, maybe) and proceed.

Medicare For All Update – Getting the Math Straight

~600 words, ~3 min reading time

Okay, so I’ve been looking at the Mercatus numbers.

First, Think Progress IS wrong in their representation. (Think Progress makes the very simple error of acting like an ADDITION to cost is the WHOLE cost.)

HOWEVER,  my initial impression was also wrong. My error was a bit more complicated – I assumed constancy in some things that weren’t constant in the Mercatus estimates, and ended up misrepresenting the results, TOO.

So, let’s try to get it right, and we’ll just focus on one year.

Before we hop in, we need to figure out what we’re talking about. We’re going to look at National Health Expenditures (page 5 is my reference here). What this is: Personal Health Care Expenses + Government Administrative Cost + Net Cost of Insurance (Basically, private administrative costs, I would guess) + Government Public Health Activities

Mercatus starts by looking at personal health care expenses in 2022. They suggest these are projected, under our current system, as being $3.859 trillion. (Note: this includes both public and private systems.) With Medicare 4 All, there would be a big jump in healthcare utilization – amounting to $435 billion. This comes from the currently uninsured being covered and from Medicare covering things that some private insurance doesn’t, and from people using more medical care because they are no longer responsible for copays or coinsurance (so, on the margin, they go to the doctor more often – though I suspect this effect is small). BUT, providers would receive less because of M4A’s pay structure. That would cut $384 billion from provider payments, and $61 billion from prescription drug costs. Net effect: personal health care spending FALLS by $10 billion in 2021.

The other change is that total administrative cost is expected to fall by about $83 billion. Basically, we’re eliminating private health insurance costs,  but Medicare’s administration would have to eat that up – but with some economies of scale, there would be a net savings on the administrative side.

So, total effect: $93 billion in National Health Expenditure savings. The other years in the estimate project savings of up to $300 billion in NHE by 2031.

Now, Mercatus’s point is that, EVEN WITH this savings, the government would be spending an additional $2.535 trillion that year – since it is absorbing the private insurance industry’s costs. They want to know where the money is coming from, since doubling income taxes on both individuals and corporations wouldn’t be enough to bring in that money.

On the one hand, progressives can reasonably point out that we’re already spending this money, it’s just a matter of redirecting it. And there’s a point in that. This $2.535 trillion is not new to the ECONOMY, it’s just new to the GOVERNMENT BUDGET. Okay.

But, would progressives then suggest that we should just have the government absorb the health insurance premiums currently paid by employees, employers, and individuals? I suspect not. That would mean that each person’s premium would vary not based on income, but on their current employer. This would be an administrative nightmare, I suspect. So, while the money is there, there is still the practical question of how best to collect it in a way that isn’t politically disastrous.

Another big point: Blahous is very clear that he’s being generous in his estimates of savings because he wants to estimate the MINIMUM amount of additional tax revenue that would be required.

Letter to Mises U Students (2017)

To Mises U students – especially those planning to enter economics as a vocation – an autobiographical note:

TL;DR – You’re amazing. Act like it.

After this week, you may feel inspired and overwhelmed. This is normal. It happens to me, too. Still. Every year. The level of interest, talent, and devotion to the study of good economics that I see among the students and my colleagues on the faculty is inspiring. And overwhelming. I know there are many of you – and I’m speaking of the students and young faculty here, not just David Gordon – who have out-read me. Easily. Many – possibly most – are cleverer and more insightful than I. Many of you will out-write me – if you haven’t already.

I write these not as mere empty words of encouragement – I don’t believe in such things. I write them because they are true – and that is something that I find encouraging, and believe you should, too.

I also write these things with very little regret, regardless what the tone may sound like. The reality is that I love my life and the balance that I have achieved between the various aspects of it.

