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Posts Tagged ‘Russ Roberts’

Faith-based economics

Tuesday, February 2nd, 2010

Did the stimulus package jump-start the economy? Will climate regulation create jobs? Are clean energy subsidies an efficient way to curb pollution? Is health-care spending worth it? And how worried, really, should we be about budget deficits?

Those are questions for economists. With those issues in the news, economists are in demand. They’re quoted in the press, invited to conferences, even sought out at cocktail parties. But what, really, do they have to tell us?

Russ Roberts

Russ Roberts

“It’s a very funny time to be an economist,” says Russ Roberts, an economics professor at George Mason University and a research fellow at Stanford University’s Hoover Institution. “Our reputation isn’t very good. Probably shouldn’t be very good. We didn’t predict the recession. We don’t have a theory on how to get out. Yet people ask us for guidance. It’s bizarre.”

Russ is an unusual economist because he spends a good deal of time trying to explain his trade to a broad public. He hosts an excellent weekly podcast called EconTalk. He has written “an economic romance” called The Invisible Heart. He blogs at Café Hayek and, most recently, produced a rap video showdown between Frederick A. Hayek and John Maynard Keynes that has amassed an astonishing 500,000 (!!!) views on YouTube.

But when Russ spoke the other day during a  day-long media colloquium at Hoover, where he was joined by John Taylor and Robert Hall, who are distinguished Stanford economists, he titled his talk: “Is Economics a Progressive Discipline?”

By progressive, he didn’t mean left of center. (Not at Hoover!) Instead, he was asking whether economics, like physics, evolves, to develop deeper or more precise knowledge about how the world works. “Do we make any progress?” he asked. His answer, in sum, was not much. Unlike physicists or mathematicians (or even, I daresay, climate scientists), economists today can’t agree on what would seem to be very fundamental questions. (more…)

Rappin’ economists: Keynes v. Hayek

Wednesday, January 27th, 2010

Here’s a treat for those of you, like me, who are interested in economic theory. (I know, I’m a bit of a geek.) My favorite economics teacher, Russ Roberts, who’s at George Mason U. and the Hoover Institution, has put together a rap video with a Spike TV producer named John Papola that, believe it or not, illustrates the debate between free-market economist F.A. Hayek and macro-economist John Maynard Keynes. You may have heard about it on Planet Money or NPR’s All Things Considered. Russ is a multi-media threat–he’s written a “economic romance” novel called The Invisible Heart, he hosts a terrific podcast called EconTalk and now he’s branched into video. Last time I looked, some 250,000 people had watched this on YouTube. Enjoy!

Obama’s dumb $8-billion car loans

Wednesday, July 15th, 2009

Yesterday I blogged about economist Steve Fazzari and his arguments on behalf of the Obama administration’s $8 billion in loans to automakers Ford, Nissan and Tesla to make electric and fuel-efficient cars. Today, an opposing view comes from Russ Roberts, a libertarian economist who is a professor at George Mason University, a research fellow at Stanford University’s Hoover Institution, the host of the excellent podcast EconTalk and a blogger at www.cafehayek.com.

Steve, Russ and I spent time together recently at a retreat for journalists and economists organized by the Murray Weidenbaum Center on the Economy, Government and Public Policy at Washington University in St. Louis.  What struck me was how smart, thoughtful economists can see the world so differently. If you’d like to delve further into these issues, you can listen to my podcasts with Steve and Russ at The Energy Collective, or listen to an in-depth conversation about Keynesian economics between Russ and Steve here at EconTalk. A correction to my podcast: Although I say that the administration is giving loan guarantees to the automakers, the government in fact is making low-interest loans directly to Ford, Nissan and Tesla—a concept that Russ finds troubling, and not just because Tesla builds $100,000 sports cars for millionaires.

Tesla roadster

Tesla roadster

The economy’s a mess, Russ Roberts says, in part because the government promoted cheap credit and fueled a housing bubble. The Fed kept interest rates too low for too long, while government-sponsored enterprises Fannie Mae and Freddie Mac poured money into risky mortgages. So, he goes on, “it’s kind of ironic that, as we try to cope with that mess, we continue with the same fundamental idea–let’s try to artificially alter the rate at which people can borrow so they can do more of what appear to be good things.”

“In the past, it was home ownership,” he says. “Now it’s manufacturing and green technology.”

(more…)

Obama’s smart $8-billion jolt for electric cars

Tuesday, July 14th, 2009

I’m trying something different this week on the blog, in part because I’m on vacation. Recently, I had the great pleasure of attending a retreat for journalists organized by the Murray Weidenbaum Center on the Economy, Government and Public Policy at Washington University in St. Louis. The event was held on Cape Cod, at the lovely Wianno Club in Osterville, Mass., and while time was set aside for golf, tennis or sightseeing, we engaged in a lot of  learning, discussion and debate with economists and political scientists from the Weidenbaum Center and elsewhere.

