links for 2008-01-21

• America’s recession will be hard to shift - Wolfgang Munchau
• The Rationalizing Voter - The Monkey Cage
• Reaganomics - Paul Krugman Blog
• For Clinton, Government as Economic Prod - New York Times
• A fiscal stimulus offers limited help - Clive Crook
• Tax Rebate or Payment? A Policy Debate Begins - New York Times
• Econophysics - Vox Baby
• Objection! - Bluematter
• The Tata Invasion - James Surowiecki
• Let Justice Roll Down - Martin Luther King Jr.

Comments

[robertdfeinman]

I have no idea what econophysics is but this remark is pure bunk:

Physicists have a very different view about how work should be presented, and in particular about mathematical rigor (which they generally disdain). In addition, physics has a laissez-faire attitude about publication, believing that it is better to err on the side of letting as many new ideas in as possible, and to let the market eventually decide what is good and what is bad through a Darwinian process that selects what is useful and forgets what is not.

Any physics paper had better be mathematically rigorous or it will get laughed off the stage. There is no cheating by selectively picking data as happens in economics (and apparently drug trials) and there is no creating of meaningless models which are never tested against real data.

As for laissez faire attitudes towards publishing I suggest the authors look at the rejection ratio of some of the key journals like Physical Review Letters to see how willing editors are to let the market decide. Every reputable journal uses a anonymous refereeing process.

I don't know who J. Doyne Farmer and Thomas Lux are but perhaps they might talk to a few physicists before they make such stupid comments. They certainly don't bolster whatever case they think they are making by remarks such as these.

[anne]

http://krugman.blogs.nytimes.com/2008/01/21/stimulus-issues/

January 21, 2008

Stimulus Issues
By Paul Krugman

The big problem with attempts to provide temporary economic stimulus is how to ensure that the money gets spent. As Milton Friedman pointed out 50 years ago, consumers tend to base their spending on "permanent income" — the income they expect to have over the long run — rather than their income in any given year. So an $800 check from the Treasury tends, other things equal, to be mostly saved rather than spent.

How does one get around this?

One answer is that not everyone bases spending on permanent income. In particular, people who don't have a savings cushion and can't borrow (or can only borrow at high credit-card rates) may be "liquidity constrained," spending less than they'd like to given their permanent income. For example, a laid-off worker who expects to get another job eventually, but meanwhile is running low on savings, is very likely to spend an extra check.

Another answer is for the government to spend the money directly — or simply refrain from spending cuts that would otherwise happen. For example, state and local governments, which aren't supposed to run deficits, may be forced to slash spending in a recession; aid to these governments can avert these spending cuts, which is a real plus for the economy.

All of this suggests that if you want a stimulus plan to actually affect demand, it should focus on people likely to be liquidity constrained and on sustaining government spending.

But — you knew this was coming, didn't you? — it seems that the Bush administration wants to restrict the plan to income tax rebates. This means excluding the people most likely to be liquidity-constrained — because people having a bad year probably won't owe income taxes that year — and shying away from any aid to direct government spending.

The point is that the debate over exactly how the $145 billion or whatever gets allocated is not, as some might think, a second-order issue. It's probably at the heart of whether this plan has any real effect.

[anne]

"Physicists have a very different view about how work should be presented, and in particular about mathematical rigor (which they generally disdain). In addition, physics has a laissez-faire attitude about publication, believing that it is better to err on the side of letting as many new ideas in as possible, and to let the market eventually decide what is good and what is bad through a Darwinian process that selects what is useful and forgets what is not."

Good grief; as any physicist or mathematician disdaining to answer will explain, the fields are as near to each other as can be. As for publication, there are ever so significant differences, one from another, formal and informal.

[bigbadwolf]

Quote Any physics paper had better be mathematically rigorous or it will get laughed off the stage. There is no cheating by selectively picking data as happens in economics (and apparently drug trials) and there is no creating of meaningless models which are never tested against real data.Unquote

That's not correct. String theory has never been tested. Many quantum field theories have no empirical corroboration.

A physics may not be mathematically rigorous but if it has genuiney good ideas it will not be dismissed -- the gaps in rigor can often be filled in by any experienced journeyman mathematician or theoretical physicist.