So, here is my advice to you based on my own – admittedly limited, but rapidly becoming less-so – experience:

(1) I was asked today what the threshold of significance is to write a paper and send it to a journal. My answer: Do you think it is worth your time to write it down? If so, then share it. The reality is that, early in your career, you haven’t the slightest clue how significant your ideas are. You don’t have the experience to make that call. That’s what editors and referees are for. So, simply tell yourself that the odds of rejection are fairly high (which is true even for excellent papers, by the way), do your best, and send the thing out. Yes, rejections hurt. Especially the first few. But, you will learn more from being shot down in a rejection than you will learn from any acceptance. Maybe what you learn is that that editor is a jerk, but far more often, you will receive feedback that will help you refine your ideas or the presentation of your ideas.

(2) At first, follow Carmen’s advice I mentioned in another post – that is, add to what the Masters are doing. Expand, explain, defend, and apply (in no particular order). I especially advise doing this with people who are currently alive. One paper I’m still working on connects Mark Thornton’s Skyscraper research with some basic, fairly mainstream, urban economics and Rothbard’s theory of wages. I presented a draft of this paper at the Austrian Economic Research Conference. What happened? Mark Thornton asked me to coauthor a response to a critic of the theory. It should be obvious but, DON’T SAY NO TO THAT. Coauthoring with an established economist is amazing. It’s far less work than working alone. You get the benefit of their name attached to what you’re doing. You get to observe their research process. And you get to build a relationship with them that can lead to further projects.

(3) Get started early. You’re lucky. Austrian economics is still a small field. As a result, we, frankly, can’t afford to be as credentialist as most other fields. You don’t have a PhD. So what? Look at the Quarterly Journal of Austrian Economics. It’s pretty common for there to be articles in there that are not written by PhDs – they might be grad students, or even undergrads. But, they all go through the same double-blind review process. Yes, if you have a PhD, your odds of acceptance are higher – but that’s because people with PhDs probably have more experience with academic writing and publishing than you do. So, get that experience. Read academic articles – I mean QJAE, not Mises Wire, for this purpose – and try to write them, too. You’ll learn.

(4) Go ahead and write popular pieces – like for Mises Wire and others. This is good practice for writing clearly – something that is far too often missing in academic writing. Confession: when I was a Fellow at the Mises Institute in 2004, I spent a great deal of time commenting on the Mises Blog. This caught the attention of Lew Rockwell, who asked to see me in his office. Yes, I thought I was in trouble for not taking the Fellowship seriously, and spending too much time arguing with people in comment threads instead of doing real economic research. Instead, he said he was going to set me up with a password so that I could post on the Mises Blog on a regular basis. This writing was important for my development, as I had to think far more about being sure that I was clear. Now, it’s true, I haven’t written a popular piece – self-published or published by anyone else – in a LONG time. But, that’s not my focus right now, and it doesn’t take away from the fact that you may learn a lot from doing it.

(5) Keep your life in balance. What that means is purely up to you. But don’t wear yourself out, beat yourself up, or put yourself down just because you don’t write 80 pages a day like Murray Rothbard did. You aren’t Murray Rothbard. Now, that doesn’t mean you aren’t as brilliant as he. But, it does mean that you very well may have different preferences. If you do, don’t pretend otherwise. Austrian economics may be a small field – but there are far more of us than there were just 20 years ago (before I even knew of Austrian economics). We each have a part to play in the division of intellectual labor. Take a break when you need to, and let others take on their roles.

It has been 14 years since I was in your shoes. From this side, it’s a very short time. Make the most of your time – whatever that happens to mean to you. I can only hope that, in 14 years, when you have filled my shoes again (and likely have outgrown them!), you will also find yourself inspired and overwhelmed – but, most of all, encouraged by the days ahead and the bright minds that will lead us there.

Fitness Friday – New Routine (Again…)

~300 words, ~2 min read time

It wasn’t that long ago that I mentioned switching to a new routine. This led to lunges killing me.

Well, I’ve been away from home for the past couple weeks, and took a break from my routine for that time. So, the past 3 days have been… a challenge, I’ll say. And it made me realize something.

I hate leg day.

So, today (I’m writing this on Wednesday – which is Leg Day #2 of the week under the routine I’ve been using), I made a decision. I’m not doing it. Now, that doesn’t mean I’m not going to do any more leg exercises – that would be a bit unbalanced. Rather, it means that I’m not doing leg day.