I spent time there with a bunch of smart, interesting and lively people, including two economists, Steven Fazzari, who teaches at Wash U.,  and Russ Roberts, who teaches at George Mason and hosts one of my favorite podcasts, EconTalk. Steve is a Keynesian and Russ is a libertarian, so I thought it would he interesting to talk to them about the Obama administration’s aggressive efforts to promote clean energy and create green jobs. We discussed the U.S. Department of Energy’s recent decision to make $8 billion in loans to Ford, Nissan and Tesla “for the development of innovative, advanced vehicle technologies that will create thousands of green jobs while helping reduce the nation’s dangerous dependence on foreign oil.”

Today’s blogpost explains why Steve Fazzari thinks this is a good idea. Tomorrow, we’ll hear from Russ, is pretty sure that it isn’t.

CapeCodSky

Cape Cod sky photographed by Russ Roberts

Ask Steve Fazzari what he thinks about the government loan program for electric and fuel-efficient cars, and he says:

(more…)

The phony green jobs debate

Tuesday, April 14th, 2009

As the battle over climate change legislation heats up, several Big Green groups–the Environmental Defense Fund, the Natural Resources Defense Council and the Sierra Club–are rolling out TV and Internet ads designed to persuade voters that regulating greenhouse gas emissions will create green jobs. David Yarnold, the president of EDF’s Action Fund, sums up the message in an email: “Carbon Caps = Hard Hats.” Clever. Here’s an ad from EDF’s campaign, launched in partnership with the United Steelworkers union and the Blue Green alliance, a group of enviromental groups and unions.
Think of this ad, and the one below, as the “Harry and Louise” ads of the campaign to pass global warming legislation. You remember Harry and Louise, right? They were the couple who turned a devilishly complicated issue, health care reform, into a soundbite (”If we let the government choose, we lose”) and helped kill the 1994 Clinton health plan. These ads take what may be an even more devilishly complicated issue, climate change regulation, and use images of brawny construction workers to turn it into an even shorter soundbite: “Green jobs.” Take a look at this spot from The Blue Green Alliance:

Maybe I missed it, but did you hear an environmental message in either of those ads?

Of course, there’s research to support the claims about green jobs. In the interests of full disclosure, I need to say here that I’ve been doing some freelance work for EDF and NRDC—organizations I admire a great deal. But these claims about green jobs deserve greater scrutiny.

Last June, for example, the Blue Green Alliance, Sierra Club, NRDC and the steelworkers issued a green jobs report from the Political Economy Research Institute (PERI) at the University of Massachusetts, Amherst. It said:

…millions of U.S. workers—across a wide range of familiar occupations, states, and income and skill levels—will benefit from the project of defeating global warming and transforming the United States into a green economy.

A second report from PERI, issued last September under the auspices of the Center for American Progress, got more granular. In my home state of Maryland, for example, the authors project that a $100 billion green economic recovery program would create 36,739 jobs. They would be created in such industries as building retrofitting, mass transit and freight rail, smart grid, wind power, solar power and advanced biofuels.

It sounds great, doesn’t it?

Not according to the four lawyers and economists who produced “7 Myths About Green Jobs,” a 97-page report published by the University of Illinois College of Law.  They argue that “the green jobs literature is rife with internal contradictions, vague terminology, dubious science, and ignorance of basic economic principles.” Studies by conservative think tanks go further, claiming that climate legislation will destroy millions of jobs. A 2008 Heritage Foundation study claimed that passage of last year’s Lieberman-Warner bill would create “extraordinary perils for the American economy” and cause annual job losses of between 500,000 and 1,000,000 after a few years of job gains. (This report was pretty thoroughly discredited by NRDC.) The best thing I’ve read about this debate (and one of the most balanced) is this fine Slate article by Eric Pooley, my former editor at FORTUNE, who finds that there’s an emerging economic consensus that the costs of dealing with climate change are significant but manageable–and that given the risks, those costs are likely worth paying.

My point here is not that economists disagree. My point is that the climate change debate shouldn’t be about green jobs. It’s intellectually dishonest to pretend that we can forecast, with any degree of accuracy, the impact of a complicated government policy on a dynamic global economy decades into the future. Both sides know that their projections are based on a host of assumptions which may or may not come true. What if we decide as a nation to turn to nuclear energy as a source of low-carbon power? That probably won’t create many long-term jobs. What if there’s a breakthrough in the solar PV business in China? That may not bring green jobs here. Are farmers who grow corn for ethanol doing green jobs? That hasn’t turned out so well.

Let’s get real: We can’t predict oil prices 12 months out. Last spring, virtually no one anticipated the global financial crisis of last fall. And we are projecting the number of green jobs that will be created or lost on a state-by-state basis by a law that won’t take effect until 2012? Who are we kidding?

I called Russ Roberts, an economist at George Mason University who hosts the fine EconTalk podcast, for some guidance on how to think about green jobs and the economics of climate regulation.  “Creating green jobs is easy,” he told me. “We could employ millions of people picking up litter, and we could make them very good-paying jobs if we want. But of course that would make us poorer as a nation. There’s a cost to providing those jobs that would have to be borne by other people in the economy.”

