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What We Read Today 20 December 2014

Econintersect: Every day our editors collect the most interesting things they find from around the internet and present a summary "reading list" which will include very brief summaries (and sometimes longer ones) of why each item has gotten our attention. Suggestions from readers for "reading list" items are gratefully reviewed, although sometimes space limits the number included.

Too Big to Tax: Settlements Are Tax Write-Offs for Banks (Lynnley Browning, Newsweek)  Hat tip to Rob Carter.  The settlements agreed to by the big banks in compensation for fraud they have committed are not what they seem.  The are,in fact, tax deductions.  They are treated very much as would business expenses, deducted from taxable income.  So the assertion that banks are treating the settlements as a cost of doing business is in fact, well, a fact.

Facebook’s Popularity Among Teens Dips Again (Sarah Frier, Bloomberg)  In 2012 95% of 13-27 year-olds using social media were Facebook members,  In 2013 it was 94% and this year down to 88%.  What is gaining?  Twitter and messaging apps.

Superiority or Elitism? The Standing of Economics in the Social Sciences (Alan Harvey, Institute for Dynamic Economic Analysis)  Alan Harvey has contributed to GEI.  See also the next article. Here are two excerpts from his conclusion:

The summary image is of an insular profession, guarded by a tribal hierarchy, dominated by a few schools, which adheres to a narrow ideology, and teaches largely the same material. Economists have achieved a place of prominence and influence in the world unmatched by other social sciences, and in this position of superiority have declined to engage in a wider discussion. Many will recognize this image as applying also within economics, where devastating critiques go unacknowledged, bad practices go unchanged and self-confidence is unchecked. 
The final irony is that a whole institutional structure – from newspapers through congressional committees to international policy circles – looks to economists for answers in crisis, even when they have been proven wrong.


When compensation, prestige and tribal discipline replace results and intellectual debate, we have a reform that cannot be won on scientific terms. 

The Superiority of Economists (Marion Fourcade, Etienne Ollion, and Yann Algan, Max Planck Sciences Po Center on Coping with Instability in Market Societies)  This is a research study with real data.  For example, a table on interdisciplinary attitudes of social scientists is shown below.  But the most interesting (and insightful) part of the entire paper is the conclusion:

If economists could manage to get themselves thought of as humble, competent people, on a level with dentists, that would be splendid!,” Keynes (1963[1932]: 373) famously wrote. Most modern economists have a strong practical bent. They believe in the ideal of an expert-advised democracy, in which their competence would be utilized and on display in high profile, non-elective positions in government and other institutions. But democratic societies are deeply suspicious of (non-democratic) expertise, and economic advice, unlike dentistry, can never be humble. The fact is that – in some ways true to its philosophical origins – economics is a very moral science after all. Unlike atoms and molecules, the “objects” upon which economists seek to act have a perspective on the world, too. Human life is messy, never to be grasped in its full complexity or shaped according to a plan: people act in unanticipated ways, politics makes its own demands, cultures (which economists do not understand well) resist. Thus the very real success of economists in establishing their professional dominion also inevitably throws them into the rough and tumble of democratic politics, forcing them to try to manage a hazardous intimacy with economic, political, and administrative power. It takes a lot of self-confidence to put forward decisive expert claims in that context. That confidence is perhaps the greatest achievement of the economics profession – but it is also its most vulnerable trait, its Achilles heel.


Articles about events, conflicts and disease around the world

Ferguson and Related News









North Korea


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