See, I found this routine. It is slanted toward upper-body exercises – which I prefer anyway. Its goal is more aesthetic – which I prefer, too. The split is a bit strange, and it brings back some exercises I’ve not done in basically FOREVER (Rear delt flyes? Been almost a year since I’ve done one of those, I think.).

An important lesson here – which is a continuing theme for me in many ways – if you hate a program, there’s nothing making you do it. You can always choose to do something else.

As I get older (and busier…)- and feel more pressed for time – the more I find myself willing to just stop doing things that I don’t like. In short – I have no moral obligation to have a “leg day”. It doesn’t serve any particular purpose in allowing me to reach my goals. It’s not something that the world needs from me. So, I may as well stop.

Fitness Friday – Get Paid to Exercise!

~300 words, ~2 min read time

It’s been a while since I’ve done a Fitness Friday – honestly, I’ve not had much to say about it, so I decided not to.

Anyway, this week, I’ve had the pleasure at being at Mises University. This is always a fantastic time to connect with other Austrian economists and students of Austrian economics. I was chatting with another of the faculty members, and he was asking if I knew some of the other Austrian or Austrian-influenced economists that graduated from Ohio State. There’s one that works about an hour from me, it turns out, who I had met once before, about 7 or 8 years ago. Anyway, I decided to look him up to see what his current research is. Most of it is empirical stuff (probably why I haven’t seen him in Austrian circles) now, and this paper jumped out at me.

The Effect of Exercise on Earnings (abstract)

It turns out that exercise does pay. In fact, regular exercise provides something like a 6-10% boost in your wage. Now, we might be tempted to try to explain this away as a result of effects on things like obesity. We know that obesity has negative effects on earnings. So, maybe exercise pays off because people that exercise are somewhat less likely to be obese.

Turns out that’s not the explanation. The study controlled for the effects of body composition.

In other words, regular exercise itself – even if you don’t see “results” in terms of weight,  body composition, etc. – seems to have a significant impact on your wages.

Put another way: exercise pays.

Hayek’s The Meaning of Competition

~300 words, ~2 min reading time

Summary of the full article. Article available from the Mises Institute.

In modern economic theory “competition” is used to describe a state of affairs that is probably best thought of as being the CONCLUSION of a competitive process adjusting to fixed underlying conditions. Something as simple as charging the same price is unlikely outside of the most organized markets. Yet, this is a key feature of the perfect competition model.

The common speech sense of competition understands competition to be a dynamic process – one that is typified by people finding and exploiting differences between themselves and their competitors. This is directly opposed to the perfect competition model which assumes a similarity between firms (and certainly between products!).

Making a fetish of the perfect competition model can lead to odd results – in particular, the suppression of an actual competitive process by the use of regulation to impose standardization.

A more productive path than comparing the real world to a hypothetical world of perfect competition is to compare the real world with competition as commonly understood with the real world with competition (as a process) suppressed by legislation. If we allow the competitive process to occur, entrepreneurs will continually adjust their products and processes to try to produce goods that best serve consumers at the best possible prices. Failure to serve consumers’ demands for quality and price will result in losing business to competitors. On the other hand, suppressing competition – perhaps by using price regulation to enforce a common price – will tend to suppress the desire to serve consumers well and efficiently.

Mises’s Economic Calculation

~300 words, ~2 min reading time

This summarizes a section of Ludwig von Mises’s Socialism titled “Economic Calculation”, available from the Mises Institute and Amazon.

Value is fundamentally subjective. For a single consumer, comparing the values of different consumer goods is fairly straightforward. Similarly, comparing the values of factors of production in fairly simple production processes is also fairly straightforward, as the connection between the factors of production and the resulting consumer goods are clear. However, once the production processes achieve any significant degree of complexity, a direct value comparison becomes impossible – especially since there are typically a multitude of possible methods of producing any particular good. In order to deal with this situation, we need economic calculation – the calculation of profits, losses, and equity.

Economic calculation requires two conditions: first, there must be exchange of the factors of production. (This is why socialism – which Mises uses in the strict sense of government control of the means of production – can’t calculate. With government controlling all the means of production, there can be no exchange of them.) Second, it must be a monetary economy. With these two conditions, factors will have money prices, which can be used to calculate costs, profit, and equity.