It’s not just the cost of higher taxes that needs to be factored into the equation, he noted. To the degree that the government makes policy that favors, say, vast construction of wind turbines throughout the upper Midwest, the people doing those jobs will be drawn from somewhere else, maybe even from more productive work. If policy leads to the hiring of  thousands of contractors to do energy efficiency, the cost of building a new home or renovating your basement may go up because many of the good construction workers are busy.

“As voters and citizens and readers, what we want to think about is the big picture—are we moving in the right direction when it comes to environmental policy?” Roberts says. Put another way, are we spending enough money today to head off the threat of global warming in the future? Because if anyone tells you that we can deal with climate change at no cost, they probably shouldn’t be trusted.

Maybe that’s what bothers me about the green jobs ads. They’re like political campaign ads. They promise something for nothing. They treat the voters like children. They’re emotional and not educational. And they’re not helping to build a movement around climate change.

Other than that, they’re fine.

And I do hope they work.

When money doesn’t talk

Tuesday, March 17th, 2009

Million-dollar bonuses handed out by failed companies like Merrill Lynch and AIG stir outrage for many reasons—not the least of which is that they are paid, in part, with taxpayer dollars—but they have an added sting right now because, elsewhere in America, not many people are getting raises or bonuses.

Which raises a question: If companies can’t motivate people with money, how can they get the behavior they want from their people?

Here’s one answer: Instead of motivating people or trying to coerce them, companies can inspire them.

So, at least, says my friend Dov Seidman, who is the CEO of a company called LRN.

“We cannot get performance out of people through carrots and sticks,” he says. “We can inspire it in them through values and beliefs.”

It’s not just Dov saying this.

Rosabeth Moss Kanter, the Harvard Business School professor and former editor of the Harvard Business Review, has a book coming out called SuperCorp: How Vanguard Companies Create Innovation, Profits, Growth, and Social Good (Crown, September 2009). She writes about companies like IBM and Procter & Gamble “that have decided to manage through values, principles and a sense of purpose.”

Such talk may sound squishy, but it isn’t. I’ve seen people inspired by a sense of purpose and a desire to serve at a number of companies I’ve covered: They include Southwest Airlines, UPS, Timberland, Google, the theme parks at Disney and Herman Miller.

Dov and Professor Kanter spoke yesterday at LRN’s Knowledge Forum, an event for the company’s clients in Santa Monica, CA. ((Disclosure: LRN is a consulting client of mine. The company helps people do the right thing in the workplace, primarily through online courses about ethics and compliance.)

“This is the moment to turn to things that are more powerful than money. And more sustainable,” Dov said. “Values. Ideas. Optimism. Inspiration.”

He talked about Google and its famous mission—“to organize the world’s information and make it universally accessible and useful.” Now there’s a reason to get up in the morning and go to the office.

It reminded me that Jeff Immelt, CEO of GE, has said that the biggest payoff of GE’s eco-magination effort was that it made people feel better about working for GE.

The trick is to connect people who work at a company–no matter what they do–with the company’s efforts to solve problems that matter.

Kanter told a story about P&G, which developed a product called PUR that was designed to make water safe for drinking in the developing world, where tens of millions of children die each year because they lack access to clean water. PUR was sold in tiny sachets, at a low price but “it was very hard to sell,” she said. People didn’t make the connection between the product and the health of their children. PUR was losing money, she said, but P&G felt an obligation to make it available. So the company set up a nonprofit in cooperation with NGOs like Care and World Vision and with USAID, in an effort to get the PUR packets into the field. You can read the rest of the story  at a terrific website, Children’s Safe Drinking Water.

“These creative partnerships,” Kanter said, “were a result of having a company shaped by purpose, values and principles.”

Here’s a final example of people being inspired by coming together to accomplish something big and important: Wikipedia. Yesterday morning, I took a run along the Pacific Ocean  and listened to a terrific podcast from EconTalk in which the host, Russ Roberts, interviewed a founder of Wikipedia, Jimmy Wales. Wales talked about many things—the Hayekian influence on Wikipedia, whether kids should use it as a research source (yes, so long as they are still in elementary school), its reliability (good) and its growth (slowing a bit).

I came away impressed, more than anything else, by the sheer scale of the volunteer effort that created Wikipedia, which has nearly 2.8 million articles in the English edition alone, all created by people writing without pay.

“It’s been a good ride,” Wales said.

Roberts asked him to elaborate a bit. Wales replied: “Where it hits me most is when I’m traveling. Just last week I was in the Dominican Republic touring community technology centers in the poorest areas… There were kids there using the Internet and they use Wikipedia every day. Kids living in shacks with tin roofs who would otherwise have very little access to knowledge and education. That’s really rewarding.”

Wales, who is 43, started Wikipedia in 2001 after a failed attempt to create an online encyclopedia using a centralized structure in which all the entries were assigned and vetted. By opening up the process—tapping into people’s passions and their desire to make a contribution—he made possible the creation of something bigger and better than anyone could have imagined.

Why don’t more companies generate passion like that from their people? I can’t imagine a more sustainable source of competitive advantage.