Advocates of Reason: 23 November 2012

Man has only one tool to fight error: reason.

Ludwig von Mises

1. Ben Casselman, “The Cost of Dropping Out.” (There’s a paywall, but Google the title and choose the first link — it should take you to the piece.) Casselman draws the spotlight on college drop-outs, emphasizing a point that you don’t see often: those who have the worst time repaying student debt are those who drop out before earning their degree. I don’t know what kind of debt grad school will put me in, but as an undergraduate I was lucky. I was heavily subsidized through grants during the final stretch, so my student debt is less than $10,000.

2. Jeffrey Gettleman, “Congo Rebels Seize Provincial Capital.” While the world’s eyes were on Gaza, few people realized that a brutal war is stirring in the Democratic Republic of Congo. Remember, it’s almost ten years ago that what became known as the “African World War,” fought in large part on Congolese soil, ended — after 2.7–5.4 million civilian deaths.

3. While I prefer to withhold judgment on the subject, since I don’t think I know the history well enough, these are some of the pieces I’ve been reading on the recent/ongoing Israel–Gaza conflict: Ehud Yaari, “How to End the War in Gaza;” Max Fisher, “Israel, Gaza, and the Patterns of the Past;” Gershon Baskin, “Assassinating the Chance for Calm.” One of the reasons I prefer not to reflect on what I read regarding this topic is that it’s difficult for me to accept what others’ write, especially on the blogosphere; I don’t think many people, other than scholars deeply involved in the region, appreciate how complicated the situation is. I tend to be relatively critical of Israeli politics towards the Palestinian territories, but oftentimes I think a lot of people go too far in pointing the finger solely, or even mainly, at Israel.

4. Sudeep Reddy and Scott Thurm, “Investment Falls Off a Cliff.” The authors cite political uncertainty, but writers for the WSJ tend to favor this explanation over others (although they also cite “easing demand”). The authors note that there is a bit of a friction between the fact that consumer sentiment and spending are at a “five year high” and uncertain expectations about future demand. As I always stress, demand isn’t only consumer demand, but inter-firm demand for capital goods; anything that reduces investment will reduce demand. Tim Duy has some comments on the same subject that I haven’t had time to read yet.

5. Sexist humor has deep psychological impacts for the victims, according to a study. The authors also write that it tends to reinforce the same behavior, since it makes it seem socially acceptable. I’ve always been the kind of person who isn’t afraid of jokingly making fun of others, and I stress that if people are uncomfortable with what I say they should be clear. In part, it reflects my own personality; I don’t get easily offended. But, there’s a good case to be made that people ought to be more aware of their surroundings.

6. Parts of the Eurozone are back in recession. Honestly, parts of the Eurozone never escaped the recession. Spain was one of the topics at the dinner table yesterday; we discussed just how bad things are there (and there were some comparisons between the unemployment rates of Spain and the U.S., mainly with how much each should be adjusted for informal employment — I suggested that the U.S. U3 rate probably wouldn’t change much, while Spain’s basic measure would probably change by at least a few percentage points).

  • Daniel Kueh

    I think it’s a very important point on demand… I’m not sure why that morphs into a synonym for “consumption” sometimes.

    I also don’t feel like I know what “consumer sentiment” really is. I’m sure it’s been well studied, but could improved consumer sentiments just mean that people have adjusted to/accepted a new normal? I don’t know. Doesn’t necessarily mean high consumption rates.

    And of course, government spending is part of demand and that is well below trend.

    • http://economicthought.net/blog JCatalan

      To some degree, the theory of the relationship between consumption and investment has to mature. Demand is oftentimes treated as solely a function of consumption as a result of the belief that even depressed demand must be due to depressed consumption (e.g. “why are people going to produce, if nobody is buying their products”). This is what I was trying to get across in my other post on Keynesianism and consumption.

  • person

    Are you finished with undergrad? I thought you were still an undergrad.

    • http://economicthought.net/blog JCatalan

      Since I’m a semester away from finishing my econ. degree and I, more or less, already have a poli. sci. degree, I like to pretend like it’s all in my past.

      • person

        Oh, okay. Congrats! It seems like it didn’t take you very long!