Economic calculation is not perfect. It cannot account for certain “non-economic” considerations. (Mises cites the example of a productive process that destroys the beauty of the natural landscape.) However, without economic calculation, there is no clear guide for how to produce what we would like to produce.

Socialism can stumble along for a bit, if it holds to the old pattern of production. Since preferences and resources usually don’t change very quickly, the old pattern of production won’t be far from the right one at first. However, in the real world, change happens – which means that holding to the old production patterns would cease to be rational as time passes.

Rothbard’s Fundamentals of Value and Price

~700 words, ~4 min reading time

Chapter 8 in the Rothbard Reader, available from the Mises Institute or Amazon.

One of the primary contributions of the Austrian school was moving from thinking of goods and people in terms of “classes” to think of them in individual units and as individual people. This emphasis on the individual provided three main insights.

(1) The Law of Diminishing Marginal Utility – while classical economics was stuck on the paradox of value (best seen in the diamond-water paradox, which points out that water is essential for life but cheap while diamonds are mere decoration but are expensive) and had to propose that there was a disconnect between use value and exchange value, Carl Menger pointed out that this paradox is resolved if we think about the usefulness of an additional (that is to say, marginal) unit of the good. While water, as a class, may be very important, the reality is that we have so much of it available in most places that humans live that ADDITIONAL water isn’t really very useful. As a result, water is cheap – we’re not willing to pay much to get more than we already have. Diamonds, however, are very rare. So, we are willing to pay a lot to get an additional one. By thinking in terms of exchanging individual units of the good, Austrians could discover this law of diminishing marginal utility – which connects exchange value with (marginal) use value.

(2) Time Preference – where does interest come from? With their faulty value theory, classical economists were stuck going one of two directions. One group – which led to the Marxian view – suggested that interest was a kind of “surplus value”. The labor embodied in the good was what gave it value, so if the exchange value was greater than that intrinsic value, then the difference was a “surplus” of value. Another group suggested that capital is productive. So, the reason that capitalists earn interest or profit is because they own productive resources. However, both of these views are incorrect. Austrian economist Eugen von Bohm-Bawerk builds on Menger’s individualist view of value to show that what distinguishes capital is not its exploitative nature (which competition between employers would diminish) nor its productivity (which should be fully embodied in the price of the capital good when it is purchased). Rather, it is time. When an individual acts, they demonstrate a preference for sooner want-fulfillment to later want-fulfillment. What a capitalist does, then, is pay for the production of a good up front – knowing that they won’t get the revenue until later. They would only do this if they expect the revenue to be enough greater than the cost that it is worthwhile to delay gratification. That is: if they receive interest. Meanwhile, workers are willing to work at a “discount” below the value of the product precisely because they do not have to wait for the final product to be sold before they receive their pay. They are willing to sacrifice some money in order to get their pay sooner rather than later.

(3) The law of diminishing marginal productivity – finally, thinking in terms of individual units allows for the Austrians to explain, for example, wages (and other factor prices). Factors are paid according to their marginal productivity – that is what an additional unit of the factor would add to production. We can’t arbitrarily divide production of goods from distribution of income. Rather the two are intimately connected. Distribution of income is not arbitrary – rather it comes about as a result of marginal productivity. This thinking also changes the question of class dynamics. Laborers and capitalists should not fight over how to distribute goods between them – the two are partners, as labor and capital are typically complements. (That is, most of the time, having more capital makes labor more productive – raising wages, while having more laborers makes capital more productive as well!) Rather, the conflict should be between members of the SAME class. Rothbard’s example: a new discovery of copper doesn’t hurt workers (who will now have additional jobs available) or consumers (who will find that copper goods are cheaper). It hurts those who ALREADY PRODUCE copper, as they see the price of their product decline. So, then, the Marxian approach suggesting there is some fundamental conflict between labor and capital is incorrect. Rather, conflict exists WITHIN each of these classes – labor v labor and capital v capital.